Johnson Controls to reduce workforce & close 10 manufacturing plants

The Automotive Experience restructuring actions target excess manufacturing capacity resulting from lower industry production in the European, North American and Japanese automotive markets. Johnson Controls said it now expects vehicle production in its 2009 fiscal year to be 8.8 million units in North America and 14.3 million units in Europe. These production levels are lower than the company's forecast in December 2008. On an annualized basis, North American production in the March quarter was at a 27-year low. Initiatives in the company's Power Solutions business are focused on optimizing manufacturing capacity. The actions reflect lower overall demand for original equipment batteries resulting from lower vehicle production levels. Johnson Controls said that the second quarter impact of the restructuring would be partially offset by an approximately $75 million non-recurring tax benefit. The company had announced previously that it expected tax benefits in the second through fourth quarters of fiscal 2009 to total $150 to $200 million. In the fourth quarter of fiscal 2008, Johnson Controls announced a $495 million restructuring program with cost reduction initiatives across all three of its businesses. The company said these restructuring actions are approximately two-thirds complete. The timeline for the actions is ahead of schedule, aided in part by the lower automotive production levels, which enabled the closure of plants sooner than originally planned. The benefits from the 2008 restructuring program will begin to meaningfully impact the company's financial performance in the fiscal 2009 third quarter. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength and enhance our ability to gain further market share while improving our margins," said Stephen A. Roell, Johnson Controls Chairman and Chief Executive Officer. "Today's announcement demonstrates our continued ability to improve our cost structure. Earlier this month, we completed a debt offering that significantly improves our liquidity and gives us the flexibility to take advantage of opportunities that may arise as a result of the economic environment. Both of these actions provide further competitive advantage," Mr. Roell said. "We remain confident in our long-term growth prospects." Johnson Controls said it does not expect any further restructuring activities in the foreseeable future.