The long-awaited turnaround plan for Freightliner and DaimlerChrysler's Commercial Vehicles Division is about to be announced. As part of that turnaround plan, DaimlerChrysler Corporation will cut salaries, wages and benefits across the board at its Freightliner division, beginning January 6, 2002.

Hourly and salary employees will take a 5% pay reduction. Health insurance will now have a monthly charge ranging from $40 per month to $130 per month. And the co-pay on prescription drugs will go to $15.

In the accompanying letter to employees by President and CEO Rainer Schmueckle, the cuts were outlined as part of the Freightliner Turnaround Plan. Mr. Schmueckle states, "Over the past several months, there has been an extended amount of effort expended in developing a comprehensive Turnaround Program for Freightliner LLC. Essentially, every facet of the Company's business has been examined. As a result, numerous changes have been identified for implementation that range greatly in scope and complexity. However, in all cases, these changes are considered absolutely essential to the viability of the Company. Further details of the Turnaround Plan will be communicated by mid-October."

Freightliner's problems have been growing in the past two years, as the market for heavy trucks in the United States took a dramatic downturn. Many industry experts blame Freightliner for creating the industry's problems - offering too-generous trade-in allowances, too-high guaranteed off-lease valuations, and other tactics which were designed to gain market share but had huge, long-term profitability issues.

The deepening recession in manufacturing has damaged the customer base for heavy trucks even more, making the development of a viable turnaround plan very difficult. In early Spring 2001, Freightliner's then-CEO James Hebe revealed his turnaround plan for the company, but was fired before it was considered. Since then, another turnaround plan has been in the works, with only "autumn" given as the implementation date.