Navistar restructures North American manufacturing strategy

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Navistar International Corporation will close its Chatham, Ontario, truck manufacturing operation. In addition, the company also announced plans to rationalize and better integrate its RV and chassis businesses.

The Chatham facility has been idled since June 2009 and employees have been on layoff status for the past two years due to the company’s inability to reach a collective bargaining agreement with the Canadian Auto Workers. Navistar says Chatham production has already been absorbed by other Navistar truck plants. The closure is expected to result in charges of $100 million to $130 million, of which the majority is related to pension and retiree healthcare costs.

“From a capacity standpoint, we are well positioned to meet demand expected in the last half of 2011 and further increases in 2012,” said Dee Kapur, president, Navistar Truck Group. “We’re seeing tremendous benefit from our flexible manufacturing strategy, which allows us to build more trucks—and a wider variety of them—at various plants.”

Navistar also announced plans to significantly scale back operations at its Monaco headquarters and motor coach manufacturing plant in Coburg, Ore., which will impact approximately 450 people. All motor coach production will be consolidated at Monaco’s Wakarusa, Ind., manufacturing facility, and certain Monaco headquarters functions will be consolidated at Navistar’s new corporate campus in Lisle, Ill. The company plans to continue producing towables and retain certain finance and information systems operations in Oregon, as well as maintain a RV service center there.

Navistar will also close its Workhorse Custom Chassis subsidiary chassis plant in Union City, Ind., and consolidate manufacturing into existing Navistar facilities.

The actions related to the Monaco/Workhorse consolidation may result in charges of approximately $100 million, which are predominantly related to expected asset impairments. Most of the restructuring charges are expected to occur in the third and fourth quarters 2011, with the remainder taking place in 2012. The company expects ongoing savings of $20 million to $30 million annually once all of the actions are implemented.