CHICAGO - Navistar International Corp. and Canadian union leaders have reached a conditional understanding that could avert the planned closure of the company's primary heavy truck plant, a Navistar spokesman said on Sunday.
The Chatham, Ontario, heavy-duty truck assembly plant, scheduled to close July 18, was the target of a six-week strike last year by members of the Canadian Auto Workers union (CAW).
Union workers returned to work after the company agreed not to cease production at the plant for at least one year.
However, the two sides never reached an agreement on how to cut $28 million in costs from plant operations, which the company said was needed to make the facility competitive.
Navistar, which has been struggling to return to profitability amid a prolonged slump in the truck market due to the weak U.S. economy, has been preparing to relocate its heavy truck operations to a plant in Escobedo, Mexico.
The conditional plan that would allow the Chatham plant to remain open is the result of recent discussions between company and union officials after CAW leaders approached the company to initiate a new dialogue, said Navistar spokesman Roy Wiley.
"They presented us with a plan that would help make the plant cost competitive," Wiley told Reuters. He declined to discuss financial details of the proposal.
The plan is contingent on obtaining financial support from the Canadian federal, Ontario provincial and Chatham municipal governments, Wiley said.
It is also subject to the approval of Navistar's board of directors and members of CAW Locals 127 and 35.
Union members are expected to vote on Tuesday on elements of the plan, Wiley said.
The Chatham plant, which employs about 900 active CAW members, currently produces an average of 35 trucks a day, down from a peak of 120 trucks a day in 1999. The plant has laid off about 1,300 union employees.
Navistar said the decision on whether to keep the Chatham plant open would have no impact on the company's second-quarter or full-year earnings guidance. Navistar took a restructuring charge in the fourth quarter to cover projected costs associated with the plant's closure.