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Layoffs in store for Freightliner

PORTLAND, Ore. -- Freightliner LLC is feeling the impact of the Environmental Protection Agency's (EPA) emissions c...

PORTLAND, Ore. — Freightliner LLC is feeling the impact of the Environmental Protection Agency’s (EPA) emissions crackdowns, with layoffs and temporary plant shutdowns in store.

The company is adjusting its manufacturing capacity in response to the sharp decline in Class 8 orders attributed to the reduced-emissions engines.

Among the cost-cutting measures to be implanted, Freightliner will lay off 175 temporary employees at its St. Thomas, Ont. plant on Feb. 3, 2003 while trimming the staff at its Cleveland plant by 138 regular workers and 362 temporary workers on Jan. 2.

In addition, the Cleveland plant and Freightliner’s Mount Holly, N.C. plant will be temporarily shut down altogether from Jan. 2 through to Jan. 10. The company is also considering one-week shutdowns in February and March and may also make adjustments at its Gastonia Parts Manufacturing Plant.

“To this point, we have been able to modify our capacity by deleting overtime and discontinuing extended shifts,” says Freightliner LLC president and chief executive officer, Rainer Schmueckle, “but now we must take more significant action.”

Schmueckle says the decline in Class 8 orders was expected, thanks to the pre-buy that occurred in the months leading up to the EPA-enforced changes, which took effect Oct. 1.

“We regret having to take these measures, but the entire industry is dealing with an extraordinary market situation,” says Schmueckle. “We expect some strength to return to the North American Class 8 truck market in the second quarter of 2003 with the second half of 2003 showing a major improvement.”

Despite the announcement, Schmueckle says Freightliner is still on-track to return to profitability on target.

"Freightliner LLC’s turnaround remains on track," says Schmueckle. "We achieved profitability in the second quarter of 2002, two quarters ahead of schedule. We were also profitable in the third quarter of 2002 and now expect to exceed our 2002 cost savings target of $450 million by $100 million. As announced in our original turnaround statement, we continue to expect a small operating profit in 2003 despite much weaker market conditions."

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