Dana to Close Milwaukee Plant

Dana Holding Corporation ( DAN - Snapshot Report ) plans to close down its operations in the Milwaukee plant by early 2013. The company has informed the Wisconsin state officials about shifting the plant located in 11500 W. Brown Deer Road to the company’s facility in Danville, Kentucky.

Dana Holding is consolidating the engine-gasket manufacturing business in order to achieve long- term growth and greater success. The closure of the plant will render nearly 150 workers jobless; however, a handful of the company’s employees will be offered the choice of relocating to another facility of the company. At present, the company employs 25,500 people and serves about 26 countries.

According to the union members, the plant in Danville employs about 195 people with wage scale lower than that in the Milwaukee plant. The wages at the plant range from $16.5 to $32.0 per hour. It is thus clear that the plant closure is mainly driven by the company’s cost cutting strategy.

Milwaukee is the largest city in Wisconsin. Recently, General Motors Company ( GM - Analyst Report ) and Chrysler have withdrawn their operations from the city followed by supply constraints as suppliers Delphi Corp, in Oak Creek and Lear Corp. ( LEA - Snapshot Report ) in Janesville have both withdrawn from the market. These factors are also responsible for the closure of Milwaukee plant.

In the first quarter of 2012, Dana witnessed a 30% increase in earnings to 44 cents per share from 34 cents a year ago. The results surpassed the Zacks Consensus Estimate by 3 cents. The higher profit was attributable to higher sales, material cost recovery, and cost reductions strategy of the company. In absolute terms, the company reported a profit of $94 million compared to a loss of $73 million recorded in the first quarter of 2011.

Total revenue in the quarter escalated 9.4% year over year to $1.97 million. The growth was driven by higher vehicle production, which offset the effects of foreign currency.

Maumee, Ohio based Dana is one of the world’s leading suppliers of driveline, sealing, and thermal technologies, which improves the efficiency and performance of passenger, commercial and highway vehicles. The major competitors of the company include Magna International Inc. ( MGA - Analyst Report ) and Meritor Inc. ( MTOR - Analyst Report ) . Currently, it retains a Zacks #3 Rank, which translates into a short-term (1 to 3 months) Hold rating.