Linamar Past Worst, Ramps Auto-Parts Output Back Up, CEO Says

(Bloomberg) -- Canadian auto parts supplier Linamar Corp. is cranking its factories back into production as the threat of the coronavirus pandemic wanes.

“We are very much focused on recovery at this point,” Linda Hasenfratz said on BNN Bloomberg TV Friday. “I feel we’ve really come through the toughest point.”

Some plants are now running in North America and Europe. “Next week, the rest of the North America plants will be coming back online,” Hasenfratz said.

The comments may help soften the blow from U.S. factory production data today which showed an almost 72% slump for motor vehicles and parts as car plants shuttered to slow the spread of the virus.

The Guelph, Ontario-based company has established safety protocols based on screening, making sure workers get the protection they need, including masks, establishing physical barriers to keep people apart, cleaning and hygiene and contact tracing, she said.

China Factories

With factories running for weeks in China, the company hasn’t had a single positive case of Covid-19, she said. “Protocols work,” Hasenfratz said. “We feel very confident in the safety of our people coming back.”

Linamar is continuing to trim costs to weather the downturn, coming up with C$12 million ($8.5 million) in just a couple of weeks. Capital expenditures are likely to be down by a third over last year, she said.

Dividends

The company last week announced a 50% cut to its quarterly dividend to C$0.06 cents a share. The cut didn’t move the dial very much in terms of liquidity, Hasenfratz said.

But “it didn’t feel right that we pay a full dividend to our shareholders when we have thousands of people who were laid off.” she said. “We’ll get that restored just as soon as we can.”

Linamar shares fell 0.6% to C$31.66 at 9:50 a.m. in Toronto in line with falling North American markets and are down about 35% this year.

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