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Daimler refocuses, drops Sterling Trucks product line

TUTTGART/PORTLAND, Ore. — Daimler Trucks North America on Tuesday reported a comprehensive plan designed to adjust and strengthen company operations, including a decision to no longer build Sterling trucks. The moves come in response to continuing depressed demand across the industry and structural changes in the company’s core markets, DTNA said.

“It is a principle of our ‘Global Excellence’ strategy to strive for benchmark profitability and to address structural market changes in a timely and consequent way”, said Andreas Renschler, member of the board of management of the Daimler AG, responsible for Daimler Trucks. “We are confident that this forward-looking strategy for DTNA is the right measure to address the challenges in the North American market.”

The measures to be implemented address three key areas of DTNA’s operations:

• Focus on a two brand strategy: discontinuation of the Sterling Trucks product line

The Sterling Trucks brand will be discontinued effective in March 2009. Additions to the Freightliner and Western Star product ranges will be made to address market segments that have been served exclusively by Sterling offerings in the DTNA stable, according to DTNA.

• Consolidation of manufacturing plant network and alignment of network capacity with market demand

As a result of the decision to discontinue the Sterling brand, the St. Thomas, Ontario, plant will cease truck manufacturing operations in March 2009, concurrent with the expiration of the existing agreement with the Canadian Auto Workers members employed there. The plant currently manufactures Sterling medium and heavy-duty trucks.

DTNA said it will also close the Portland, Ore., truck manufacturing plant in June 2010, when current labor contracts expire. Western Star commercial production will be assigned to the company’s Santiago, Mexico plant, while production of Freightliner-branded military vehicles will take place at one of the company’s facilities in the Carolinas by mid-year 2010.

Start of production at DTNA’s new Saltillo, Mexico manufacturing plant will occur as planned in February 2009, DTNA said. The plant will produce Freightliner’s new flagship Cascadia model.

• As a result of the measures cited above, DTNA said it expects to achieve annual earnings improvements of $900 million by 2011.

An estimated 2,300 workers in the St. Thomas and Portland plants will be affected by mid-2010. This figure includes 720 workers at the St. Thomas plant to be laid off in November 2008 as already announced in July.

The company also plans to reduce its salaried workforce by approximately 1,200 positions, with over half directly related to the Sterling brand. A voluntary separation program will be available as well as other measures to offer flexibility and choice to affected employees, DTNA said.