KKR Installs Partner to Run Marelli as Job Cuts, CEO Exit Await
KKR Installs Partner to Run Marelli as Job Cuts, CEO Exit Await
(Bloomberg) -- KKR & Co. has installed one of its partners to run Marelli Corp. as the coronavirus pandemic puts pressure on the Italian auto-parts supplier to make deeper restructuring cuts.
Marelli Chief Executive Officer Beda Bolzenius plans to resign as soon as next month as part of an overhaul involving job and cost cuts, according to people familiar with the matter.
Dinesh Paliwal, a partner at owner KKR, and Marelli’s executive chairman, has already stepped in to take control of the company, said the people, who asked not to be identified because the information isn’t yet public. It’s unclear if Paliwal would keep the role on a long-term basis.
Bolzenius was appointed in 2018, about a year before KKR formed the company after buying Magneti Marelli from Fiat Chrysler Automobiles NV and combining it with Japan’s Calsonic Kansei, which was already in KKR’s portfolio.
The coronavirus pandemic has caused additional challenges for Marelli, including supply-chain bottlenecks and shortages in components and raw materials.
Just three months after rolling out a restructuring program, Marelli could double planned job cuts to more than 3,000 and shut down some locations, the people said. Sites in Japan, Italy and France could be affected, but the plans are fluid and could still change, the people said.
A spokesman for Marelli, which isn’t listed, declined to comment. The company employs about 58,000 people and operates about 170 facilities around the world, according to its website.
Paliwal has taken a more active role internally. In a recent note to Marelli employees, he said the company has “the highest fixed cost among our competitors.” To generate $1 of gross margin, Marelli spends $2.72, compared with 9 cents to 66 cents at its rivals.
“This is not economically acceptable,” he wrote in the note seen by Bloomberg. “Unfortunately, there is no alternative -- decisive measures are needed to make our company fit for the future.”
KKR is also considering a sale of Marelli’s suspension-systems business as the private equity firm shifts the company’s focus toward more profitable products, people familiar with the matter told Bloomberg in June.
“The difficult market environment crystallized the issues that we need to fix before we can become a leading, economically thriving automotive supplier,” Paliwal said in the employee memo. “Our structures have been too complex, our processes too complicated and our systems often too old.”
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