Cook column: Freightliner stands as firm as it can

Published 12:00 am Friday, February 13, 2009

At least two people called the Post last week to pass on what they’d heard about the Cleveland Freightliner plant ó news that on the surface sounded like a plant closing.
They said someone had gotten hold of a letter from Roger Nielsen, chief operating officer of Daimler Trucks North America, that spelled it out.
As I read the information making the rounds, it sounded like more details about the March layoff the company has already announced.
Early last month, Freightliner started production at its new Saltillo, Mexico, plant. Workers there assemble the Cascadia model ó the same heavy truck made in Cleveland. So there is understandable nervousness that eventually all production will move south of the border.
Part of Nielsen’s letter could be interpreted to mean just that, if you’re trying to read between the lines.
“Cascadia orders will be scheduled for build in our new Saltillo plant in accordance with our ramp up plan,” Nielsen’s letter says. “Cascadia orders beyond the capacity of Saltillo will be scheduled in Cleveland.
“Our decision to shift production to our Mexican plants requires us to change the outbound routings for vehicles requiring modification by Fontaine Modification.”
Hmmm. “Our decision to shift production to our Mexico plants” seems to say a lot. Is that some production or all? I sent an e-mail to Freightliner spokesperson Amy Sills. Here is her reply, interspersed with my questions in italics:
Sills: “Thanks for your email; you’ll find our responses to your follow-up questions below …. We appreciate your interest in getting the facts out, and hope this helps!”
Cook: We’re hearing that a letter from Roger Nielsen outlining the closure of N.C. Freightliner plants is making the rounds and that the Gastonia paper has a story about it. … The story sounds more like the layoff we already know about, the one that takes effect next month.
Sills: “Attached for your information is the letter in question. As you see, it references the previously announced layoffs at the Mt. Holly and Cleveland plants taking place next month.”
Cook: …It seems more direct about moving all new Cascadia production to Saltillo and using Cleveland strictly as a back-up. People are interpreting this to mean the Cleveland plant will close.
Sills: “The Cleveland Truck Manufacturing Plant is the primary plant for our Cascadia product, and will continue to be for the foreseeable future. The attached letter to our dealers simply covers the operational adjustments we need to make within our production network to support our Cleveland and Mt. Holly decisions, and handle the limited number of new orders we expect to see in the near-term. Note that the Saltillo plant ramp-up referenced in the letter will be very gradual, and our Santiago plant is now on 3-day work weeks.
“As background on the challenges our industry is facing, orders for Class 8 Freightliner trucks were down 40 percent this January versus January of 2008, which was already down significantly compared to the 2004-2006 time frame.”
Cook: You’re quoted saying Saltillo is ramping up slowly. Once it’s up to full speed, will it replace Cleveland entirely? How long will it take for Saltillo to get to that stage? Is that more a question of truck orders than plant capacity?
Sills: “Even with two plant closures planned (St. Thomas and Portland), and another on indefinite furlough (Mt. Holly), we still have far more capacity than today’s market can support. However, once we return to more “normal” market conditions, neither Cleveland nor Saltillo, alone, will be able to fill all our expected demand. Predecessor models were assembled in three locations, including Cleveland, during the last market peak.”
Cook: What can you tell the Cleveland workers remaining after March about plans for the plant where they work?
Sills: “As we have communicated to both our remaining employees and to those who are directly affected by our workforce adjustments, we have to accept that periodic temporary layoffs and closures are inescapable until the market improves.”
Cook: These are hard times, and companies have to make tough decisions in order to stay in business. We just want to get the facts out there.
Sills: “As a further illustration of just how difficult times are, order intake across all our product lines will have to IMPROVE from today’s level in order for us to build one-third as many vehicles in 2009 as we did in 2006. To paraphrase a trucking company executive recently quoted in the Wall Street Journal, for our industry, it is literally nuclear winter.”
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Elizabeth Cook is editor of the Salisbury Post.