German heavy truck maker Daimler said Tuesday it will eliminate 3,500 North American jobs owing to the worsening economic slowdown, a day after Japan's Nissan announced nearly 1,700 jobs were being axed.
Following announcements by Nissan, Renault, and Volvo in Europe, and restructuring by General Motors and Ford, utility vehicles are also unveiling hits from slumping sales.
In the United States, the market deteriorated “in a way we have not anticipated,” Daimler Trucks boss Andreas Renschler told a telephone press conference.
He pointed to weaker demand, a “dramatic” increase in fuel and raw material prices earlier this year and effects of the international financial crisis.
The sector was undergoing fundamental changes, Renschler said, and “a near-term recovery is not on the horizon.”
Daimler, the world's biggest maker of heavy trucks, decided to shut down its Sterling Trucks brand in March “in response to continuing depressed demand across the industry and structural changes in the company's core markets,” a statement said.
The German group is a rare European actor in the North American heavy truck sector, with about 28 percent of the market and sales of 320,000 vehicles in 2007.
As a result however, it has suffered from the financial and economic crisis there, and has slashed its previous market forecast for 2008 sales of 435,000 heavy trucks down to 294,000.
“As the recession deepens, the heavy-truck market is hit harder,” German auto expert Ferdinand Dudenhoeffer told AFP. “The sector will see a recession as well.”
In addition, a Daimler spokeswoman told AFP, the sector is subject to regular cycles, and the German group had already expected diminished demand late this year and early in 2009.
“It is falling back more sharply now,” she noted however.
Finally, new US regulations aimed at reducing pollution have also hurt sales, Daimler said.
The group will eliminate around one quarter of its workforce in North American heavy truck production, based on figures it provided.
Two plants are to be shut down, one in Ontario, Canada in March, and another in Portland, Oregon in June 2010, and production will move to Mexico.
With pressure to reduce production costs rising, Daimler would focus on “low-cost countries,” Renschler said.
In addition to the loss of 2,300 jobs, another 1,200 administrative posts will also be eliminated, the Daimler statement said.
After unloading the Sterling Trucks brand, Daimler will concentrate on its Freightliner and Western Star models.
“Sterling and Freightliner occupy the same (market) segment. But Freightliner has stronger sales and is our top-of-the-line,” the Daimler spokeswoman said.
The group estimates its restructuring will cost around 600 million euros (820 million dollars), but will generate annual savings of 900 million from 2011.
“Daimler is trying to limit its losses in the United States,” Dudenhoeffer concluded, though he added that the market should “pick up again in 2010.”
It is likely meanwhile to shift towards emerging economies in eastern Europe, India and China.
“There are almost no other means of transporting merchandise there,” Dudenhoeffer said.
In general, he concluded, “logistics is clearly a growth industry, it is expanding twice as fast as the market for personal vehicles.”
