Friday, 11 March 2016

Viasystems takeover means hundreds of job losses



The ruthless experts in corporate greed who brought misery to scores of families 20 years ago when they closed local Viasystems electronics plants in Selkirk and Galashiels are still despised by those who suffered in the economic meltdown of the Scottish Borders.

But when Not Just Sheep & Rugby reported last year on the American company's apparent demise - it had been taken over by US rival TTM Technologies - it seemed the last chapter had been written in the tragic Viasystems saga. Surely the job cuts and lack of consideration for entire workforces would fade into history alongside the company's brutal management.

The first detailed report from TTM following the Viasystems acquisition shows that in fact factory closures and job losses on a massive scale seem set to continue across the globe as manufacturing capacity is trimmed and the never ending drive to deliver maximum profits at all costs remains the top priority.

Less than a year after the huge take over deal was completed, TTM is involved in "consolidation" plans which will see the closure of two plants in the USA and one in Mexico. It means another 550 employees of the Group will be thrown out of work on top of the 774 workers who were deemed surplus to requirements by TTM when the decision was taken to close a manufacturing facility in Suzhou, China.

Industrial action, including a work stoppage failed to avert that closure. It seems to have been a re-run of events in the Borders during the 1990s when political interventions and deputations to far away Missouri failed to make a jot of a difference. The fate of the workers in Selkirk and Galashiels lay in the hands of so-called casino capitalists who showed no flicker of emotion or compassion as their closures took effect.

TTM now generates $2.1 billion in annual sales, has control of 28 separate production centres in the Americas and China with a combined workforce of 29,000, including those who previously manned Viasystems' plants.

The acquisition cost TTM $248.8 million in cash, shares worth $149 million, and they assumed and refinanced Viasystems' crippling debts of $669 million. Now the TTM debt burden dwarfs that of Viasystems and stands at around $1.25 billion.

In a report filed with the US Securities and Exchange Commission (SEC), TTM warn prospective investors and shareholders: "We have substantial outstanding indebtedness, and our outstanding indebtedness could adversely impact our liquidity and flexibility in obtaining additional financing, our ability to fulfill our debt obligations and our financial condition and results of operations".

Those who lived through the Borders Viasystems nightmare may recall there were similar grave warnings about the business's debts shortly before the empire presided over by the notorious Mills brothers and their managers crashed into the American equivalent of liquidation. But it was not long before the same group of industrialists - give or take a few - were up and running with a set of new loans and a similar philosophy of ruthlessness towards their employees.

Perhaps things are no different at TTM for their executives, like those who presided over Viasystems, are expressing serious misgivings about significant increases in the minimum wage payable in various provinces of China where most of the company's manufacturing centres are located.

The report to SEC adds: "In addition, we have experienced very high employee turnover in our manufacturing facilities in China, generally after the Chinese New Year, and we are experiencing ongoing difficulty in recruiting employees for these facilities.

"Furthermore, labour disputes and strikes based partly on wages have in the past slowed or stopped production by certain manufacturers in China. In some cases, employers have responded by significantly increasing the wages of workers at such plants".

TTM confirm that their so-called consolidation plan involving factory closures is part of a strategy to improve total plant utilization, operational performance and customer focus following the Viasystems acquisition. But there is no expression of regret that 550 workers will lose their jobs by the time the plan is fully implemented in June 2016.

The matter-of-fact style of reporting reveals that during 2015 the company "recognized total restructuring charges of $7.4 million"

The report continues: "These charges primarily represent severance expense associated with the plan and other global realignment restructuring efforts. We estimate that we will incur total charges of approximately $10-15 million related to these closures. Additionally, our first quarter 2016 financial results will be negatively impacted as a result of the planned closure of these facilities".

That document with its complete lack of sentiment or sorrow could easily have been written by one of the Mills brothers or one of their cohorts who masterminded the Viasystems exercise which almost bled the Borders dry.

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