GKN to shed 1,000 more high-cost jobs

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The Independent Online

GKN, the automotive components and aerospace group, is stepping up its restructuring programme and expects to shed a further 1,000 jobs in Western Europe and the US this year as production is switched to low-cost countries of Asia, Latin America and Eastern Europe.

Kevin Smith, the chief executive, also said that with net debt of just £65m on the balance sheet, GKN could afford to spend up to £700m on an acquisition, should the right target come along.

The rationalisation plan, which started two years ago and involves the closure of 11 factories and the streamlining of a further 12 production sites, had been expected to result in 3,000 job losses. But Mr Smith said yesterday that the headcount was likely to be 4,000 lower by the end of 2006.

He was speaking as GKN beat market expectations with a 31 per cent rise in underlying pre-tax profits last year to £203m and painted an upbeat picture for this year and 2007, sending its shares 7 per cent higher.

GKN also announced that it would nearly halve its pension fund deficit with a one-off £200m cash injection, funded by through a £1bn sale of its stake in the helicopter manufacturer Agusta Westland. Mr Smith said he expected the progress achieved last year as the benefits of the restructuring began to show through to continue this year and then accelerate in 2007.

GKN said the outlook for the major automotive markets over the next 12 months was stable while aerospace demand would remain strong. The group's world-leading driveline business is expected to have a solid year while GKN's once-troubled powder metallurgy business, which also makes automotive components, is experiencing strong growth.