EXCLUSIVE: Kenworth blames credit crunch for slowing market

Kenworth cuts another 90 jobs, telling <i>ATN</i> the credit crunch is cruelling sales and the Commonwealth must intervene

EXCLUSIVE: Kenworth blames credit crunch for slowing market
Kenworth cuts build rate, lays off staff
By Gary Worrall

Kenworth will cut another 90 jobs due to slowing truck sales, as the company boss tells ATN the credit crunch is cruelling attempts to rebound from the economic crisis.

The latest job cuts come as other truck and trailer manufacturers report difficulties in securing new orders, as potential customers find themselves unable to secure finance from lenders spooked by the economic situation.

While its delivery rate remains high as a result of record sales in 2007 and 2008, Kenworth reports forward orders are not as promising and the decision was made to reduce the build rate in a bid to protect more jobs and retain an Australian manufacturing presence.

Most jobs will go from the Kenworth factory in Melbourne, along with some administration jobs.

Joe Rizzo, Managing Director of Kenworth parent PACCAR Australia, says the lack of available finance is slowing the speed of the Australian truck market’s attempts to rebound from the current economic situation.

Rizzo says liquidity issues are a "common theme" among potential clients.

"We have our own finance company and it is still active, we are still able to offer finance, but it is difficult," he says.

While Rizzo says he has not considered the idea of a federally-operated bank to finance infrastructure project-related capital expenditure, he believes there is a need for some form of federal intervention to kick-start the transport market.

"The reason for the difficulty is the commercial paper market has dried up, we would like to see US-style guarantees to allow customers access to money," he says.

Without wanting the Federal Government to create a new financial institution, Rizzo says underwriting the loans would be sufficient.

"We would like to see the Federal Government underwrite the loans, so that non-bank lenders can enter the market. The US Federal Reserve did it some months ago and it is quite successful."

Rizzo says despite the job cuts the PACCAR workforce is still at roughly the same level as 2003-2004, after the company employed "about" 300 new people during the last three years to cope with the increased demand for product, particularly for Kenworth trucks.

Kenworth says staff made redundant will be paid all their entitlements and a range of support services will be offered for affected employees.

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