Traton SE has eliminated the second shift at its International brand’s Mexican plant, a move that means 900 people have lost their jobs, as executives look to contain costs after a first quarter during which North American orders fell by more than a third.
CEO Christian Levin and CFO Michael Jackstein told analysts April 28 that they also have instituted a hiring freeze at International, where sales fell 11% from the first three months of 2024 as customers have pulled back on spending in the face of tariff-led economic uncertainty. The division’s incoming orders fell to less than 9,700 in the first quarter from nearly 13,600 early last year. In the United States and Canada, orders fell to about 8,000 from more than 12,200 a year earlier.
International had added a second shift at its Class 8-making Escobedo, Mexico, plant in 2021 when the facility was still owned by Navistar International, which was then in the process of selling itself to Traton. The retreat from that capacity isn’t a shock, though: Levin said early last month that his team would “have to be very swift” in reacting to an equipment market slowdown.
On a conference call discussing Traton’s Q1 results and outlook, Levin and Jackstein said they are looking at other layoffs to cut costs in the face of what Levin called “a wet blanket over the entire market right now.” In addition to macroeconomic worries, he said, uncertainty about the Environmental Protection Agency’s 2027 emissions regulation changes has forced Traton to assume there will be “no sizable” prebuy of trucks in 2025. That means Class 8 volumes in North America are likely to be down nearly 10% to roughly 280,000 vehicles.
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First-quarter financials and a hopeful silver lining
Globally, Traton booked a first-quarter operating profit of nearly $740 million on revenue of roughly $12.1 billion. Those numbers were down 58% and 10%, respectively, from the prior-year period, pushing down the company’s operating margin to 6.1% from 9.4%.
Despite the layoffs in Mexico and possible other moves to come soon, Levin did offer a silver lining to the current downturn by pointing to longer-term trends—2027 prebuy or not.
“We do believe that—especially on the Class 8 on-road—we will see a bouncing back here towards the second half of the year as there is also in the U.S. a big replacement need,” Levin said. “But the situation in the U.S. remains, as you well understand, very, very difficult to predict.”
Shares of Traton (Ticker: 8TRA.DE) rose more than 7% in European trading April 28. Over the past six months, they are essentially unchanged, which has left the company with a market capitalization of about $17.1 billion.
