Linamar moves to shut U.K. plant with 200 workers, shift production elsewhere

TORONTO - Canadian auto parts maker Linamar Corp. is taking the first step towards shutting down its only British plant due to high labour costs.

Canada's second-biggest auto parts company said Wednesday it's beginning consultations with the Unite trade union on the planned closure of the plant in Wales, which employs 200 people.

"We felt that the cost levels in the facility were not competitive and we've worked closely with our people there over the last couple of years to try to create a competitive structure in the facility and we have been unable to do so," Linamar CEO Linda Hasenfratz said in an interview.

British law requires companies that intend to shut down a facility to consult with their workers and attempt to find alternatives to the closure.

"We are in good faith having discussions and consultations with our people around the contemplation of the plant closure," Hasenfratz said.

"If we collectively come to the decision that this is clearly the only alternative for us, then our discussions would shift to the actual closure and how our people would be handled in that situation."

If the plant closes, production of its electronic components would be moved to Germany and Mexico, but Hasenfratz emphasized this isn't an attempt to slash labour costs.

"It's because of the product expertise. The only plant that we make PTUs (power transfer units) at in North America is in Mexico. We're not taking it from some high-cost labour place to a low-cost labour place. That's got nothing to do with it," she said.

Consultations between companies and unions on such shutdown proposals in the U.K. are usually for a 90-day period.

Linamar bought the factory from U.S. auto parts maker Visteon in mid-2008 — the Canadian company's first foray into manufacturing in the United Kingdom.

At the time, Linamar said it planned to grow the business with new products such as camshafts, flywheels and connecting rods.

Originally built in 1960 for fridge manufacturer Prestcold, the plant was acquired by Ford in the mid-1960s before being transferred to Visteon, a major parts maker spun out from the No. 2 U.S. carmaker.

The Lassco plant (Linamar Automotive Systems Swansea Company) is located in Swansea, Wales.

Linamar makes components, modules and systems for the world's car manufacturers and power generation markets as well as Skyjack scissor-lift work platforms for industrial customers.

The southwestern Ontario company has close to 11,000 employees in 37 manufacturing plants and other operations in Canada, the U.S., Mexico, Germany, Hungary, the U.K., China, Korea and Japan.

Shares in Linamar (TSX:LNR) added 18 cents to $17.28 in afternoon trading on the Toronto Stock Exchange.