Sterling to exit truck market in 2009

In response to depressed demand in the weakening truck market, Daimler Trucks North America has announced plans to discontinue the Sterling Trucks brand and consolidate its manufacturing network.

As a result of these changes, Daimler expects annual earnings improvements of $900 million by 2011, with estimated program costs of $600 million.

Effective March 2009, truck manufacturing operations will cease at the St. Thomas, Ontario, plant, where Sterling medium- and heavy-duty trucks are produced.

According to Daimler, Sterling models have substantial overlap with Freightliner Trucks’ product offering. Since its launch in 1998, the company says Sterling has achieved one-fourth of Freightliner’s market penetration.

While the Sterling dealer network is expected to continue to perform warranty repairs offer maintenance services, replacement parts and technical support, dealers will stop accepting truck orders on January 15, 2009. New truck sales will continue until present dealer stocks are depleted, according to Daimler.

Daimler also plans to close its Portland, Oregon, manufacturing plant in June 2010. The company’s Santiago, Mexico, plant will produce Western Star trucks, while Freightliner-branded military vehicles will be produced at one of the manufacturing facilities in the Carolinas in 2010.

An estimated 2,300 workers at the St. Thomas and Portland plants will be laid off, including 720 St. Thomas workers, which will be laid off in November 2008. Daimler plans to reduce 1,200 salaried positions, with more than half directly related to the Sterling brand.

Production will begin at Daimler’s new Saltillo, Mexico, manufacturing plant as planned in February 2009. The company’s headquarters will remain in Portland.