Milwaukee-based Jason Industries Inc. announced additional cost reduction actions Friday as revenue fell during the third quarter and the company again posted a loss.
The company will look to sell its European acoustics business, close its finishing operations in Brazil and consolidate its two components facilities in Libertyville, Illinois into a single operation. Jason is also in the process of exploring sale leaseback deals for its long-term facilities.
Jeffry Quinn, Jason chairman and chief executive officer, said the company saw declines in several of its end-markets, including a decrease in heavyweight motorcycle volumes for seating, lower railcar volumes for components and general industrial weakness in finishing.
Jason reported a net loss for the third quarter of $2 million or 13 cents per diluted share, an improvement from the $2.6 million loss, or 16 cents per share, last year. Revenue was down 0.6 percent to $170.1 million
“In spite of our topline headwinds, we are making progress on initiatives to structurally improve our margins. While we did not see the operational improvement at the speed and magnitude we anticipated during the quarter and are disappointed with the results, we are confident we will deliver on our cost reduction and margin expansion commitments. We will continue to devote significant resources to improving manufacturing efficiency in our plants and improving our operational talent,” Quinn said.
Jason has been in the midst of a number of cost reduction and operational improvement efforts since Quinn took over as CEO at the end of 2015. The company has acted on $22 million of its targeted $30 million savings, said Brian Kobylinski, president and chief operating officer.
Kobylinski said the company also plans to embark on an enterprise wide lean initiative.
“I see opportunity in every plant that I visit,” he said, highlighting that some facilities could see a 20 percent reduction in floor space being used.
He said one facility was using a 35-year-old conveyor to take parts along the ceiling of the facility for a long distance.
“It was a visible symbol of waste,” Kobylinski said, adding that employees were happy to take it out.
Quinn said the issues the company has identified in its operations have not improved as quickly as expected.
“While it continues to be a challenging time for us, I believe we are on the right track,” he said. “We knew there were no silver bullets and we knew that the problems we were facing weren’t created overnight and won’t be solved overnight.”
Quinn added the next priority will be to invest in the company’s workforce, highlighting a need for more talent and experience.
Kobylinski said the company has a good core of veteran employees that can be supplemented with additions in supply chain, finance, operations and sales.
“These employees re looking for leadership and fresh ideas and they need to know what good looks like,” he said.
Quinn said he expects the remainder of 2016 and 2017 to be a challenging transition period for the company.