REDFORD TOWNSHIP, MI– Daimler AG announced it will close its Sterling Trucks division in North America and cut 3,500 jobs as it reins in production and shifts manufacturing to Mexico, according to www.bloomberg.com. The reorganization involves the closure of plants in the United States and Canada at a cost of $600 million and is aimed at saving $900 million a year by 2011, Daimler said in a statement today. The Stuttgart, Germany-based company will retain the Freightliner and Western Star brands in the region.

Daimler and competitors VolvoAB and Paccar Inc. have seen truck sales dive as growth slows and credit markets seize up. The German company, whose U.S. deliveries fell 30 percent in the first half, will shut Sterling’s St. Thomas, Ontario, factory in March and one in Portland, Oregon, in 2010, when labor deals expire. A new Freightliner plant in Mexico will open as planned.

The Sterling brand, a maker of medium-sized models that accounts for 15 percent of Daimler’s U.S. truck output, never met expectations. The unit was set up in 1998 from truck operations that Daimler bought a year earlier from Ford Motor Co.

The plant closures will cost 2,300 manufacturing jobs, while an additional 1,200 administrative positions will be cut in connection with the reorganization. Costs will amount to $350 million in the fourth quarter, mainly for severance pay and dealer compensation, plus $150 million next year and $100 million spread over 2010 and 2011, according to www.bloomberg.com.

Production of Western Star trucks will be transferred to a plant in Santiago, Mexico. Freightliner is sticking to plans to start making its Cascadia model at a new factory in Saltillo, Mexico, in February and will shift military-vehicle manufacture to plants in North or South Carolina. The North American truck division’s headquarters will remain in Portland.