Freightliner, DaimlerChrysler AG's
(DCX.N)(DCXGn.DE) heavy truck division, said on Monday it will
lay off 3,745 people, or 18.6 percent of its North American
work force and curtail output 18 percent because of a slowdown
in North American demand.
The Portland, Oregon-based unit said the heavy truck making
industry has seen a "significant slowdown'' in new orders as
trucking firms struggle with high fuel prices, rising interest
rates and driver shortages.
The company, known for its Freightliner and Sterling brand
trucks, said it expects North American heavy-duty truck sales
to decline by as much as 25 percent this year, and sales on
medium-duty trucks also have slowed. It is the largest
heavy-duty truck maker in North America.
"We can't underestimate the impact of fuel price increases
and interest rate increases on the overall economy,''
Freightliner President and Chief Executive Officer Jim Hebe
"The trucking industry tends to be a leading indicator by
six to 12 months so this could be indicative of more things to
come in the general economy,'' he added.
The layoffs and production cuts will take place on Oct. 20
in the United States and on Dec. 4 in Canada, the company said.
North American heavy truck sales were slightly above
300,000 units last year, and will decline at least 25 percent
this year, Hebe said. Freightliner expects to cut its capacity
by about 18 percent to an annual rate of 150,000 to 160,000
units, he added.
The truck maker said the layoffs will be at plants in
Portland, Oregon, 770 workers; Cleveland, N.C., 1,304; Mount
Holly, N.C., 825; Gastonia, N.C., 154; St. Thomas, Ontario in
Canada, 692, the company said. Freightliner employs 20,141
people in North America.
The company said other large truck makers had recently
taken similar action and the only reason it was able to hold
out longer was because of its order backlog entering the year
and strong demand among North America's largest fleets.
In addition to the layoffs, Freightliner said it will
discontinue third-shift operations at truck plants in Portland,
Cleveland and Mount Holly, N.C., and St. Thomas, Ont., as well
as at its parts plant in Portland. It also will end weekend
shifts at its Gastonia, N.C., plant.
Freightliner is the largest heavy-duty truck maker in North
America and a leading manufacturer of medium-duty trucks. The
company said it holds a 35-percent share of the U.S. heavy-duty
truck market and 23 percent of the U.S. medium-duty truck
The Freightliner unit had sales last year of about $12
billion, and it sold 200,00 vehicles in North America.
Last month, Freightliner agreed to buy Canadian heavy-duty
truck maker Western Star Trucks Holdings Ltd. (WS.TO) for about
$456 million. DaimlerChrysler, the world's largest commercial
truck maker, also said it would buy the 79 percent of Detroit
Diesel Corp. (DDC.N) for $423 million to create the world's
largest producer of heavy-duty diesel truck engines.
DaimlerChrysler's stock closed up 1/16 at 56-7/16 a share