The cut in salaried and contract positions in the coming weeks represents approximately 15 percent of the company's white-collar workforce.
John R. Horne, chairman, president and chief executive officer of Navistar, said a strong operating performance by the company's engine subsidiary partially offset weakness in the more cyclical truck operations. He noted that the strong third quarter and nine-month results masked a continuing decline in new truck orders, indicating that the industry has reached the long anticipated downturn.
"While truck shipments have been good, our order receipts and backlog, particularly for heavy truck, are at their lowest level since 1996," Horne said. "To continue as a strong company, we must continue to deliver strong financial results regardless of market conditions. This means we will immediately defer some programs, reduce capital spending and streamline operations through improved processes and a reduction of our salaried workforce."
Excluding the benefit of a research and development tax credit, earnings for the third quarter totaled $76 million, or $1.27 per diluted share. For comparison, 1999 third quarter earnings without the benefit of the deferred tax asset adjustment were $77 million, or $1.17 per diluted common share.
Net income for the third quarter ended July 31, 2000 totaled $96 million, or $1.60 per diluted common share, compared with $255 million, or $3.86 per diluted common share in the same quarter last year.
Shipments of mid-range diesel engines to other original equipment manufacturers during the quarter totaled 72,200, a gain of 5 percent over the 68,500 units shipped in the third quarter of 1999.
Worldwide shipments of International brand heavy and medium trucks and school buses during the third quarter totaled 27,600 units, compared with the 26,200 units shipped in the third quarter of 1999.
However, Horne said a drop in third quarter truck and bus shipments from second quarter levels and the decline in order receipts were clear indications that the industry is at the beginning of a downturn brought on by an oversupply of late model used trucks, escalating diesel fuel prices and higher interest rates.
"While we cannot control market conditions, we can control how we respond," Horne said. "The hallmark of a great company is not only how well it performs when times are good, but also whether it wins in difficult times."