"Truck-ocalypse" Hits Main Street As Daimler Fires 1,250 Amid Collapsing Demand

If you were looking for signs that US trade may be collapsing on itself, a good place to start would be Class 8 truck orders which, as we first documented in early December, have posted sharp y/y declines of late.

In November for instance, orders collapsed 59% y/y. In December, the drop was 37%, and in January, Class 8 orders dove 48% from the year ago period.

This is all consistent with the trend towards broadly lower global growth and trade, something which at this point looks to be structural and endemic rather than transient and cyclical.

To be sure, the writing has been on the wall for quite a while. Have a look, for instance, at Morgan Stanley’s Dry Van TLFI:

As you can see, things haven’t been this bad since the crisis. And expectations aren’t looking so hot either:

Speaking of trucking and expectations, Daimler pretty clearly shares the rather dour outlook expressed by Morgan Stanley’s survey respondents because on Monday, the company laid off 1,250 people in North Carolina.

"We see a fall in demand of about 10 percent for heavy trucks in North America this year,” a spokeswoman said. “This is a response to lower demand," she added, flatly. 

"Workers at Daimler’s truck manufacturing plants in Mount Holly and Cleveland, North Carolina, said they were told Monday morning that the company is cutting hundreds of jobs at each plant at the end of the week," the local WSOCTV wrote yesterday, adding that "Daimler has taken over the plants that were run by Freightliner in Rowan and Gaston counties, and workers at the plant in Cleveland told Eyewitness News the announcement of job cuts came as a shock to many."

“I know that I'm one of the ones that's going to be laid off, so it's going to affect me,” said Andre Tucker, who has worked at the plant since May 2014. “Right now probably the biggest thing is to figure out the next step as far as trying to find a new job,” he laments. Tucker has a wife and two children.

Daimler also laid off 900 employees in Rowan County last month. "Everybody around here's been hurting, and it's going to hurt even more," a convenience store clerk told WSOCTV.

Yes, it most assuredly is "going to hurt even more," because as we've said time and again as it relates the collapsing Baltic Dry, central banks can't print trade. The US economy is bumping along at a barely positive 0.69% growth rate, and that's according to the BEA who, as we saw last summer, is prone to doing all sorts of things to make the data look better than it actually is.

Quick, someone tell the executives at Diamler that the industry forecasters who see a double-digit decline in Class 6-8 demand this year are merely "peddling fiction."

Full statement from Daimler

Pursuant to the notification requirements of the Worker Adjustment and Retraining Notification Act of 1988 ("WARN"), Daimler Trucks North America (DTNA) has announced that it will implement a reduction in force of approximately 700 employees at its Mt. Holly Truck Manufacturing Plant and approximately 550 employees at its Cleveland Truck Manufacturing Plant, effective April 16, 2016. Employees at the Mt. Holly and Cleveland plants were notified in Town Hall meetings yesterday and today.

The last day of work for employees affected by this announcement will be Friday, February 19, 2016 in both facilities. Impacted employees will receive payment in lieu of the notice period at each employee's regular rate of pay, and employees are free to seek and accept other employment during the notice period without jeopardizing their entitlement to the WARN period payment or benefits.

As of February 22, the workforce at the Mt. Holly Truck Manufacturing Plant will be reduced from approximately 2,150 to approximately 1,450 employees, with plant operations scaled back to two full shifts per day. The workforce at the Cleveland Truck Manufacturing Plant will be reduced from approximately 2,150 to approximately 1,600, with plant production scheduled at one full shift per day. The Cleveland reduction in force is in addition to a previous workforce adjustment announced in January affecting approximately 936 employees at the Cleveland Truck Manufacturing Plant, effective March 5, 2016.

These workforce adjustments are in response to a sustained reduction in orders and a diminished build rate, and are expected to be temporary, based on future market developments. 2015 was an extraordinarily strong market for trucks in NAFTA. DTNA anticipates the North American truck market Class 6 to 8 to be down around minus 10 percent in 2016. This is still expected to be above the 2014 Class 6 to 8 market.

The Mt. Holly Truck Manufacturing Plant is located in Mt. Holly, North Carolina and manufactures medium-duty Freightliner trucks. The Cleveland Truck Manufacturing Plant is located in Cleveland, North Carolina and manufactures heavy-duty Freightliner and Western Star trucks.

The company has no further comment pertaining to the announcement. 

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