Dana says Mack Trucks to end contracts

CHICAGO (Reuters) _ Dana Corp. said that heavy-truck maker Mack Trucks Inc. will not extend Dana's contracts for chassis assemblies and axles. Toledo, Ohio-based Dana has provided the parts for Mack's on-highway and vocational trucks for more than 15 years. It said Mack, a unit of Sweden's AB Volvo, cited tough market conditions and restructuring needs.Heavy-truck sales have been soft for more than a year because of the weak U.S. economy and an oversupply of recent-model used trucks. While orders have risen so far this year before new federal emissions standards, many analysts are expecting orders to return to previous levels.Dana said it received about $293 million last year from the chassis and axle contracts, which expire in December 2003 and May 2004, respectively. About $120 million of that came from Dana-manufactured components, with the balance being purchased parts, assembly and other related fees."We are disappointed by this change of direction by Mack," said Nick Cole, president of Dana's Heavy Vehicle Technologies and Systems Group, in a statement.He said that Dana continues to win new business that is expected to offset the contract loss. It is aggressively pursuing other opportunities for its factories in Lancaster, Pennsylvania, and Lugoff, South Carolina, that have mostly worked on the contracts. Dana will continue to provide other parts to the company.Mack Trucks, based in Allentown, Pennsylvania, said its decision was based on an assessment of trends in the trucking industry. It also said it is looking at a number of options, but declined to comment further.Mack Trucks estimated it had about 14.6 percent of the U.S. heavy-truck market at year-end.