Staff report
Daimler Trucks will discontinue the Sterling Trucks brand, effective in March 2009, and cut an estimated 2,300 jobs from plants in Canada and Oregon.
The St. Thomas, Ontario, plant will cease truck manufacturing operations in March 2009 as an existing agreement with the Canadian Auto Workers ends. The plant manufactures Sterling medium- and heavy-duty trucks.
The company will also close the 39-year-old Portland, Ore., truck manufacturing plant in June 2010, when current labor contracts expire.
Production will be assigned to the company’s Santiago, Mexico, plant, while production of Freightliner-branded military vehicles will take place at one of the company’s manufacturing facilities in the Carolinas.
A company spokesperson said no decision had been made on whether the Cleveland plant would be involved in work on the military vehicles.
The end of production at the manufacturing plant in Portland won’t affect the location or operation of the company’s headquarters in the same city. The company recently completed the relocation of sales, marketing and customer support functions to Fort Mill, S.C., leaving 2,200 employees engaged in administration, product development, procurement and information technology in Portland and neighboring satellite offices.
An estimated 2,300 workers in the St. Thomas and Portland plants will be affected by mid-2010. That includes 720 workers at the St. Thomas plant to be laid off in November as earlier announced.
The company also plans to reduce its salaried workforce by approximately 1,200 positions, with more than half of those directly related to the Sterling brand. A voluntary separation program will be available, as well as other measures to offer flexibility and choice to affected employees.
Start of production at the new Saltillo, Mexico, manufacturing plant will occur as planned in February 2009. The plant will produce Freightliner’s new flagship Cascadia model.
These measures are estimated to cost the company $600 million, but it expects to achieve annual earnings improvements of $900 million by 2011.
“We are confident that this forward-looking strategy for DTNA is the right measure to address the challenges in the North American market,” said Andreas Renschler, a member of the board of management of Daimler AG, responsible for Daimler Trucks.
Chris Patterson, president and CEO of Daimler Trucks North America, added, “We’ve examined every part of our organization in light of the changed economic environment.”
The company release said that because of recent increases in the cost of raw materials and the limited ability to pass those on to North American customers, “a significant focus will be placed on identifying and expediting material optimization efforts in all DTNA manufacturing operations.”