April 1, 2020 4:00 PM, EDT

Meritor Suspends Activity as Other Suppliers Take Corrective Actions Amid COVID-19

MeritorTrailer axles on the assembly line at Meritor's Frankfort, Ky., plant. (Meritor Inc.)

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Commercial vehicle supplier Meritor Inc. announced it halted production at most of its commercial truck facilities throughout North and South America, India and Europe on a temporary basis as a result of the spread of the coronavirus.

Likewise, other suppliers, including Dana Inc., Knorr-Bremse AG, Stoneridge Inc. and Penske Automotive Group were revising operational plans.

Meritor expected its temporary halt could last through the month, or end sooner if conditions improve. As part of the transition, a significant portion of Meritor’s hourly workforce across its manufacturing facilities was laid off. It reduced base salary for all other salaried employees in the United States and Canada by 40% to 50%.

At the same time, its trailer and industrial businesses remain in operation as customer order activity continues. Meritor’s industrial customers are producing vehicles for the defense, bus and coach, terminal tractor, fire and rescue and off-highway end markets which are deemed critical in the response to the current healthcare crisis.



“The COVID-19 pandemic has resulted in unprecedented uncertainty in the global commercial vehicle industry and economies around the world. In light of rapidly evolving market conditions, and in accordance with the guidance of global health professionals, we made the difficult but necessary decision, along with many of our customers, to suspend production at most of our global commercial truck manufacturing facilities,” CEO Jay Craig said.

Meritor’s aftermarket business also is fully operational to maintain the supply of critical replacement parts vital to the truck and trailer transportation network.

The Troy, Mich.-based company said it will evaluate operating conditions and consider reopening the facilities once it is safe to do so, and based on information and guidance from local government and health authorities.

Meritor is a supplier of drivetrain, mobility, braking and aftermarket products for commercial vehicle and industrial markets.

Dana reported it was adjusting production schedules, idling certain manufacturing facilities (which it did not immediately identify) and managing controllable costs as it took additional safety measures to protect employees.

Dana is a commercial vehicle supplier of drivetrain and e-propulsion systems.

“We believe Dana has ample liquidity to manage significantly lower production volumes,” said Jonathan Collins, chief financial officer at Dana. “We are flexing our cost structure to match the lower level of demand and combined with our strong balance sheet, positions us to navigate the current environment.”

The company had $527 million in cash and marketable securities at the end of 2019 and $979 million available on its committed revolving credit facility for total liquidity of more than $1.5 billion. The company said that it has no meaningful debt maturities before 2024.

Knorr-Bremse reported it set up “staff-reduction measures” in North and South America.

It is the parent company for Elyria, Ohio-based Bendix Commercial Vehicle Systems, a supplier of active safety technologies, air brake charging and control systems and components under the Bendix brand name for medium- and heavy-duty trucks, tractors, trailers, buses and other commercial vehicles throughout North America.

Knorr-Bremse also said it had signed agreements with the works councils in Germany to introduce “short-time working at individual locations in Germany.”

Meanwhile, there has been a rapid recovery in China where Knorr-Bremse’s plants have resumed 97% of operations, which the company said indicates that with appropriate measures in other markets affected by COVID-19, delivery capacity can be quickly restored.

Bendix completed a layoff at its original equipment-focused production facilities on March 27 in Bowling Green, Ky., and Acuña, Mexico, affecting 300 people.

“We remain in close contact with our global customers during this time and expect to restore production levels when conditions warrant,” the company said.

Stoneridge announced production facilities are operating on modified schedules because of reduced customer demand. Among other electrical and electronic products, Stoneridge makes the MirrorEye camera monitoring system for heavy duty trucking.

“Where possible, we have instituted a work-from-home policy to ensure we do our part to slow the spread of the virus. Where work-from-home arrangements are not possible, we are strictly adhering to the CDC and other applicable guidelines,” CEO Jon DeGaynor said, referring to the Centers for Disease Control and Prevention.



Its facility in Suzhou, China has resumed operations.

“We are actively adjusting our operating model and cost structure to address the needs of our customers and any limitations due to the pandemic,” DeGaynor added.

Counter to the others, Penske Automotive Group Inc. reported its Freightliner, Western Star and Isuzu commercial truck dealership sales and service operations remain open “in most locations” around the United States and Canada. Freightliner and Western Star are brands of Daimler Trucks North America.

CEO Roger Penske said, “The COVID-19 crisis is impacting our operations requiring us to take swift and decisive action to address declining business levels.”

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