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 Corp. will reduce global employment by more than 10%, the maker of International brand trucks said Tuesday. The Lisle, Ill.-based manufacturer slashed its forecast for 2020 revenue to below the lowest estimate among analysts surveyed by Bloomberg, sending shares plunging more than 10%, the biggest drop since October 2018.
Navistar follows truck-engine maker Cummins Inc., which announced plans in November to dismiss 2,000 salaried employees as part of a $300 million cost-cutting effort next year, and Meritor Inc., 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 plummet. Convoy Inc., a startup that connects shippers with truck drivers, believes the freight industry has been in recession since the Fall of 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.”
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,” CFO 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.”
By Chester Dawson, Craig Trudell and Keith Naughton
