Aluminum Wheel Producer, Superior Industries is Downsizing and Closing Plants

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Researched by Industrial Info Resources (Sugar Land, Texas). Superior Industries International (NYSE:SUP) (Van Nuys, California) has announced that it will close an aluminum wheel foundry in Johnson City, Tennessee, effective January 22, 2007, due to decreasing production of many of its OEM customers, especially in the light truck and SUV platforms.

The closure will leave about 500 workers unemployed and follows closely on the heels of the downsizing and laying off of 375 of Superior’s 635 employees at its Van Nuys, California plant, as well as the closure and termination of 225 jobs at its Fayetteville, Arkansas chrome-plating plant, ostensibly because the industry is moving away from the expensive chrome-plating technology and gravitating toward less expensive coating technologies. These 1,100 jobs lost represent a reduction of about 16% by the end of 2005 of Superior’s 6,700 worldwide employees. The company has said it plans to transfer all existing contract production from Johnson City to its other plants.

Also in company news, Superior had announced in early January of this year that it would divest itself of its suspension components division, namely a 300,000 square-foot plant in Heber Springs, Arkansas, which it had acquired in 1999 in order to focus on its wheel business. Superior more than doubled the size of this plant in 2002. Finally, on August 25, 2006, the company announced that the sale of this plant was in the final stages, but the name of the new owner has not yet been announced. The Heber Springs plant manufactures custom chrome exhaust extensions, license plate frames, illuminated grab bars, and other distinctive accessories for automobiles.

Nevertheless, Superior doesn’t seem to lack for customers and has, since April 2006, been named a Strategic Supplier for Ford, and has picked up numerous contracts from DaimlerChrysler, General Motors, Nissan, Audi, BMW, Isuzu, Jaguar, Land Rover, Mazda, MG Rover, Mitsubishi, Toyota, and Volkswagen, and a completely new customer, Subaru (for 17-inch wheels for its 2007 models). However, according to Superior’s annual report for 2005, 91% of 2005 sales came from General Motors and Ford, which may not bode well for Superior, given the present state of both of those OEMs and the almost certain probability that both will cancel or at least severely curtail production of a number of their respective larger models, such as pickups and SUVs.

Superior plants are located in Chihuahua, Mexico; Fayetteville and Rogers, Arkansas; Heber Springs, Arkansas (sold recently); Johnson, Tennessee (to be closed soon); Pittsburg, Kansas and two in Van Nuys, California.

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