Freightliner reacts to fourth-quarter swoon with layoffs

PORTLAND, Ore. (Oct. 30, 2002) — Mired in what it calls “very difficult and extraordinary market conditions,” Freightliner LLC yesterday announced plans to layoff 675 assembly workers and idle two plants for a week in January.

The North American truck and bus arm of DaimlerChrysler AG indicated that it could dip back into the red during the final three months of the year after showing profits in the first three quarters.

The loss is not expected to derail Freightliner’s turnaround plan, said Freightliner president and chief executive Rainer Schmueckle. The company targeted savings of $450 million US in 2002.

“As announced in our original turnaround statement, we continue to expect a small operating profit in 2003 despite much weaker market conditions,” said Schmueckle.

Schmueckle said sales in 2002 have been skewed due to diesel engine emissions rules that took effect Oct. 1, with customers placing an unusual number of orders in advance of the deadline followed by a dramatic drop-off in the sale of vehicles scheduled for fourth-quarter production.

Most truck manufacturers have reacted to the situation by paring their temporary workforce, adjusting shifts and overtime for full-time workers, and scaling back factories.

“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.”

The company’s plants in Cleveland, N.C., and Mount Holly, N.C., will be temporarily shut down from Jan. 2 through Jan. 10. Early next year, Freightliner will layoff 138 regular and 362 temporary employees at the Cleveland plant, and 175 temporary employees at its St. Thomas, Ont., plant. St. Thomas produces medium and heavy trucks under the Sterling brand. Freightliner also said it may adjust its temporary workforce in Santiago, Mexico, but did not indicate how many workers would be affected or what action it planned to take.