UPDATE 2-ArvinMeritor plans to close Indiana plant


(Recasts lead, adds details from company news release)

CHICAGO, Sept 24 (Reuters) - Auto parts supplier ArvinMeritor Inc. said on Wednesday it will close an Indiana plant employing 850 workers.

The Franklin, Indiana, factory makes exhaust systems. The union representing 750 workers at the Franklin plant was informed of the decision last week, ArvinMeritor spokeswoman Krista McClure told Reuters.

ArvinMeritor shares ended up about 3.5 percent at $20.51 on Wednesday afternoon on the New York Stock Exchange.

The Troy, Michigan-based maker of products including axles, brakes, transmissions and suspension systems has struggled to boost profit this year amid higher steel prices, weaker demand for replacement parts, and severe pressure from auto makers to cut costs.

In January, the company announced it would eliminate 575 jobs in its light vehicle systems division and close a plant in Gordonsville, Tennessee, as part of its cost-reduction efforts.

"The process of assessing our operations is ongoing. We need to make sure that capacity is in alignment with industry demand," McClure said.

Production based in Franklin will be transferred to ArvinMeritor locations in Indiana, Michigan, South Carolina and Mexico. Initial production moves are expected to begin in December 2003 and the process will be complete by September 2004, the company said.

ArvinMeritor is waging a hostile takeover bid for rival parts maker Dana Corp. and has said in the past that its sees synergies from the potential combination.



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