Visteon Corporation has signed a memorandum of understanding with Ford Motor Company that provides for significant structural changes to Visteon“s North American manufacturing operations, the auto pa…
Visteon Corporation has signed a memorandum of understanding with Ford Motor Company that provides for significant structural changes to Visteon“s North American manufacturing operations, the auto part and architectural glass manufacturer informed on 25 May 2005. When finalized, the transaction is expected to increase Visteon“s competitiveness by streamlining and improving the cost structure of its North American operations. A key aspect of the proposed agreement is the transfer of plants and other locations and certain associated assets to a separate entity to be acquired by Ford. Following the closure of the transaction, Visteon will not own any part of the new entity. The units to be transferred include the following glass facilities: Autovidrio at Chihuahua, Mexico; Glass Labs at Dearborn, Michigan; Carlite Automotive at Lebanon, Tennessee; Vitro Flex at Nuevo Leon, Mexico; and the glass plants at Nashville, Tennessee and Tulsa, Oklahoma. Another important aspect of the deal relates to staff costs: the current leasing arrangements for 17,400 Ford-UAW employees will be terminated and Visteon will shed its remaining liability, including about USD 1.5 billion of previously deferred gains, related to Ford-UAW post-retirement health care and life insurance benefit obligations (OPEB) for former assigned employees and retirees and certain salaried retirees, totaling about USD 2 billion. Visteon intends to focus its engineering and capital resources on products that have been generating significant new business with major vehicle manufacturers: interiors, climate control and electronics, including lighting. Visteon says it has significant global scale in these products and intends to strengthen its position through a more focused investment in capital, people and technology. The agreement will reshape Visteon from a company that had USD 18.7 billion in revenue in 2004 to a leaner, more competitive USD 11.4 billion organization, based on estimated 2005 pro forma revenue. “This is a milestone agreement which, upon completion, will create a more competitive business structure for Visteon in the United States and remove a number of structural barriers to the company“s long-term sustainable success,” said Mike Johnston, Visteon“s chairman-elect and chief executive officer. The non-binding memorandum of understanding is subject to customary conditions, regulatory approvals and the ratification of the affected Ford-UAW members assigned to Visteon. Visteon and Ford expect to sign a definitive agreement on or before 1 August 2005 and close the transaction by the end of the 3Q of 2005.