Navistar International announced Tuesday that it would close its Chatham, Ontario, truck manufacturing operations.


The plant has been idle since June 2009, when the truckmaker and the Canadian Auto Workers union failed to reach an agreement on scaled-back production at the plant. As a result, former Chatham production has already been absorbed by other Navistar truck plants.

"From a capacity standpoint, we are well positioned to meet demand expected in the last half of 2011 and further increases in 2012," said Dee Kapur, president, Navistar Truck Group. "We're seeing tremendous benefit from our flexible manufacturing strategy, which allows us to build more trucks-and a wider variety of them-at various plants."

The company had originally announced plans to close the factory in 2003, but that was averted with a $65-million investment from the Canadian government and employee concessions totaling $41 million annually.

The company blamed the inability to reach a collective bargaining agreement with the CAW since the plant was idled in June of 2009 as the reason operations have been permanently halted.

The Chatham Daily News reports the union has continually stated it couldn't get the company to the bargaining table.

CAW Local 127 president Aaron Neaves said, "it's hard to negotiate, quite frankly, with yourself."

The sticking point was the company's plan to move the plant from manufacturing complete trucks to producing only cabs with a reduced workforce of just over 100 employees, down from the 370 who were employed before workers were locked out, The Chatham Daily News reported.

There are currently 1,000 workers on layoff status at the plant. At its peak in the late 1990s, the facility was churning out 100-plus Class 8 trucks a day, employing more than 2,400 people.

Navistar also announced plans to significantly scale back operations at its Monaco headquarters and motor coach manufacturing plant in Coburg, Ore., putting about 450 people out of work. All motor coach production will be consolidated at Monaco's Wakarusa, Ind., manufacturing facility, and certain Monaco headquarters functions will be consolidated at Navistar's new corporate campus in Lisle, Ill., the press release noted.

The company's Workhorse Custom Chassis subsidiary plans to close its Union City, Ind., chassis plant, impacting about 225 employees. These operations will be consolidated into other existing Navistar facilities for greater efficiency and productivity.

Meanwhile, combining all motor coach production in Wakarusa will add about 400 jobs at that facility. The company will continue producing towables and retain certain finance and information systems operations in Oregon, as well as maintaining a RV service center there.

"We understand the impact these decisions have on our employees," Kapur said. "We will treat people with respect and provide support to help them with their transitions."

The planned restructuring and asset impairment activities related to the Chatham closure is expected to result in charges of $100 million to $130 million, of which the majority is related to pension and retiree healthcare costs.

The actions related to the Monaco/Workhorse consolidation may result in charges of approximately $100 million, which are predominantly related to expected asset impairments. Most of the restructuring charges are expected to occur in the third and fourth quarters 2011, with the remainder taking place in 2012.

Navistar expects to save $20 million to$30 million annually as a result of all its downsizing initiatives.