REDFORD, Mich. (Feb. 23, 2005) — Detroit Diesel Corporation (DDC) and Freightliner LLC are making a $275 million investment in DDC’s Redford, Mich. manufacturing facility. Under the plan, the 3.2 million sq-ft facility will soon house two new engine manufacturing lines and a heavy-duty axle and gear-set manufacturing facility. In addition, Freightliner announced today that it would be moving its Sterling and Western Star corporate headquarters to the Radford facility.

Currently home to Series 60 diesel engine production and several other lines of industrial, marine, and military engines, the new undertakings at the facility in Redford – located on the outskirts of Detroit – will transform the 67-year-old plant into a “manufacturing mall,” bringing together key elements of Freightliner’s proprietary drivetrain component manufacturing plan.

Speaking at today’s event, Freightliner’s president and CEO, Rainer Schmueckle, said the plans for the Redford plant demonstrate the shared commitment of DDC and Freightliner to continuing leadership in all aspects of North American truck manufacturing. “The new versatility of the facility will further extend our ability to serve our customers in North America. We are assembling significant future capability to design and manufacture a variety of key components for North American commercial vehicles here at Redford.”

Manufacturing of the MBE 900 medium-duty diesel (currently built in Mannheim, Germany) is slated to begin at Redford in 2007, but officials say machines and tooling are already in transit and heading to Redford. Refitting of existing manufacturing and assembly areas will begin later this year.

While assembly of the Series 60 will continue at Redford for the foreseeable future – production will be ramped up to 270 units per day as of April this year – DDC will begin production of a brand new heavy-duty engine platform at Redford sometime in 2007. Currently in development by Detroit Diesel and parent company DaimlerChrysler, the engine will be available in three displacements; 9.9L, 12.8L, and 14.8L – horsepower and torque ratings have not been discussed. It will incorporate the latest in diesel engine and emissions technology, and will be available in tandem with the Series 60 for an extended but undisclosed transition period.

Schmueckle said the engine represents about $1 billion in development costs, and will become the DaimlerChrysler’s global heavy-duty diesel engine platform for 2010 and beyond. “It will be the most advanced diesel ever built, and it will provide market-leading efficiency and productivity,” he said.

Freightliner’s proprietary axle division, Axle Alliance Company (AAC) will expand into gear set manufacturing at Redford beginning this year. Over the next year, AAC will increase its Redford operations by 85,000 sq-ft as they gain market share in Freightliner’s axle data book.

Also slated to begin manufacturing at Redford in June 2005 is an as yet unnamed proprietary manufacturer of Diesel Particulate Filters (DPF). Currently, DDC is studying two options for use with its Series 60 and MBE 900 and 4000 engines: a sintered metal filter that offers high ash storage volumes, or a ceramic filter that requires an afterburner to complete the same task.

Key to the entire upgrade of the Redford facility was a ground breaking agreement with the United Auto Workers, Local 163, which will see workers covered by different contracts working side by side in the same shop.

“The UAW is extremely proud of its role in meeting the challenges of maintaining existing work and drawing new work for its membership at Redford,” said UAW regional director, Jimmy Settles. ” As a union, we’re committed to the concept that job security of workers is best delivered through a world class competitive manufacturing environment.”

The state of Michigan and local and county governments granted DDC and Freightliner a series of tax abatements worth $65 million over a 10-12 year period. Speaking at the event in Redford, Michigan Governor, Jennifer M. Grenholm said the deal is a win-win-win for the workforce, the company, and the people of Michigan. “This project could not have occurred without enlightened and cooperative labor-management relations and state and local governments working to keep this skilled talent pool working here.”

With the moving of Sterling and Western Star headquarters to the DDC plant in Redford, John Merrifield, senior vice president of sales and marketing for Western Star and Sterling trucks said manufacturing will continue at the Portland Ore, and St. Thomas, Ont. facilities. The only change is in the head office operations. “Western Star and Sterling have been based in the Cleveland-area suburb of Willoughby, Ohio since 2000, and while Willoughby has been a good home for the group, the advantages of being closer to our affiliated companies called for this relocation.”