White-collars get the hook at Navistar

While most major North American truck manufacturers have been reacting to the summer slowdown by cutting production positions, Navistar International has decided to yank about 15% of its white-collar workforce instead.

After laying off about 800 production workers from its Chatham, Ont. plant this past spring and summer, the second-largest North American Class-8 truckmaker said yesterday that it has gone a different route by cutting 1,100 contract and salary jobs. The layoffs are considered permanent.

“Based upon our current production levels, things are fine,” he said. “To address the downturn, we felt that we needed to make the cuts where they we most appropriate, and that was contract as some salary positions.”

Despite meeting analyst expectations for the 10th consecutive quarter and a strong operating performance by the company’s engine subsidiary, heavy truck orders are at their lowest levels since 1996, said Navistar president and CEO John R. Horne, who added an oversupply of late model used trucks, inflated diesel prices and high interest rates are the main factors.

Third quarter net income ended July 31, totaling $96 million, or $1.60 per diluted share, compared to $255 million, or $3.86 per diluted share, in the same quarter of 1999.

Just a couple weeks ago, after two blockbuster Freightliner LLC deals, a small group of International shareholders met to discuss merger and acquisition opportunities in an attempt to increase market share. Wiley said he could not comment whether the recent round of layoffs clouds any of those discussions, but did agree “(the company’s) stock price is undervalued.”