International Truck and CAW Reach Conditional Understanding
WARRENVILLE, Ill.--May 10, 2003--International Truck and Engine Corporation announced today that it was approached by the Canadian Auto Workers union (CAW) and as a result of discussions, has reached a conditional understanding on a plan that would keep the company's Chatham, Ontario heavy truck assembly plant open if certain conditions are met. The plan is now subject to review and approval by company management, Navistar's Board of Directors and CAW members.
The plant is scheduled to close July 18. After CAW leadership approached the company, representatives from both the company and the union began meeting to see if common ground could be found to keep the plant open.
The conditional understanding is contingent upon securing financial support from Chatham-Kent municipal government, the federal government of Canada as well as the Ontario provincial government. Union members of CAW Local 127 and CAW Local 35 would also have to approve the plan. The company and the union have agreed to keep all details confidential until all necessary government and union approvals have been received.
Daniel C. Ustian, Navistar president and chief executive officer, said the decision to close the Chatham plant was never about the ability of the workforce to produce high quality trucks, but about the need to make the plant cost competitive in the face of industry overcapacity and reduced industry demand.
"We are encouraged by the initiative taken by the CAW and the progress made by representatives from both the union and the company. Our management now needs to make certain that the conditional understanding meets our profit objectives," Ustian said.
Efforts to achieve necessary cost reductions at Chatham began in December 2001. Unable to achieve necessary cost savings, International announced its plans to close Chatham on October 17, 2002, and the July 18 date was set on last March 28.
Currently, the Chatham plant is producing an average 35 trucks per day on one shift with approximately 900 active employees. At its peak, the plant was producing more than 120 trucks per day on two shifts. In addition to active employees, there are approximately 1,300 union employees on layoff status.
Excluding accounting treatments of the restructuring taken in the fourth quarter of 2002, the decision on whether to keep the Chatham plant open will have no impact on either second quarter or full year earnings guidance. The projected costs associated with the closing of the Chatham facility were included in Navistar's 2002 fourth quarter restructuring charge.
International Truck and Engine Corporation is the operating company of Navistar International Corporation , and is the nation's largest producer of mid-range diesel engines, medium trucks, heavy trucks, severe service vehicles, bus chassis and a provider of parts and service sold under the International(R) brand. The company is also a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Additionally, through a joint venture with Ford Motor Company, the company builds medium commercial trucks and sells truck and diesel engine service parts. A subsidiary, IC Corporation, produces integrated school buses. Intentional Truck and Engine has the broadest distribution network in the industry. Financing for customers and dealers is provided through a wholly owned subsidiary of Navistar. Additional information can be found on the company's web site at www.internationaldelivers.com