North America's biggest truckmakers and their suppliers are firing thousands of workers as orders dry up amid a glut of big rigs.
Navistar International will reduce global employment by more than 10%, the maker of International brand trucks said Tuesday, Dec. 17. The Lisle, Illinois-based manufacturer, which has more than 13,300 workers worldwide, slashed its forecast for 2020 revenue to below the lowest estimate among analysts surveyed by Bloomberg.
Navistar follows truck-engine maker Cummins, which announced plans in November to dismiss 2,000 salaried employees as part of a $300 million cost-cutting effort next year, and Meritor, which in September flagged $20 million in severance costs linked to a restructuring the components supplier expects to complete by the end of the year.
Trucking companies ordered too many vehicles last year when freight volumes were growing. That overhang is causing freight prices to drop and orders to plunge. Convoy, a startup that connects shippers with truck drivers, believes the freight industry has been in recession since fall 2018, its economist said in an August blog post.
"Our concern had been that we would slip into something that might look like a manufacturing recession in the first half of 2020," Navistar Chief Executive Officer Troy Clarke told analysts on an earnings call Tuesday. "If we do, then that could make the second half look a little more challenging."
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Most of the more than 1,300 jobs being eliminated will come from North American production cuts, according to a spokeswoman.
Cummins will carry out its salaried-job cuts by the end of the first quarter. The reduction amounts to more than 3% of the Columbus, Indiana-based company's global workforce.
"It's not just in North America truck - we're seeing a slowing global economy," Chief Financial Officer Mark Smith said during an analyst conference this month. "It's a sharp shock that we're experiencing. Hopefully, we get through that in the next two or three quarters and things start to stabilize and improve."
This article was written by Craig Trudell, Keith Naughton and Chester Dawson, reporters for Bloomberg.
