International Truck and Engine Corp. has reached an understanding with the Canadian Auto Workers union (CAW) 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.
Local union 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 last October, and the July 18 date was set in late March.
Currently, the Chatham plant is producing an average 35 trucks per day on one shift with about 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 is the operating company of Navistar International Corp., producing mid-range diesel engines, medium trucks, heavy trucks, severe service vehicles, bus chassis and parts and service sold under the International brand.
Additional information can be found on the company's web site at www.internationaldelivers.com.