Union Postpones Strike at Grupo Dina
MEXICO CITY, Feb. 8 Consorcio G. Grupo Dina, S.A. de C.V.
, a leading Latin American producer of trucks, today
announced that the Independent Workers National Union for the Automotive
Industry intends to postpone a planned strike at the company's Dina Camiones
plant in Sahagun City. The Union has requested a 20-day extension, and the
strike will be rescheduled from February 7th to midnight on February 27th.
However, a strike has been averted at the Plasticos Automotrices plant,
which produces plastic parts and components for the automotive industry.
Under the terms of the agreement the 97 workers at this plant will receive a
10% wage increase and a 6% increase in fringe benefits.
Dina's General Director, Mr. Gamaliel Garcia, stated that, in principle,
the company wishes to offer a fair work contract to its workers in all its
plants. Nevertheless, the company's financial situation has been severely
damaged as a result of the cancellation of the Western Star Truck (WST)
contract to manufacture 9,000 vehicles over the next three years. Under the
circumstances Dina cannot meet the 40% wage increase that the Union has
requested for the Dina Camiones employees. In fact, the company has been
compelled to implement a series of actions to reduce its overall costs to the
maximum possible extent in order to improve its financial situation.
Unfortunately, the Union's expectations do not correspond to the harsh
realities of the company's current circumstances.
In September 1999 Grupo Dina and WST signed a contract with a 10-year
option, under which Dina would produce class 7 vehicles for this Canadian
company for sale in North America. However, on September 27, 2000, WST
notified Dina that it was canceling the contract since the company had been
acquired by Freightliner LLC.
This contract cancellation, and the severe downturn in the medium and
heavy duty truck sector of the North American market and Dina's reduced share
of the domestic Mexican market, have created a cash flow problem which
precludes Dina from meeting all of the Union's requests and avoiding a
Mr. Garcia asserted that Dina's reduced participation in the Mexican
market is due to the company's inability to obtain sufficient funding to lease
finance its vehicles to its customers. Meanwhile, larger companies with the
major share of the Mexican market have the financial resources from their
foreign parent companies to be able to offer lease financing.
It should be noted that starting in the second quarter of 2000, and as
part of Dina's downsizing and restructuring process, the company made major
organizational changes and decided to lay off 300 employees. This number
represented 50% of its non-union workers. Additional layoffs may be necessary
in the next few months, as part of the cost reduction program. Consistent
with the company's program, no salary increases were offered to non-union
workers this year.
Dina's claim against WST for US $110 million was initiated on October 27,
2000 and the company still awaits a ruling by The International Court of
Arbitration of the International Chamber of Commerce.
Mr. Garcia pledged that the company would keep the financial community,
its investors, employees, and customers, fully informed as to the status of
its labor relations and any other material developments.
The Private Securities Litigation Reform Act of 1995 provides a "Safe
Harbor" for forward-looking statements to encourage companies to provide
prospective investors with information, provided that such statements are
identified as forward-looking and are accompanied by meaningful cautionary
statements identifying important factors which could cause results to be
materially different from those discussed in the statement.
In discussing the future prospects of the Company, management has
identified factors including, but not restricted to the following:
-- Economic and industry conditions, including interest rates and
-- Conditions in Mexico and Argentina, among the Company's primary
markets, which have experienced significant volatility in recent
years, including devaluation of the peso.
-- The successful implementation of the Company's restructuring program,
and a satisfactory resolution of its financial difficulties.
-- Competitive and overall industry conditions in its major markets.
-- Order flow for its products from major customers.
-- Harmonious relationships with its workers and labor unions that
-- The outcome of a lawsuit against Western Star for breach of contract.
There is no assurance that the eventual outcome will be beneficial to