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SOURCE: Bloomberg News

Daimler to Close Sterling Trucks Unit, Cut 3,500 Jobs
By Chris Reiter and Andreas Cremer

Oct. 14 (Bloomberg) -- Daimler AG, the world's largest maker of heavy vehicles, will close its Sterling Trucks division in North America and cut 3,500 jobs as it reins in production and shifts manufacturing to Mexico.

The reorganization involves the closure of plants in the U.S. and Canada at a cost of $600 million and is aimed at saving $900 million a year by 2011, Daimler said in a statement today. The Stuttgart, Germany-based company will retain the Freightliner and Western Star brands in the region.

Daimler and competitors Volvo AB and Paccar Inc. have seen truck sales dive as growth slows and credit markets seize up. The German company, whose U.S. deliveries fell 30 percent in the first half, will shut Sterling's St. Thomas, Ontario, factory in March and one in Portland, Oregon, in 2010, when labor deals expire. A new Freightliner plant in Mexico will open as planned.

"This is an indication of how bad things are,'' said Michael Tyndall, an analyst at Nomura Securities in London with a "buy'' recommendation on Daimler stock. "It's positive for the long term, but everyone's focused on the short term.''

Daimler rose 2 euros, or 7.6 percent, to 28.20 euros in Frankfurt trading. That pares the stock's decline this year to 58 percent, valuing the company at 27.2 billion euros ($37.1 billion).

Brand Missed Targets

The Sterling brand, a maker of medium-sized models which accounts for 15 percent of Daimler's U.S. truck output, "never met expectations,'' company spokesman Heinz Gottwick said today. The unit was set up in 1998 from truck operations that Daimler bought a year earlier from Ford Motor Co.

With orders remaining on a "downward trend'' and only a "moderate rebound'' foreseen in the U.S. economy in 2009, about 88,000 trucks have been "sidelined'' in North America as companies go bankrupt or are taken over, Chris Patterson, head of the trucks division in the region, said on a conference call.

"We're not happy with the achieved return this year'' at Daimler's North American truck business, Patterson said.

Conversely, with costs at European plants running at lower levels, Daimler is "better prepared'' to cope with a shrinking market there, Andreas Renschler, head of Daimler's global truck operations, said on the call. The company is closing its "highest-cost'' plants as it can't wait for possible government bailouts to maintain profit, and expects the remaining brands to pick up customers from Sterling.

`Streamlining'

"They're streamlining the business, adjusting capacity in line with the market,'' said Arndt Ellinghorst, a London-based analyst at Credit Suisse with an "outperform'' recommendation on Daimler, who added that "there were always doubts'' about what Sterling stood for. "We're going to see more of this.''

The plant closures will cost 2,300 manufacturing jobs, while an additional 1,200 administrative positions will be cut in connection with the reorganization, Daimler said. Costs will amount to $350 million in the fourth quarter, mainly for severance pay and dealer compensation, plus $150 million next year and $100 million spread over 2010 and 2011.

Production of Western Star trucks will be transferred to a plant in Santiago, Mexico. Freightliner is sticking to plans to start making its Cascadia model at a new factory in Saltillo, Mexico, in February and will shift military-vehicle manufacture to plants in North or South Carolina, Daimler said. The North American truck division's headquarters will remain in Portland.
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Discussion Starter · #2 · (Edited)
I guess this is the end of what once was Ford's medium and heavy duty truck operations.

However, I wonder if they will soldier on? The article says a new plant is going up in Mexico, but isn't clear (at least to me) on if the lines will be relocated there and just sold under the Freightliner brand?

Also, in light of this news, I guess it isn't any wonder why GM can't seem to sell their own operations off, eh? No one wants to buy them as demand continues to fall unfortunately...
 

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Sterling makes a model of HD pickups w/ just the cab, or a utility bed of some sort. All it is is a rebadged Ram. Suppose GM bought Sterling, would they get Sterlings share of Ram-bodys as well?
 

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Freightliner's been building in Santiago for a long time.
As for what Sterling stood for, "Rebadged Freightliner" would be accurate. It's nothing the Freightliner and Western Star brands can't cover.
 

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In southern Quebec I would say it is the most popular heavy-duty truck and is supported by a strong dealer network which carried on when Ford sold to Daimler.
 

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Just another reason for the automotive industry not to be sold out to foreign interests. They have even less loyalty than an American owned company.
 

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Sterling makes a model of HD pickups w/ just the cab, or a utility bed of some sort. All it is is a rebadged Ram. Suppose GM bought Sterling, would they get Sterlings share of Ram-bodys as well?
Actually, Chrysler supplies the Sterling Bullet to Sterling, which is a heavy-duty Ram 4500. I've seen ONE on the road ever...anyone else seen any?
 

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St. Thomas is just getting pummeled by job losses, Stirling, Formet and presstran totalling about 2,000 good paying jobs in a city of 32,000, and all these plants are relatively new. It is sad to see.
 

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St. Thomas is just getting pummeled by job losses, Stirling, Formet and presstran totalling about 2,000 good paying jobs in a city of 32,000, and all these plants are relatively new. It is sad to see.
Most people will have to leave that city, unless it has some other industry. Despite what are wise leaders think economies can't function with just restaurants, law firms, accountancy offices and real estate brokers. (and I say that as someone in accountancy).
 

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The brand is redundant to Freightliner, but far less successful. I'm surprised it didn't happen sooner
The thought, at the time, was a good one. Let Freightliner concentrate on bigger, over-the-road trucks while Sterling concentrated on the specialty markets. Sterlings typically didn't have sleeper cabs and were tailored to the local delivery markets. Western Star is just a Class 8, "luxury" truck brand...the big truck you aspire to own...the "Cadillac," if you will.
 

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Actually, Chrysler supplies the Sterling Bullet to Sterling, which is a heavy-duty Ram 4500. I've seen ONE on the road ever...anyone else seen any?
I've never seen any in person, but one time my father returned from a company trip asking me about "Have you ever heard of a Sterling pickup...I think it's just a Dodge Ram with a new grille. Looked pretty cool, I thought." Google'd it for him, and agreed.

I thought Sterling was pretty big, but who knows. A shame either way.
 

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Sounds like Mercedes is going to concentrate on passenger cars and crossovers.
Sounds like you didn't read the article. Daimler is the biggest maker of these heavy duty trucks in the world. And they own 2 other (bigger) truck brands. How is this concentrating on passenger cars and crossovers???
 

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Actually, Chrysler supplies the Sterling Bullet to Sterling, which is a heavy-duty Ram 4500. I've seen ONE on the road ever...anyone else seen any?
I've seen a total of one... And it was at the Sterling booth at a construction show at the Las Vegas Convention Center. I've never seen one on the road or anywhere else...just the show model at Sterling's booth....

Since Ford sold this off, it's relevance rapidly dwindled to nothing so this is not a surprise.
 

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Western Star is just a Class 8, "luxury" truck brand...the big truck you aspire to own...the "Cadillac," if you will.
Western Star and Kenworth are very popular here. Saying that , all is not what it seems. Australia is the alternate universe as far as automotive products go. Kenworth is actually built here and redesigned here(Australian models), about 50% of the parts are local. The Truck is considerably strengthened for use in Australia. Western Star in Australia is owned by an Australian Company in Australia, not Daimler Chrysler(long story to that one), they even import MAN trucks as well ,Mercedes competition in Europe.
Freightliner is here but only as the Cabover Argosy model which is only built for Australia
Mack and Volvo are assembled in the same factory in Brisbane.Current new MACK uses a Volvo engine(like the new one in the US). Some MACKS have the Renault Midlum body!!!
IVECO and Kenworth are the only true manufacturers of heavy trucks left in Australia, both make Australian only models. IVECO the Powerstar and Kenworth its locally developed trucks.
Yes we had Sterling as well, but only the ex-Fords not anything else.
 

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Freightliner's been building in Santiago for a long time.
As for what Sterling stood for, "Rebadged Freightliner" would be accurate. It's nothing the Freightliner and Western Star brands can't cover.
Actually all the Sterlings I've seen are all clearly the old Ford trucks but with "S" and "STERLING" instead of "FORD" don't think they ever did a "new" design.

Freightliners were way different.



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