Future of Orion remains unclear as Daimler gets out of bus business

By WKTV News

ORISKANY, N.Y. (WKTV) - A new business partnership means the end of bus manufacturing at Orion in Oriskany as Daimler, which owns Orion, gets out of the bus business.

What that means for the close to 500 employees that work there remains unclear.

Daimler Buses announced Wednesday that the company is reconfiguring its bus business in North America and has signed a Letter of Intent with Motor Coach Industries International Inc. ("MCI") to establish a partnership that will 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.

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. Under the proposed agreement, after the deal is closed, MCI would evaluate operations related to Setra in North America and look to integrate operations with existing MCI facilities where they feel appropriate.

The companies state that the poor economy has made for low public sector investments by municipal government agencies, and that they expect them 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.

Effective immediately, 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 states that it expects to continue a retrofit program for current customers at the Oriskany facility.

"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 Hartmut Schick, Head of Daimler Buses. "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 states that the company 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.

An Orion employee tells NEWSChannel 2 that workers were sent home shortly before 10 a.m. from the Oriskany facility on Wednesday morning.

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