Daimler Buses Reconfigures Operations in North America
- Strategic partnership planned with Motor Coach Industries (MCI) to strengthen Setra's coach business in North America
- Daimler would receive a minority stake in MCI
- Production of Orion transit buses to wind down after fulfillment of current orders
- Daimler to stand behind all current customer commitments and warranties
STUTTGART, Germany, April 25, 2012 /PRNewswire/ -- As part of its 'GLOBE 2013' initiative, Daimler Buses is moving to secure sustainable competitiveness through worldwide advances in growth and efficiency. As a result of these efforts, the company is reconfiguring its bus business in North America (U.S. and Canada).
Strategic Partnership planned with MCI to strengthen Setra's coach business in North America
Daimler Buses today announced the signing of a Letter of Intent with Motor Coach Industries International Inc. ("MCI") to establish a strategic partnership to combine MCI's product, service and sales network with Setra's North American coach distribution rights and network. The companies have agreed upon the material terms and conditions of the transaction and are working to finalize definitive agreements, which they expect to enter into and consummate not later than May 31, 2012. Upon consummation of the transaction, Daimler Buses would receive a minority ownership stake in MCI, and MCI would become the exclusive North American distributor of the Setra S407 and S417 German-manufactured premium motor coaches.
"The Setra motorcoach represents the highest standards of comfort, performance, customization and quality in a number of key regions worldwide," said Hartmut Schick, Head of Daimler Buses. "We're excited at the prospect of this partnership with MCI, which is a leading manufacturer of coaches in North America with top-flight distribution and service networks in the U.S. and Canada. Under a Setra-MCI partnership, customers will continue to enjoy the same state-of-art technology, quality German engineering, and best total cost of ownership in the market. A strategic relationship with MCI will carry forward Setra's proud tradition in North America, and also take it to the next level -- through increased local presence and enhanced customer services for Setra."
Rick Heller, MCI CEO, said, "The proposed transaction would allow MCI to expand its luxury motor coach offerings in the North America marketplace, while establishing a strategic partnership with one of the world's leading manufacturers of buses and motor coaches. If consummated, we would intend to fully leverage the capabilities of MCI's marketing and distribution networks on behalf of the world-renowned Setra brand. The expected partnership would also allow MCI access to Daimler's world-class Setra engineering and manufacturing capabilities. In addition to our planned consolidation of operations to realize efficiencies and other benefits, the strategic intent of the proposed transaction is to maintain the integrity of the MCI and Setra brands, parts and services."
Under the proposed agreement, through a transition period of several months following the execution of definitive agreements and the closing of the transaction, MCI would evaluate operations related to Setra in North America, and, where appropriate, integrate such operations with existing MCI facilities which will permit MCI and Daimler Buses to realize significant operating synergies. This planned partnership will allow Daimler Buses to better serve its customers through a broader service network, while strengthening Setra's presence in North America. All Setra motor coaches are German-engineered products produced in Neu-Ulm, Germany. This fact remains unchanged.
Daimler anticipates that operations related to Mercedes-Benz Sprinter in Greensboro, NC will be transferred to another Daimler facility.
Wind down of Orion transit bus production after fulfillment of current orders
Expectations for the transit bus business, which suffers from low public sector investments by municipal government agencies, are low and likely to remain depressed over the next several years. As a consequence, Daimler has decided to exit the transit bus business in North America and to wind down production of Orion buses in the U.S. and Canada.
Starting today, Orion plans to take no additional new orders. Following the fulfillment of current production commitments over the next twelve months, the operating facility in Mississauga, Ontario will be closed, and the facility in Oriskany, New York will continue operations related to parts and field service only. In addition, Daimler expects to continue a retrofit program for current customers at the Oriskany facility. Daimler clearly stands behind all current customer commitments and warranties, and will therefore continue to support all Orion customers' warranty and service agreements through its extensive network of parts and field service representatives in the United States and Canada.
"Daimler Buses considered all possible options for reconfiguring our transit bus operations in North America, but at the end of the day, Orion is facing a situation where the cost position is not competitive, the local market is in a continued slump, and growth opportunities are not available from selling the product overseas," said Schick.
"Discontinuing production of Orion buses was a very difficult decision for us to make, but to secure our leadership position we must always strive to invest resources efficiently in support of our global strategy for growth. As part of our lasting commitment to all existing Orion customers, we will make sure a robust parts and service infrastructure continues to provide a high level of service and support."
Daimler intends to provide a separation benefit to all eligible employees affected by the reconfiguration of its Setra and Orion bus and coach businesses in North America, including to those separating employees for whom such benefits are not otherwise required by law.
'Globe 2013': A worldwide initiative for growth and efficiency
Daimler Buses last month announced GLOBE 2013, an initiative for Global Bus Excellence that aims to shape the future of mobility, while securing sustainable competitiveness through worldwide advances in growth and efficiency. In 2011, Daimler Buses sold 39,740 buses and coaches worldwide. Whereas the bus business was booming in some parts of the world, particularly in Latin America, the industry in Western Europe remained in a slump because of the financial and debt crisis. Market demand was similarly negative in North America, which, like its Western European counterparts, suffered from public sector budget constraints and therefore from substantially fewer calls for bids.
This document contains forward-looking statements that reflect our current views about future events. The words "anticipate," "assume," "believe," "estimate," "expect," "intend," "may," "plan," "project," "should" and similar expressions are used to identify forward-looking statements. These statements are subject to many risks and uncertainties, including an adverse development of global economic conditions, in particular a decline of demand in our most important markets; a worsening of the public debt crisis in the eurozone; a deterioration of our funding possibilities on the credit and financial markets; events of force majeure including natural disasters, acts of terrorism, political unrest, industrial accidents and their effects on our sales, purchasing, production or financial services activities; changes in currency exchange rates; a shift in consumer preference towards smaller, lower margin vehicles; or a possible lack of acceptance of our products or services which limits our ability to achieve prices as well as to adequately utilize our production capacities; price increases in fuel or raw materials; disruption of production due to shortages of materials, labor strikes, or supplier insolvencies; a decline in resale prices of used vehicles; the effective implementation of cost-reduction and efficiency-optimization measures; the business outlook of companies in which we hold a significant equity interest, most notably EADS; the successful implementation of strategic cooperations and joint ventures; changes in laws, regulations and government policies, particularly those relating to vehicle emissions, fuel economy and safety; the resolution of pending governmental investigations and the conclusion of pending or threatened future legal proceedings; and other risks and uncertainties, some of which we describe under the heading "Risk Report" in Daimler's most recent Annual Report. If any of these risks and uncertainties materialize, or if the assumptions underlying any of our forward-looking statements prove incorrect, then our actual results may be materially different from those we express or imply by such statements. We do not intend or assume any obligation to update these forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made.
Motor Coach Industries (MCI), owned by KPS Capital Partners, LP and headquartered in Schaumburg, Illinois, is a leading manufacturer of intercity coaches in the U.S. and Canada. Reliability driven, MCI builds expertly engineered, best-selling models for the tour, charter, line-haul, commuter, and transit segments. MCI also offers 24-hour technical support, industry-leading technician training and one of the most extensive aftermarket parts and repair service networks.
Daimler AG is one of the world's most successful automotive companies. With its divisions Mercedes-Benz Cars, Daimler Trucks, Mercedes-Benz Vans, Daimler Buses and Daimler Financial Services, the Daimler Group is one of the biggest producers of premium cars and the world's biggest manufacturer of commercial vehicles with a global reach. Daimler Financial Services provides financing, leasing, fleet management, insurance and innovative mobility services. The company's founders, Gottlieb Daimler and Carl Benz, made history with the invention of the automobile in the year 1886. As a pioneer of automotive engineering, Daimler continues to shape the future of mobility today: The Group's focus is on innovative and green technologies as well as on safe and superior automobiles that appeal to and fascinate its customers. For many years now, Daimler has been investing continually in the development of alternative drive systems with the goal of making emission-free driving possible in the long term. So in addition to vehicles with hybrid drive, Daimler now has the broadest range of locally emission-free electric vehicles powered by batteries and fuel cells. This is just one example of how Daimler willingly accepts the challenge of meeting its responsibility towards society and the environment. Daimler sells its vehicles and services in nearly all the countries of the world and has production facilities on five continents. Its current brand portfolio includes, in addition to the world's most valuable premium automotive brand, Mercedes-Benz, the brands smart, Maybach, Freightliner, Western Star, BharatBenz, Fuso, Setra, Orion and Thomas Built Buses. The company is listed on the stock exchanges of Frankfurt and Stuttgart (stock exchange symbol DAI). In 2011, the Group sold 2.1 million vehicles and employed a workforce of more than 271,000 people; revenue totaled euro 106.5 billion and EBIT amounted to euro 8.8 billion.
SOURCE Daimler Corporate Communications