DTNA, Navistar Made More Trucks in Mexico than U.S., Canada During ’09 for First Time

This story appears in the Jan. 18 print edition of Transport Topics.

Most of the Class 8 trucks sold in the United States last year by Daimler Trucks North America and Navistar Inc. were — for the first time ever — assembled in Mexico, both companies have acknowledged.

But that production shift is not permanent, the companies said, and was the result of the slow pace of sale here and in Canada.

DTNA, which makes Freightliners and Western Stars, acknowledged that it had built most of its ’09 trucks in Mexico but denied United Auto Workers’ statements that it was moving U.S. jobs to Mexico.

Navistar Inc., which builds International Trucks, said that it began building all of its over-the-road ProStars and LoneStars in Mexico in 2009 but, like DTNA, said it was not a permanent situation.

All other manufacturers said they do not build any trucks in Mexico for the U.S. and Canadian markets.

Gary Casteel, United Auto Workers director for the union’s southeast region, told Transport Topics that DTNA has moved jobs to Mexico to produce trucks that cost “substantially less” than those built by its American workforce, but the manufacturer sells them in the United States and Canada for the same price as its U.S.-built trucks.

Navistar has a factory in Chatham, Ontario, where it built ProStars, but that plant has been “idled” since June when its contract with the Canadian Auto Workers expired. The company laid off 500 workers.

CAW members voted in July to reject Navistar’s new offer, which has kept the plant shuttered. CAW officials told TT at the time that Navistar wanted to move production to Mexico, where labor costs are lower.

In January 2009, DTNA opened a new factory in Saltillo, Mexico, which has the capacity to produce 30,000 vehicles a year.

DTNA is currently building only the Freightliner Cascadia in Saltillo, said Roger Nielsen, the company’s chief operating officer. The company also has an older factory in Santiago, Mexico, which builds all other Freightliner trucks except the Argosy. Nielsen told TT that the company raised the percentage of its medium- and heavy-duty trucks built in Mexico from 30% in 2008 to 55% of total production in 2009, the first time a majority of its trucks came from Mexico.

“There have been misunderstandings about our future employment plans,” Nielson said. “We’re not moving jobs to Mexico. The trucks being built in Mexico are not using U.S. capacity.”

Nielson said that DTNA’s U.S. production is intended for the U.S. and Canadian market, where sales are down dramatically.

Production in Mexico is intended mainly for Mexico and for the rest of Latin America.

DTNA currently employs 4,000 workers in the United States, Nielsen said, while the two Mexican plants employ 2,300 workers.

“We have not added workers to our Mexican operations in four years, nor increased production,” Nielsen said.

Daimler also builds the Freightliner Cascadia at its plant located in Cleveland, N.C. Nielsen said DTNA did not release production numbers for any of its plants for competitive reasons, but he said that Mexican truck production has “been at the same levels as before.”

“Once we are running at full capacity again, 70% of our vehicles will come out of the United States,” Nielson said.

UAW director Casteel said that DTNA exports from Mexico were minimal, and “its trucks are coming here, to the United States.”

In 2009, DTNA’s vehicles had 31.1% of the U.S. Class 8 market; Navistar, 28%; Paccar Inc., 25.3,%; and Volvo AB, 15.5%.

Navistar spokesman Roy Wiley said that the company has operated a truck plant in Escobedo, Mexico, since 1998.

“The Escobedo plant produces trucks for the Mexican, U.S. and Canadian market, as well as for export,” Wiley told TT. “The International ProStar and LoneStar are currently not being built anywhere else except in Escobedo.”

Wiley said the Chatham plant, which built only the ProStar, will produce that truck and other models as well when it reopens.

“We expect the plant to reopen with a new contract, but Navistar wants a much smaller and more flexible facility up there,” Wiley said.

Wiley said that Navistar makes vocational models, medium-duty trucks and all of its truck and bus engines in the United States.

“There is a cost difference between trucks built in Mexico and Canada, but I don’t say it’s substantially different,” he said. “There is much more than labor that goes into the cost of a truck.”

Wiley said that Navistar’s current production schedule was based on a “market that is very slow, very soft.” He said that the ProStar and LoneStar could be built at Navistar’s U.S. plants as well, if demand warranted it.

Volvo Trucks North America and Mack Trucks Inc. said that they build their trucks and engines only in the United States.

Robin Easton, treasurer for Paccar Inc., which owns Kenworth Truck Co. and Peterbilt Motors Co., said the company’s only production plant in Mexico makes Classes 5-8 vehicles for only the Mexican market and for export to non-North American markets.