Freightliner LLC Announces Production Adjustments, Workforce Reductions Beginning in First Quarter 2007

PORTLAND, OREGON - Freightliner LLC announced plans today for production rate adjustments at its truck manufacturing plant in St. Thomas, Ontario. Eight-hundred employees will be idled as a result. These changes are the first in a series of such measures that will affect all the company’s vehicle and component assembly plants during the first quarter of 2007. As many as 4,000 production and related workers may be affected.

All manufacturers of heavy and medium trucks, as well as the suppliers of components used in their assembly, are facing a dramatic reduction in volumes presently. Truck buyers in all markets are showing hesitation to purchase trucks equipped with the new engine technology necessary to meet the diesel exhaust emissions standards that go into effect in Canada and the United States on January 1, 2007.

Depending on specification and weight class, Freightliner LLC vehicles, are subjected to price increases ranging from $4,600 to $12,500, before application of taxes, for the new engines. It is clear that all residents of North America benefit from the cleaner atmosphere that will ultimately result, but it is equally obvious that the costs associated with this worthy initiative are borne almost entirely by the truck manufacturing industry’s employees, suppliers, shareholders, and dealers.

“Workforce reductions are always the last thing any of us want to do,” said Chris Patterson, Freightliner LLC President and CEO. “Unfortunately it has become necessary at this point as the entire industry is dealing with an extraordinary market situation”.

“We will continue to monitor the market closely and make adjustments accordingly but we anticipate further reductions of up to 3,200 workers in the first few months of 2007. We are anticipating that demand will begin to recover in the second half of the year, as our customers gain confidence in the new technology, and their existing vehicles suffer the effects of aging. We expect to be able to make some positive workforce adjustments at that time”.

Affected employees in St. Thomas were notified yesterday.

The St. Thomas plant, operated by Freightliner Canada Ltd., produces the company’s Sterling-brand heavy- and medium-duty trucks.

Freightliner LLC, headquartered in Portland, Oregon, is the leading medium- and heavy-duty truck manufacturer in North America. Freightliner produces and markets Class 3-8 vehicles and is a company of DaimlerChrysler, the world's largest commercial vehicle manufacturer.

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