In a bid to reduce costs and better utilize its manufacturing
Navistar International Corporation
) has announced its plans to shut down its Garland truck assembly
plant in Texas by the first half of 2013. The plant employs
approximately 900 salaried, hourly and third-party temporary
workers. Sources reveal that the company intends to lay off 600
workers and the remaining 300 workers will be employed
temporarily by a third party contractor.
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Post closure of the plant, the company will be able to reduce
operating costs by $25-$35 million annually. The company intends
to shift the production of the plant to other North America
operations, which builds similar trucks, starting January 2013.
However, the company will incur employee separation benefits
charge of around $10 million in the fourth quarter of 2012. It
also expects a pre-tax charge of $30 million to $50 million
during the quarter.
Navistar recorded an adjusted loss of $86 million or $1.48 per
share in the third quarter of fiscal 2012 (ended on July 31,
2012). This was in sharp contrast to an adjusted profit of $46
million or 60 cents in the corresponding quarter of 2011. The
loss was wider than the Zacks Consensus Estimate of a loss of
$1.39 per share.
Revenues declined 6% year over year to $3.3 billion in the
quarter, surpassing the Zacks Consensus Estimate of $3 billion.
The year over year decline was due to lower revenues from the
company's Truck and Engine segments in the U.S. and Canada.
Warrenville, Illinois-based Navistar manufactures and sells
commercial trucks, mid-range diesel engines, buses, military
vehicles and chassis for motor homes and step-vans. It also
provides service parts for various trucks and trailers. The
company's U.S. controlled domestic competitors include
Ford Motor Co.
Currently, Navistar retains a Zacks #3 Rank, which translates
into a short-term (1 to 3 months) Hold rating.