A continued depressed U.S. medium- and heavy-duty truck market is forcingTrucks North America to scrap its Sterling brand and close two U.S. assembly plants as it shifts production to Mexico.
DTNA says it will drop the Sterling line as of March. U.S. sales through September total only 9,041 units, down 30.2% from 12,945 in like-2007, and DTNA says the 10-year-old marque has failed to top a quarter of the volume of its Freightliner brand despite improvement initiatives and new-product launches.
The truck maker says it will bolster the lineups of its two remaining core brands, Freightliner and Western Star, to fill any market voids left by the departing Sterling. Dealers will take Sterling orders until Jan. 15 and are expected to continue to perform warranty repairs and maintenance services for current owners.
Suffering the effects of Sterling’s demise will be plants in St. Thomas, ON, Canada, and Portland, OR. St. Thomas, home of medium- and heavy-duty Sterling output, will end production in March.
The Portland plant will close in June 2010, with that facility’s Western Star production shifted to a facility in Santiago, Mexico. Freightliner military vehicles built at the Portland plant will be sourced from one of DTNA’s facilities in the Carolinas beginning mid-2008. The truck maker says a shifting supplier base and high logistics costs contributed to the decision to close Portland.
The plant closings will affect 2,300 workers, including the 720 St. Thomas employees that will be laid off in November as announced in July.
Portland will remain the company’s headquarters. However, DTNA will trim its salaried workforce overall by 1,200 positions – more than half related directly to the Sterling brand.
In February, DTNA says it will launch production at a new plant in Saltillo, Mexico, as planned. It will produce Freightliner’s new flagship Cascadia model.
The company expects the moves to cost $600 million and improve its annual earnings by $900 million by 2011. It says it will book $350 million of the charges in the fourth quarter, $150 million in 2009 and $100 million in total in 2010 and 2011.
Industry-wide, medium- and heavy-duty truck sales so far this year are down 20.1% through September.