Freightliner LLC, subsidiary
of DaimlerChrysler's Commercial Vehicles Division, announced Friday a restructuring
program designed to return the company to sustainable profitability. The plan
to be implemented calls for three plants to be shut down and 1,600 more hourly
employees to be laid off.
Compared to the peak
employment levels in 1999 (25,000 employees), Freightliner had already reduced
its workforce by 9,000 employees.
In addition to layoffs,
Freightliner will close its Ontario school bus assembly plant in the fourth
quarter of 2001 and the Kelowna, British Columbia, truck assembly plant in
the third quarter of 2002. Freightliner also plans to completely overhaul
its parts manufacturing operation and intends to close its Portland, OR, parts
manufacturing plant by mid 2002, pending discussions with the local unions.
In a further major initiative
to reduce material costs, the company will move to three chassis platforms,
from the current six, in its medium- and heavy-duty truck business within
The company says it will
also concentrate on securing profitable business rather than accumulating
market share. In this respect, Freightliner will apply more stringent criteria
to new truck pricing and residual commitments. Additionally, the cost of the
used truck operations will be streamlined, while maintaining the trade capabilities
of the Freightliner group, supporting and strengthening the three brands of
Freightliner, Sterling and Western Star. The group will more pro-actively
pursue the vocational truck markets.
The restructuring plan
is targeted to deliver annual savings at an operating level of $850 million
by 2004. Freightliner, which will report a loss in 2001, hopes this plan will
allow the truckmaker to return to breakeven toward the end of 2002. A small
operating profit is anticipated in 2003 and Freightliner expects sustainable
returns above the cost of capital in 2004 and thereafter.