Freightliner Inks Deal for Western Star

The Western Star name will become part of Freightliner's growing truck and bus product offering with the acquisition of the Canadian manufacturer announced yesterday.

Speaking in a conference-call press announcement from Portland, Ore., Freightliner President Jim Hebe said the move further strengthens Freightliner's market position in product and dealers and also expands its commercial vehicle and bus business in the NAFTA region.

The Western Star brand name and truck line will continue in the market, while Western Star's support operations will be integrated with Freightliner's vocational truck division Sterling Trucks.

"The two product lines fulfill Freightliner's strategy to offer a full truck line to owner-operators as well as expand the company's vocational truck offerings," Hebe said.
Included in the C$670 million ($465 million U.S.) deal to acquire 100% of Western Star Holdings' outstanding shares is Orion Bus Industries, along with Western Star's four manufacturing plants. The plants include the newly opened 46,000-square-foot North Charleston, S.C., plant with an annual capacity of 20,000 heavy trucks. Freightliner also gets Western Star's headquarters and truck plant in Kelowna, British Columbia, and its bus manufacturing plants in Mississauga, Ontario, and Oriskany, N.Y.

Western Star will be added as a complement to the Sterling product line and managed from Sterling's Willoughby, Ohio, facility. Orion will be accommodated into Freightliner Specialty Vehicles, which currently includes Thomas Built Buses and American La France. With the Orion transit bus business, Freightliner now becomes North America's first and only full line bus manufacturer with Thomas school buses, the newly announced Thomas SLF 200 shuttle bus, a cutaway shuttle bus recently acquired from Metrotrans, and the Setra coach from DaimlerChrysler.

Hebe said the integration of Western Star into the Sterling distribution would mean better representation for both brands. With around 230 dealers each, he anticipated as many as 90% of the total 460 would handle the Sterling and Western Star nameplates. At the time of the press conference the dealers had not been informed of the details of the deal, so it was not yet decided how the dealers would be taking both nameplates. However, Hebe made it clear that he would not like to see Western Star or Sterling dealers dualed with non-Freightliner franchises.

Western Star will take a premium position in complementing the Sterling range. The Canadian truck's legendary toughness will be exploited in vocational markets, where it is already strong in applications such as logging, mining and oilfield applications. It also will be positioned as a premium over-the-road highway tractor.

Western Star also has the Warrior, a rugged Class 3 vehicle originally designed for the Canadian military. This will stay in production, with potentially a greatly expanded market with this acquisition. The medium-duty model 3700 that is currently being produced for Western Star by Dina in Mexico is under review.

Hebe said that there would be considerable synergies and economies of scale enjoyed by all three of the Freightliner nameplates. There would also be a sharing of engineering resources. As an example, Hebe said, that sharing would show up fairly in an an extreme-duty Freightliner vocational truck based on the Western Star chassis.

Other product opportunities are enabled by the additional production capacity. Freightliner announced earlier this summer that it would be assembling the German-designed Sprinter panel vans for Class 2, 3 and light 4. Additionally, a new platform almost certainly based on a hybrid of Freightliner and the replacement Dodge Ram would be introduced later in Class 3 through 5; the capacity at North Charleston would permit such product expansion.

Western Star's owner since 1991 has been Australian Terry Peabody. In the relatively short time since he purchased the company, Peabody took Western Star from where it was about to close the doors to a company producing 30 trucks a day and employing about 3,000 people. In the deal, Peabody buys the Australian distribution company from Western Star and handles the Australian, New Zealand and Asia-Pacific markets for the truck range.