26th January 2006 - TMD Friction Announces Restructuring at German Operations

Brake Friction Supplier Intends to Ensure Competitiveness of its German Locations

The management of TMD Friction Holding GmbH announces plans to restructure its German operations in order to ensure their long-term competitiveness. Measures include further improvements of the working and business processes, enhanced sourcing policies, Germany-wide adjustments of the working terms and conditions, the transfer of production capacities to Eastern Europe and a headcount reduction of up to 400, mostly in Leverkusen.

Derek Whitworth, CEO of TMD Friction: "TMD Friction is a strongly performing business but it is increasingly exposed to the global pressures affecting the whole automotive industry. TMD Friction is committed to its German operations. The objective of the restructuring plans is to ensure their long term competitive positioning. We now need to make these necessary changes required to ensure our cost base becomes competitive with other international locations and to ensure our long-term position as one of the top three global suppliers of friction materials."

Over the last 18 months, TMD Friction has been impacted by the difficult situation in the world markets in general, as well as the specific factors affecting the automotive industry. In particular, raw material prices including steel prices and energy costs have dramatically increased over this period. In reaction to these conditions TMD Friction already undertook an extensive re-orientation and change program but has to intensify these actions to face actual and future market conditions.

In the forthcoming weeks detailed discussions will be continued between the management and the works councils of the locations Leverkusen, Hamm/Sieg, Essen and Coswig as well as the trade union "Industriegewerkschaft Bergbau, Chemie und Energie" (IGBCE). It is envisaged by TMD Friction that job reductions will be organised in a socially acceptable way.

About TMD Friction

TMD Friction Group is one of the world’s leading manufacturers of brake friction materials in the original equipment market of the automotive and brake industry. Its product portfolio comprises disk brake pads and drum brake linings for passenger cars and commercial vehicles together with brake pads for racing and friction materials for industry. TMD Friction also supplies the global aftermarket with its Textar, Pagid, Mintex, Don, Cobreq, and Cosid brands. With locations in Germany and other European countries, the USA, Brazil, Mexico, China, Japan and Malaysia, TMD Friction generated a turnover of approx. 650 million euros in 2005 and employs 4,600 people worldwide

For more information on visit TMD Friction or www.tmdfriction.com

Source: TMD Friction Press Release