Local ties can't save Sterling Truck plant

London Free Press October th 2008

MANUFACTURING WOES: Daimler Trucks boss Chris Patterson says the failing bottom line, not emotion, is the deciding factor

Local roots run deep for the man in whose hands lies the fate of workers at Sterling Truck in St. Thomas. But local loyalties do not make a difference when it comes to deciding which plants remain open and which close down, said Chris Patterson, chief executive of Daimler Trucks North America. It is all about the bottom line -- and that states clearly Sterling Truck will be shut down in March, he said.

Patterson was born and raised in Toronto, but his family hails from Goderich -- his parents retired back to Goderich after leaving Toronto and still live there. He also graduated with an MBA from the Richard Ivey School of Business at the University of Western Ontario in 1978.

"We do not discriminate based on lineage," Patterson said. "It is brutal. . . . We cannot stay with Sterling longer because we have an emotional connection." Daimler is ending the Sterling Truck line -- also closing a plant in Portland, Ore. -- as its Freightliner and Western Star brands will fill the void.

Patterson will sit down with Canadian Auto Workers union officials tomorrow to hear a plea from workers to keep the plant open and they will come armed with pledges of financial support from the federal and provincial governments.

"We never had any dialogue on this," said Jim Stanford, CAW chief economist. "There are all kinds of things we can do. The province has a $1-billion fund, the federal government a $450-million innovation fund. They did not even try and that is outrageous."

In 2003, a federal and provincial government bailout and CAW concessions helped save the International Truck plant in Chatham from a planned shutdown and more than 800 workers are still there.

But Patterson will not ask for a bailout and bristled at the International example.
"I am very aware of that situation. I am not prepared to comment on the fact our government used our tax dollars to bail out a competitor that was failing. It is not a positive comment about our government's industrial policy. "If they (International) had gotten out of the heavy truck business, perhaps this (Sterling closing) may not have happened."

Closing a plant is nothing new to Patterson. He shut down a Kenworth plant in B.C. during the 1980s and a Freightliner plant also in B.C. in 1992.

As for the Sterling plant's future, "we will be happy to entertain offers to purchase . . . We cannot make money with it at this juncture."

Daimler took over the Sterling truck line from Ford about 11 years ago and since then tried to build the brand, but it never caught on, he added. In fact Sterling has about six per cent of the market in the U.S., and it would need twice those numbers to be viable, he said.

Daimler stated in a release the closings will cost $600-million and save $900-million a year by 2011.

Patterson also rejected suggestions a new plant in Saltillo, Mexico, will replace the Sterling trucks now being made in St. Thomas. Freightliner's new Cascadia truck will be made in Mexico, he said.

The closing is also not an issue of unionized wages, about $30 an hour at Sterling, or the fact the St. Thomas plant endured two strikes in its history. "That has zero, nothing to do with it," said Patterson. "The state of labour relations has not influenced things one way or the other."

The plant closings in St. Thomas and Portland as well as other hourly and salaried cuts will trim about 4,500 workers from Sterling workforce in the U.S, and Canada.