January 19, 2007 Volume 108 Number 2

Freightliner building new manufacturing plant in Mexico

Freightliner LLC announced last month that it will construct a new $300 million truck manufacturing plant in Saltillo, Coahuila, in northern Mexico.

The 1-million-square-foot facility will produce Freightliner and Sterling brand trucks. The plant could produce up to 30,000 trucks annually, and employ up to 1,600 production and management personnel. Groundbreaking is set for the second quarter of 2007, with start of production planned for early 2009.

The Saltillo plant is the second Freightliner manufacturing facility to be located in Mexico, joining the Santiago Tianguistenco plant, which produces Freightliner-brand heavy- and medium-duty trucks.

At the same time it was announcing expansion in Mexico, Freightliner warned its unionized employees at Portland’s Swan Island facility of a major layoff this spring. “It’s at least 500 employees, and possibly as many as 800,” said Joe Kear, a business representative of Machinists District Lodge 24. IAM Lodge 1005 represents approximately 1,400 of the 1,700 unionized workers in Portland, where they build Class 8 Freightliner trucks, Western Star trucks and military vehicles. Other unions at the Portland facility include the Sign Painters and Paint Makers Local 1094, Teamsters Local 305, and Service Employees Local 49.

Their labor agreement expires July 1.

In October, nonunion white-collar employees at the Portland headquarters were offered voluntary buyouts. There are about 1,900 employees there. It is not known how many employees volunteered.

Eight hundred employees — members of the Canadian Auto Workers —at a St. Thomas, Ontario, plant already have been told that they will be laid off starting in March. That plant manufactures Sterling brand heavy- and medium-duty trucks.

Freightliner officials say as many as 4,000 production and related workers could be laid off companywide.

The downsizing has further ramifications for the Machinists Union. Consolidated Metco’s (ConMet) Rivergate and Clackamas, Oregon, plants have laid off approximately 170 Machinists (85 at each location), due in part to the Freightliner slowdown. ConMet manufactures aluminum hubs and spring brackets for Class 8 trucks.

A Freightliner press release said the expansion in Mexico is not connected to the layoffs. Freightliner said the job cuts stem from an industry-wide decline in new trucks redesigned to meet federal emissions standards. The new trucks, because of their added technology, cost more than those sold in previous years.

Kear confirmed that new Environmental Protection Agency standards will add about $10,000 to the cost of building a truck engine. The new environmental regulations are meant to reduce pollutants from diesel engines.

Kear also said that Freightliner plans to yank production of all Freightliner brand trucks from Portland. “They can build trucks cheaper in Mexico,” he said.

That will leave production of the Western Star brand truck and military vehicles in Portland. Workers currently turn out 32 Western Star trucks a day and nine military trucks a day.

Freightliner has five plants in North and South Carolina. Some are union, represented by the United Auto Workers. And some are nonunion.

Freightliner President and CEO Chris Patterson in a press release said the new facility in Mexico “underscores our confidence in the NAFTA truck market, and our bullish mid-term outlook for industry recovery post-2007. Frankly, we were not able to produce what we could have sold in 2006 due to capacity constraints. We expect another surge in customer demand in 2009 prior to the next round of EPA emissions regulations, and the construction of this new plant will ensure that we are fully prepared.”

Freightliner LLC is the leading medium- and heavy-duty truck manufacturer in North America. Freightliner produces and markets Class 5-8 vehicles and is part of DaimlerChrysler’s Truck Group, the world’s largest commercial vehicle manufacturer.

The company’s truck operations, which include Portland, Oregon-based Freightliner, turned a record profit of $705 million in the third quarter, up from $449 million a year earlier.

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