Freightliner to close three plants, including Kelowna
November 1, 2001
PORTLAND, Ore. - Freightliner LLC has announced its much-ballyhooed restructuring program aimed at bringing the company to sustainable profitability.Gone are the Western Star plant in Kelowna, B.C., a...
MADE IN THE USA: Western Star trucks will now be manufactured in the States.
PORTLAND, Ore. – Freightliner LLC has announced its much-ballyhooed restructuring program aimed at bringing the company to sustainable profitability.
Gone are the Western Star plant in Kelowna, B.C., a school bus assembly plant in Woodstock, Ont. and a parts plant in Portland, Ore.
The restructuring plan promises to deliver annual savings of US$850 million by 2004. The measures should allow Freightliner, which will report a loss in 2001, to return to break-even toward the end of 2002 according to the company. A small operating profit is anticipated in 2003 and Freightliner expects sustainable returns above the cost of capital in 2004 and thereafter.
“This multifaceted restructuring program shows that we have acted quickly and decisively, to bring Freightliner back on the road to recovery and profitability,” says Dr. Eckhard Cordes, a member of the DaimlerChrysler Commercial Vehicle Division management board.
“Despite the deteriorating economic climate, the Commercial Vehicle Division still foresees achieving a slightly positive result in 2001.”
The targeted savings program comprises four main elements: material cost savings, production cost savings, overhead reductions and improvements to the existing business model.
“Aligning the production cost more fully with reduced underlying demand,” is what the truckmaker credits for the closure of two of its Canadian plants.
Freightliner will close its Woodstock school bus assembly plant in the fourth quarter of 2001, while it will wait until the third quarter of 2002 before mothballing the Western Star assembly facility in Kelowna.
All closures are pending discussions with the local unions.
The company will reduce its salaried workforce by a total of 1,100 workers or 25 per cent.
Freightliner’s turnaround plan is based on the following assumptions: A continued slow market demand of around 175,000 Class 8 trucks and 160,000 class 6/7 trucks in the NAFTA area throughout the 2002 -2004 period, with a resultant pressure on prices.
Western Star trucks have always been a popular spec for B.C. log haulers. Some industry experts have speculated the closure of the Kelowna truck plant may reduce this practice to little more than a distant memory from trucking’s past.
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