The Fourth US Trucks Major To Shut Its Plant

Navistar, the fourth US maker of heavy and medium duty trucks after Paccar, Volvo North America and Freightliner, a unit of DaimlerChrysler, will likely to shut its heavy truck plant in Canada by next summer and shift production to Mexico in a bid to speed up cost reductions.

The announcement affecting its Chatham, Ontario plant appears to signal the company's determination to take radical steps to contain costs. The cost reduction can be connected with healthcare cost, pensions.

The company also plans to replace debt maturing in 2003 to prevent cash balances from sinking below "acceptable levels". The company expects to end this year with $500m in cash.

Navistar in recent weeks has been producing only 40 trucks a day at its Chatham plant in comparison to 120 trucks a day two years ago.