Truck maker Navistar is planning to reduce its production capacity, closing its Class 8 Chatham manufacturing facility in Ontario, Canada, which has been idled since June 2009, along with its Workhorse Custom Chassis plant in Union City, IN.
The company also plans to significantly scale back production at its Monaco subsidiary’s motor coach manufacturing plant in Coburg, OR, consolidating production at its Wakarusa, IN, plant while moving certain Monaco headquarters functions to Navistar’s new corporate campus in Lisle, IL.
Navistar noted that shuttering its Chatham factory is expected to result in a charge of $100 to $130 million mainly related to pension and retiree healthcare costs. Employees at the Chatham facility have been on layoff status for the past two years due to the inability to reach a collective bargaining agreement with the Canadian Auto Workers. As a result, Chatham production has already been absorbed by other Navistar truck plants, the company said.
Navistar’s Monaco/Workhorse consolidation may result in charges of approximately $100 million, predominantly related to expected asset impairments. Also, Navistar estimates some 225 employees will be affected by the Union City plant closure, with 450 affected by the production reduction at its Coburg plant.
Altogether Navistar expects ongoing savings of $20 to $30 million per year once it completes its “manufacturing restructuring” plan, and the company expects to take charges against earnings mostly in the third and fourth quarter this year – with some potentially rolling into 2012 – to cover the cost of this effort.