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Seating and electronics suppiler Lear Corp. is working to sell its three manufacturing plants in Russia almost a year after suspending operations due to Russia’s war on Ukraine.
The company is aiming to sell its assets in Russia within the first half of this year, CEO Ray Scott told Crain’s Detroit Business in an interview Monday, adding that legal issues and other complexities have made the process slow moving.
“We’re exiting Russia,” he told the Automotive News affiliate. “(There are) issues that we have to take care of, but we’re exiting. For the most part, all of our manufacturing plants are shut down.”
Before the war began Feb. 24, Lear operated seating plants in Russia with about 1,000 employees, generating about $100 million in annual revenue. That’s a fraction of overall business at Lear, which is expected to announce next month more than $20 billion in revenue in 2022.
Just 50-60 Lear employees work in Russia now, mainly to keep the lights on and maintain the plants, Scott said.
In September, the company determined the values of substantially all of its operating assets in Russia were impaired and took a charge of $19.9 million in the third quarter related to the impairments of inventory, property, plant and equipment and right-of-use assets.
“It’s not even just the assets, it’s the people side,” Scott said. “We have good people that are in Russia that we have to make sure that we’re mindful of.”
The company has identified prospective buyers, Scott said. Getting a fair price for the plants will be a challenge. Russia’s invasion of Ukraine sparked an exodus of Western businesses, many forced to sell assets at cut rates. There had even been threats of the Kremlin seizing the assets of companies that withdrew.
“We’re going through the process of what’s best for the assets … It’s not easy to sell assets right now in Russia,” Scott said.
Lear isn’t the only company in this predicament. Canadian automotive supply giant Magna International Inc., which has a major presence in metro Detroit, has six manufacturing plants and 2,500 employees in Russia. The company also idled operations there in March.
The plants remain shut down, and the assets are still owned by Magna, a company spokeswoman told Crain’s on Tuesday.
Other manufacturers have also moved to sell off assets after pausing or scaling back operations.
Ford Motor Co. and General Motors halted business in Russia, and Ford sold its stake in a joint venture in the country.
Koch Industries, the parent company of Guardian Industries, sold its business in Russia, composed of two glass-making plants and 600 employees, to Vladimir Alexandrovich Voronin, president of FSK Group, for an undisclosed sum in July.
As of May, some other Michigan-based companies still had operations in Russia, including Domino’s Pizza Inc., Tenneco Inc., Dow Inc. and Kellogg Co. Crain’s reached out to each of those companies to check on the status of operations and assets in Russia, but they did not immediately respond.
Lear, based in suburban Detroit, ranks No. 10 on the Automotive News 2022 list of the top 100 global suppliers with worldwide sales to automakers of $19.3 billion in 2021.