Daimler AG will close its St. Thomas, Ont. truck plant and cut 700 jobs early next year in response to consumers' decreasing demand for heavier vehicles, the company announced Tuesday.
The automaker is discontinuing its Sterling Trucks brand effective March 2009, which will also lead to the closure of a manufacturing plant in Portland, Ore. in 2010.
The moves are part of a new strategy the company is implementing to turn around its economic outlook in the North American market.
"It is a principle of our 'Global Excellence Strategy' to strive for benchmark profitability and to address structural market changes in a timely and consequent way," Andreas Renschler, a Daimler AG management board member, said in a statement issued on the company's website.
The job cuts add to the previously announced layoff of 720 workers at the St. Thomas plant. Those jobs will be gone by next month.
St. Thomas residents are stunned by the news of the plant's closing, a local business leader said. Many residents are employed in the local manufacturing sector, which has suffered a series of blows in recent months.
A local Ford assembly plant recently announced job cuts, in addition to layoffs at Magna-owned Formet Industries and 3M in London, Ont.
"It spins through the entire region," Bob Hammersley, general manager of the St. Thomas and District Chamber of Commerce, told The Canadian Press.
"About 700 workers are directly affected," but a "lot of suppliers will be affected by the news. The jobs that are going to be lost are not just jobs that are in the city of St. Thomas, but they extend through the entire region."
The Canadian manufacturing sector has lost thousands of jobs in recent years, particularly in the automotive industry.
North American car manufacturers have struggled to keep up with a changing consumer base, which is drawn to more fuel-efficient cars, as well as the high value of the Canadian dollar and an economic slump in the United States.
General Motors, Deere, Co. and Volvo have also cut jobs and announced plant closures in Southern Ontario.
The Daimler plant closure is timed to coincide with the expiration of the company's agreement with the Canadian Auto Workers Union.
CAW president Ken Lewenza said the closure will be devastating to the workers.
"This is another example of the loss of hundreds of highly skilled, family supporting jobs which cannot be replaced by the slew of recently created part-time jobs," Lewenza told CP.
In announcing the moves, Daimler said it will move manufacturing operations for its Freightliner and Western Star trucks to plants in the Carolinas and Mexico.
The company will also streamline operations by cutting 1,200 jobs from its administrative workforce.
Daimler hopes the moves will boost the company's earnings by US$900 million by 2011.
Company shares rose 4.9 per cent at 27.49 euros, or US$37.33, during Tuesday trading on the Frankfurt stock market.
