Daimler Trucks North America will cut 900 workers at two Freightliner plants in North Carolina as tepid orders for new heavy- and medium-duty trucks persist following a record ordering binge in 2018.
Freightliner, which holds a commanding lead in market share over its competitors, is the fourth of six major truck makers to curtail production. Only Paccar Inc. (NASDAQ: PCAR) units Peterbilt Motors Co. and Kenworth Truck Co. have avoided production cuts so far.
“Following a red-hot North American truck market of record sales and production volumes over the last 12 months, the market is now clearly returning to normal market levels,” DTNA said in a statement.
The unit of Stuttgart, Germany-based Daimler AG (OTC: DDAIF) will release approximately 450 production workers, or nearly 16% of the workforce at its Cleveland, North Carolina, manufacturing plant and approximately 450 workers, or 26% of the employees, in Mt. Holly, North Carolina. Both layoffs are set for October 14.
The Cleveland plant, which marked the production of the 750,000th Class 8 truck on August 26, employs 2,878 workers. The Mount Holly plant, which makes medium-duty trucks, has 1,714 employees.
The Freightliner layoffs reflect a dramatic drop in the backlog of heavy- and medium-duty trucks waiting to be assembled.
The wait time across the industry for delivery of a new truck was an estimated 11 months in October 2018 when the backlog stood at 288,000. That number is expected to shrink to about 135,000 when final September orders are calculated, down from 151,000 in August, according to Kenny Vieth, president of ACT Research.
A Daimler spokeswoman declined to discuss how many Freightliner orders are in queue. On the retail side, sales were down 21.2% in August, according to WardsAuto.com. Sales of International brand trucks made by Navistar International Corp., were down 7.2% in August, WardsAuto reported. Navistar is cutting production at plants in Ohio and Mexico by 15%.
Both Volvo Trucks North America and Mack Trucks, units of the Volvo Group (OTC: VLVLY), are planning two weeks of downtime this quarter at plants in Virginia and Pennsylvania.
Paccar officials said during a second-quarter earnings call with analysts July 23 that 36% of the industry backlog when it was 188,000 units was for Peterbilt and Kenworth products.