Freightliner LLC announced that it intends to divest its American LaFrance fire and emergency services manufacturing business unit.

Based in Ladson, S.C., American LaFrance was acquired by the Freightliner organization in 1995 as part of a corporate expansion.

ALF is the country’s fifth-largest fire and emergency services vehicle producer with a heritage dating back 173 years. It currently operates six manufacturing facilities and five owned dealer locations across the United States and has a work force of approximately 1,200 hourly and salaried employees.

Freightliner LLC President and CEO Chris Patterson said that, as part of DaimlerChrysler, Freightliner continuously reviews its product portfolio and business operation and that, as part of this review, has determined that the fire apparatus business will not continue as a core business of the group in future.

“While the company has been driving improvement programs in recent times and we believe the American LaFrance business has growth and profitability potential, we also believe this potential can be better realized by a company that has a focus on ALF’s core markets," Patterson noted “As a result, we have been in discussion with a number of parties who have an interest in acquiring the assets of ALF, and several organizations have emerged as likely investors. Further details will be released as we near a final deal.”

He went on to say that while the successful buyer would be expected to acquire ALF’s manufacturing and distribution infrastructure, the Ladson facility was not part of the sale and would remain a DaimlerChrysler asset. The company intends to use the 460,000-square-foot plant and office building, situated just north of Charleston, for other purposes in its commercial vehicle business.

A total of 528 Ladson-based direct and salaried jobs will be affected. In addition to around 400 hourly-paid workers, these jobs include engineering positions, purchasing and materials acquisition, customer support and service, marketing, information technology, and finance.

Two current ALF manufacturing facilities at Hamburg, N.Y., and Casper, Wyo., are to take on the production of bodies, which is being transferred from Ladson as part of an internal restructuring program. Body production transfer work is scheduled to begin in October and be completed by late this year. A major share of the affected jobs at Ladson (about 250 of the 528) is a result of this production transfer.

“It is possible the new owner may seek to continue cab and chassis production at Ladson and perhaps retain a number of jobs through 2006 for this purpose,” Patterson said. “In the meantime, we are committed to transferring the body assembly operation out of the Ladson plant to meet operational and financial restructuring goals."

Patterson estimated the market for fire apparatus in NAFTA to be $1.5 billion, now recovering from weaker demand when municipalities faced difficult financial conditions earlier in the decade.

“Despite the occasional cycle,” he said, “the market for custom fire apparatus is expected to grow based on the need for more fire trucks, technology advances, increased federal funding for Homeland Security, and the need to replace older fire equipment.”

He said ALF’s overall revenues were forecast to increase 15% in 2005 through improved production throughput and gains on the existing order backlog.