Daimler Trucks North America (DTNA) is taking dramatic steps to meet the challenges of the current depressed market for heavy-duty trucks. Company officials announced on October 14 that DTNA would eliminate 3500 jobs, drop the Sterling Trucks brand, and shut two North American plants.
The restructuring plan is expected to cost about $600 million and should boost annual earnings by about $900 million by 2011. The company will stop building Sterling vehicles in March 2009 and will close the St Thomas, Ontario, Canada, plant where those trucks are made. The Freightliner/Western Star plant in Portland OR will be closed in 2010, when the current labor contracts expire.
Daimler officials said 2300 workers at the two plants would have lost their jobs by mid-2010. That includes 720 layoffs scheduled for November that had already been announced. DTNA also will reduce its salaried workforce by approximately 1200 people, with more than half of those layoffs tied to the Sterling brand.
“Plans based on an expectation of brief, sharp market events driven by regulatory change, followed by periods of reasonable growth, are out-of-step with the emerging realities of the latter part of this decade,” said Chris Patterson, DTNA president and chief executive officer. “We've examined every part of our organization in light of the changed economic environment.
“We are very mindful of the effects these decisions will have on the lives of many of our employees and on our Sterling dealers' businesses. We are committed to taking measures to ease the transition for all those affected and to emphasize the support offered to those owning and operating Sterling Trucks in the wake of this announcement.”
Andreas Renschler, member of the Board of Management of the Daimler AG, responsible for Daimler Trucks, said drastic action was necessary to meet the economic challenges. “We are confident that this forward-looking strategy for DTNA is the right measure to address the challenges in the North American market,” he said.
By concentrating the company's considerable technical and marketing resources on a more focused model line-up, DTNA expects to drive an even more attractive program of innovation in safety, environmental impact, and user productivity that will further strengthen the leadership position of Daimler Trucks in the North American commercial vehicle market. Additions to the Freightliner and Western Star product ranges will be made to address market segments that have been served exclusively by Sterling offerings in the DTNA stable.
DTNA said the Sterling dealer network will continue to perform warranty repairs and maintenance services, supply replacement parts, and provide technical support for Sterling Truck owners. Dealers will continue to accept orders until January 15, 2009. New truck sales will continue until present dealer stocks are depleted.
When the 39-year-old Portland plant closes in 2010, Western Star commercial production will be moved to the company's Santiago, Mexico plant, while production of Freightliner-branded military vehicles will be shifted to one of the company's manufacturing facilities in the Carolinas. A migrating supplier base and high logistics costs have had a major impact on the cost of production at the Portland plant, according to DTNA officials.
The closing of the Portland manufacturing plant will not affect the location or operation of the company's headquarters. DTNA recently completed the relocation of sales, marketing, and customer support functions to Fort Mill, South Carolina, leaving 2,200 employees engaged in administration, product development, procurement, and information technology in the headquarters building on Portland's Swan Island and neighboring satellite offices.
Production startup at DTNA's new Saltillo, Mexico manufacturing plant will occur as planned in February 2009. The plant will produce Freightliner's flagship Class 8 Cascadia model.