Thursday, October 31, 2002

Tough times prompts Freightliner to announce workforce reductions

Freightliner LLC said Tuesday "due to very difficult and extraordinary market conditions," the company will make a series of production and workforce adjustments beginning in January 2003. Major actions include a temporary shutdown of the company's Cleveland, NC, plant and Mount Holly (NC) plant Jan. 2 through Jan. 10.

Freightliner will give notice that it will reduce its manufacturing workforce by 138 regular and 362 temporary employees at the Cleveland plant and 175 temporary employees at St. Thomas (Ontario) Truck Manufacturing Plant. The layoffs are effective on Jan. 2, 2003, at Cleveland and on Feb. 3, 2003, at St. Thomas. Freightliner also will adjust its temporary workforce in Santiago, Mexico.

The company says given the current order intake, further one-week shutdowns are likely in both February and March 2003. Freightliner is also evaluating potential adjustments to its Gastonia Parts Manufacturing Plant.

According to a company press release, the changes are intended to adjust the company's manufacturing capacity in response to the previously anticipated sharp decline in industry Class 8 truck orders and weakness in medium-duty truck markets.

Despite the market situation, "Freightliner LLC's turnaround remains on track, " said Rainer E. Schmueckle, Freightliner LLC President and CEO. "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."

According to Schmueckle, the decline in industry Class 8 truck orders was expected and relates to new engine emissions requirements that took effect Oct. 1, 2002. Many North American truck fleets ordered trucks in advance of the new emissions requirements, which are the result of consent decree agreements between several North American truck engine manufacturers and the U.S. Environmental Protection Agency. This advanced purchasing phenomenon created a spike in industry Class 8 truck orders earlier in the year, followed by a significant decline.

Almost all major Class 8 truck manufacturers in North America and several major component suppliers have already announced layoffs related to the market situation.

"To this point, we have been able to modify our capacity by deleting overtime and discontinuing extended shifts," Schmueckle said, "but now we must take more significant action."

Schmueckle said measures will include temporary plant shutdowns, production rate adjustments and layoffs.

"We regret having to take these measures, but the entire industry is dealing with an extraordinary market situation," Schmueckle said. "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."

Overcharging alleged on Utah's I-15

A lead subcontractor on the four-year reconstruction of I-15 through the Salt Lake Valley overcharged the state and federal government about $5 million on dirt and fill material and pocketed the difference, a recently unsealed federal lawsuit alleges. The lawsuit also claims the Utah Department of Transportation knew of the false claims but failed to take action.

Ralph Smith Co. allegedly failed to properly weigh trucks carrying the material, instead relying on verbal reports from truckdrivers to dispatchers. Because the company was to be paid on a "per ton" basis, the discrepancy reportedly resulted in $4.8 million in overpayments.

Doug Smith, vice president of Ralph Smith Co, denied the accusations and said many of the alleged facts included in the suit are simply wrong. "A job this huge is going to have some calculations differences," Smith told the Salt Lake Tribune, specifically citing the requirement to use metric, rather than U.S., measurements.

The lawsuit was first filed in January 1999 but was sealed until recently when U.S. District Judge Paul Cassell ordered it be made public. The suit seeks $46.4 million in damages and fines.

The whistle-blowers suit is brought by Steven K. Maxfield, chief executive officer of Mighty Max Truck Parts Inc., and independent contractor John Peterson. Mighty Max reportedly was one of many subcontractors hired by Ralph Smith to transport dirt and fill materials to and from the site, and Maxfield hired Peterson to assist with that job.

Ralph Smith billed Wasatch Constructors based on the verbal reports from truckers. In turn, the company paid its subcontractors, including Maxfield and Peterson, with the payments. At least 320,000 loads were falsely invoiced between August 1997 and November 1998.

PA modifies commercial driver licensing procedures

The Pennsylvania transportation department announced Oct. 28 that all applicants for a commercial driver's license learner's permit are now required to first pass all applicable knowledge testing before a permit can be issued for the requested commercial class, endorsement or restriction removal. Previously, a CDL learner's permit was issued prior to passage of knowledge testing.

"The application process and forms will remain basically unchanged," PENNDOT Secretary Bradley L. Mallory said. "The main procedural changes are related to the testing process.

"We changed our commercial driver licensing procedures in response to the Governor's Truck Safety Initiative and recommendations by the Federal Motor Carrier Safety Administration. These changes have been developed to improve safety by ensuring all CDL applicants have the required knowledge and understanding to safely operate a commercial motor vehicle before the driving skills are practiced on our public roadways."

All commercial learner's permits issued by PENNDOT before Oct. 28 will not be affected by these new procedures.

FedEx truck bursts into fireball, no injuries

A FedEx Ground truck crashed and burst into a giant fireball Tuesday afternoon on I-270 north of St. Louis. Though the tractor-trailer was nearly obliterated, neither the truck's driver, a passenger or anyone else was injured.

The accident's spectacular nature raised concern by local media who fed national cable TV news channels live pictures and initially speculated whether a bomb packed into the cargo might have caused the explosion. But Gov. Bob Holden later assured the fire was the result of a traffic accident and not terrorism.

According to KOLR-TV in St. Louis, the truck touched a wall along the highway. The driver allegedly tried to correct the vehicle and pull over to the side, and hit a light pole, which caused the eastbound truck's fuel tank to ignite about 12:30 p.m. Shortly after the accident, the driver said the accident was caused when a vehicle cut him off, said an article in the St. Louis Post-Dispatch. According to police, however, driver fatigue was a suspected factor.

Debris and packages littered a long stretch of the highway near the crash scene. Westbound traffic resumed by mid-afternoon and eastbound lanes remained closed Tuesday night.

The truck was pulling two trailers carrying general packages, with no hazardous material. The fire burned quickly because of the paper materials on board.