In the wake of the decline, North American truck manufacturing facilities continue to make major layoffs. Freightliner has announced plans to “indefinitely furlough” more than 1,000 workers by April 2 as demand for heavy-duty trucks slows. The maker of commercial trucks plans to cut output by 55 percent and lay off about half of the hourly workers at a Portland, OR, plant as North American demand falls. Heavy-duty truck production at the plant would be reduced to 34 units a day from 76 units. “We regret having to take this action,” said Jim Hebe, Freightliner president and CEO. “We have made every effort to avoid further production cuts and layoffs, but high fuel prices and economic weakness continue to depress the demand for heavy-duty trucks in North America.”
International Truck and Engine Corp. plans to lay off about 500 workers at its Springfield, OH, plant on March 5. The company blamed slow truck sales. This second wave of layoffs will reduce the workforce at the plant from 4,200 to 3,700. About 500 workers were laid off in November.
In late February, Kenworth eliminated 135 workers from its Chillicothe, OH, plant. The layoffs are not the first at the plant. Kenworth laid off 500 workers at the plant last September. Volvo Trucks also has cut its workforce. The truck maker has eliminated 1,000 North American workers.
On Jan. 29, DaimlerChrysler, the parent company of truck makers Freightliner, Sterling, and Western Star, announced plans to cut 26,000 jobs over three years at its U.S.-based Chrysler division. The cuts, part of a restructuring designed to pull Chrysler out of the red, amount to about 20 percent of DaimlerChrysler’s North American workforce.
The soft truck market is also taking its toll on CEOs. In early February, Marc Gustafson resigned as president and chief executive officer of Volvo Trucks, North America. According to Volvo AB, the world’s second-largest maker of heavy trucks, Karl-Erling Trogen, senior vice president at parent company Volvo AB, was named acting president and CEO.
In recent weeks, the business news headlines have evidenced Volvo NA’s struggles, including cutbacks in U.S. operations. On Feb. 1, Volvo announced quarterly earnings that compared poorly with earnings a year ago, pointing to the soft North American truck market as a factor. Volvo’s North American truck sales fell 31 percent last year, pulling down the company’s 2000 worldwide sales. The Swedish truck maker has formed a new division, Volvo Global Trucks, to incorporate the Volvo, Renault and Mack truck brands. Gustafson, a former executive at Mack Trucks, took over North American truck operations four years ago. Volvo cites personal reasons for his resignation. Meanwhile, Mack Trucks recently announced that it closed 2000 with 28,210 U.S. Class 8 retail sales, which represented 13.3 percent of the heavy-truck market. This was an increase from 13.1 percent in 1999, making Mack the only U.S. Class 8 truck manufacturer to consistently increase its market share over the last eight years.
The Canadian market was down more than 9 percent in 2000, but Mack’s Canadian subsidiary, Mack Canada Inc. outperformed the market by retailing more than 2,800 units. Mack’s Canadian retail market share increased almost a full percentage point to 10.2 percent, up from 9.3 percent in 1999. Year-end figures for industry exports are not yet available. However, Mack increased Class 8 exports to 1,666 units, compared to 1,363 units in 1999.
Trailer sales continue to sag, with reported total trailer shipments in November 2000 down more than 36 percent from the same time the previous year. According to the Bureau of Census, for the first 11 months, trailer shipments were down 10.5 percent, with shipments of 226,219 vs. 252,809 in 1999. For some, the slowdown is fatal. In December, Dorsey Trailers filed for bankruptcy after suspending operations at its three manufacturing plants to review its options.
John L. Pugh, chief executive officer for Dorsey said, “We have been unsuccessful in negotiating a line of credit with our lender in order to continue operations.”
Truck and trailer makers are not the only ones suffering upsets. Cummins recently announced it has cut more than 1,000 workers from the engine business since May. The company said it plans to cut more than 500 people as it closes, consolidates or exits nine businesses and facilities. Cummins also said it planned to trim another 400 employees by the end of this quarter to cut costs at its engine unit. The job cuts and other actions are expected to save about $55 million a year, Cummins said. Cummins posted fourth quarter 2000 sales of $1.61 billion, down from $1.84 billion in fourth quarter 1999. The company reported net earnings of $111 million on revenues of $6.6 billion, vs. $205 million on $6.6 billion for 1999.
– Keith Goble