“This will be the first full year of savings,” Jackson tells Ward’s, while here for the Society of Automotive Engineers World Congress.
The savings are a direct result of Project Genesis, a company-wide initiative to “optimize its global manufacturing, distribution and logistics footprint.”
“Genesis has been a success for us,” says Jackson. “We were one of the early Tier 1s to see the need to optimize our global footprint.”
In addition to the savings, the value-mapping has made the supplier more competent in its core business, Jackson says. That is reflected in a record year for new business in 2003 and’s increased competitiveness and growth rate.
Tenneco, based in Lake Forest, IL, first received board approval at the end of 2001 to begin implementing the first phase of Genesis.
It recognized that the quest to maximize capacity utilization by redesigning its plants and making operations leaner would involve consolidating and transferring operations and rearranging flow, while standardizing processes and products.
The end result of this clean-sheet approach would be greater efficiency and profitability, but there would be casualties along the way.
Tenneco took $32 million in charges in fourth-quarter 2001 to cover the cost of the first-phase actions, designed to generate $29 million in annualized savings starting in 2004.
Early in 2002, Tenneco announced its intention to close its Walker Denmark Middlefart plant that made aftermarket exhaust system products, by year-end, affecting 280 employees. Overcapacity and declining sales were the main reasons.
Later that year came news the Walker exhaust manufacturing facility in Queretaro, Mexico, also would be shuttered, affecting 170 workers. The emission-control products they made for original equipment manufacturers were to be consolidated at the supplier’s exhaust manufacturing plant in Puebla, Mexico.
Genesis has resulted in the closing of eight facilities and a streamlining of operations at 23 more manufacturing and distribution facilities.
The supplier still plans to close its facility in Birmingham, U.K., by the end of the year, affecting 127 employees. The manufacture and distribution of aftermarket exhaust components will be transferred to plants in France, Spain, Sweden and Poland.
But Tenneco also opened new plants in Europe, notably in lower-cost Poland, Russia and two in Germany, as it redrew its global manufacturing footprint, Jackson says. And while the workforce has been reduced in the short-term, there have been selective increases, as well.
Tenneco Automotive became an independent company in November 1999. The $3.5 billion manufacturer has been reduced to about 19,600 employees from about 23,000 worldwide before Project Genesis. The supplier produces and markets ride control and exhaust systems and products, sold under the Monroe and Walker global brand names.