Navistar to trim work force, reduce some health benefits

Navistar International will cut 20 to 25 percent of itswhite-collar sales and administrative staff over the next threeyears, the Chicago-based heavy-truck maker said yesterday.

In addition, the firm will scale back health benefit plans forits non-union employees, adding deductibles and co-payment provisionsto the plan that formerly covered all medical expenses. Unionemployees, who are covered under a three-year contract that expiresin October, 1987, are not affected.

Savings will total $40 million over the three-year period, thecompany said.

Donald D. Lennox, Navistar chairman and chief executive officer,said the cost-cutting moves are part of the company's plan to "keepNavistar profitable and competitive during a period of reducedproduct demand and intense pressure on margins resulting from arestructuring of the trucking industry."

In the company's third-quarter earnings report, released earlierthis month, Lennox said the problems that have plagued the heavytruck industry - price discounting, continued weak demand andindustry overcapacity - "show no signs of abating."

The latest round of staff reductions will affect between 350 and450 of Navistar's 1,800-person white-collar work force. Most ofthose jobs are in the Chicago headquarters.

About 150 of the positions will be phased out by Oct. 31through a combination of early retirements and voluntary terminationswith deferred pension benefits. Approximately 275 employees areeligible for early retirement and another 600 qualify for thedeferred retirement plan, the company said.

One industry observer suggested that Navistar already has cutcosts so severely that this latest round of cuts "will be cuttinginto muscle. I find it hard to believe there are 400 moredispensable people."

But Barry A. Mannis, analyst with Shearson Lehman Bros., said:"I have confidence they wouldn't cut into the muscle at this point."Mannis is the co-author of a report recommending that "risk-oriented"investors purchase Navistar stock, a conclusion based on a beliefthat industry demand will pick up in the near future.

Navistar's common stock fell 25 cents after its announcementyesterday to close at $7.75.