“These decisions are very difficult because they affect hardworking associates,” Wabash CFO Mark Holden said. “However, since existing poor market conditions have shown no signs of near-term improvement, the restructuring and cost reduction plans are important to the company's future in order to align its cost structure with the market.”
Wabash plans to take $68 million in pretax charges to cut the jobs and eliminate trailer inventory. Holden says Wabash has approximately $100 million of used trailer inventories and anticipate receiving up to $50 million in used trailer trade-ins before the end of the year.
“We believe our business simply can no longer support these levels of used trailers and the associated infrastructure costs,” Holden said.
A recent report by the Federal Reserve said that overall industry capacity in the U.S. fell to 77% in July, representing the lowest level of utilization since August 1983. Holden said that given those conditions, Wabash believes the restructuring and cost reduction plans will put the company in a stronger position.
The company also announced today that it has names Arthur R. Brown as its vp and COO, and that it has hired Heidrick & Struggles International Inc., an executive search firm, to assist it in identifying internal and external candidates for its vacant CEO position.
