Reports in the Seattle Times indicate that Freightliner is to build a $300 million truck plant in Mexico to meet a surge in long-term demand. This news comes in the light of Freightliner’s previous announcements that it is to lay off up to 4,000 US-based workers in 2007.
The site, at Saltillo, Coahuila, is near a Chrysler plant that produces the half-ton and three-quarter-ton Dodge Ram pickups. Chrysler also operates an engine and stamping plant in Saltillo. Groundbreaking at the northern Mexico plant will occur in the second quarter of 2007, and production will begin in 2009, Freightliner said. The factory will be able to produce as many as 30,000 trucks annually and employ 1,600 people. Freightliner raised an eyebrow or tow in Orgeon earlier this year when it moved some of its operations to Retford, Michigan. In doing so, it denied any plans to shift manufacturing away from its Portland plant, although some observers have pointed to the fact that Oregon real estate prices are increasing, as the state attracts residential development away from California.
Freightliner is counting on sales to rise after 2007. For next year, company chief Andreas Renschler expects North American truck output may fall 39 percent because 2006 purchases jumped before new U.S. emissions rules boost prices on Jan. 1.
"This news comes as a surprise after their talk about layoffs," said Cantor Fitzgerald’s Stephen Pope, quoted in the Seattle Times. "There has to be a major cost advantage or incentive for this plant to get the go-ahead after the layoff. Freightliner may also be easing out of one relatively high-cost area in North America in favour of a lower-cost one." 800 Freightliner employees at a St. Thomas, Ontario plant have already been told they'll be laid off starting in March.