Daimler Trucks North America (DTNA) shocked the industry Oct. 14, by announcing it is discontinuing the Sterling Trucks brand.
The surprising announcement came just two months after Sterling introduced a new sleeper cab and Class 8 natural gas vehicle, rounding out the most complete line of Class 3-8 trucks in the industry.
“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,” Chris Patterson, president and CEO of DTNA said in a release. “We’ve examined every part of our organization in light of the changed economic environment.”
Here in Canada, the demise of Sterling delivers a triple whammy: brand-loyal customers (and there were some) must find a new truck; Sterling dealers must find a new revenue stream; and the 1,300 employees at the Sterling truck plant in St. Thomas, Ont. must find new jobs.
The St. Thomas plant will be shuttered in March, 2009 concurrent with the end of an agreement with the Canadian Auto Workers (CAW), DTNA announced. It will also close a truck plant in Portland, Ore. in June, 2010, with Western Star production moving to a plant in Santiago, Mexico.
Top-ranking officials from the CAW met with Daimler executives Oct. 21 and appealed for them to keep the truck plant open, but to no avail.
“We are confident that this forward-looking strategy for DTNA is the right mea sure to address the challenges in the North American market,” said Andreas Renschler, member of the board of management with Daimler AG.
Daimler said it would continue producing Western Star trucks, focusing on a two brand strategy. Sterling had “substantial overlap with offerings in the Freightliner Trucks product line,” the company said. Meanwhile, Sterling was only able to reach one-quarter of the market penetration that Freightliner achieved.
The company said it will add to the Freightliner and Western Star product lines to fill any holes left by Sterling’s demise. Daimler also said Sterling dealers will continue to accept orders up until Jan. 15, 2009 and new truck sales will continue until stocks are depleted.
The dealer network is expected to continue performing warranty repairs and maintenance services as well as provide replacement parts and technical support.
John Nelligan, dealer principal for Harper Truck Centres, said “While we are terribly disappointed by the news, our organization is committed to stand behind the products we have sold and to continue to service our customers with the products that we represent.”
When all is said and done, DTNA expects to realize annual savings of US$900 million by 2011. It will cost the company about US$600 million to eliminate the brand. All told, 2,300 workers at the St. Thomas and Portland plants will lose their jobs while 1,200 salaried employees will also be let go.
“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,” said Patterson. “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.”