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International Truck and Engine Corp. announced May 10 it had reached a conditional understanding with the Canadian Auto Workers union on a plan to keep the company`s Chatham, Ontario, heavy-truck assembly plant open.

The plan is now subject to review and approval by company management, Navistar`s board of directors and CAW members.

The plant is scheduled to close July 18.

The understanding is contingent upon securing financial support from Chatham-Kent municipal government, the federal government of Canada and the Ontario provincial government. Union members of CAW Local 127 and CAW Local 35 would also have to approve the plan. The company and the union have agreed to keep all details confidential until all necessary government and union approvals have been received.

Daniel C. Ustian, Navistar president and chief executive officer, said the decision to close the Chatham plant was never about the ability of the workforce to produce high-quality trucks, but about the need to make the plant cost competitive in the face of industry overcapacity and reduced industry demand.

"We are encouraged by the initiative taken by the CAW and the progress made by representatives from both the union and the company. Our management now needs to make certain that the conditional understanding meets our profit objectives," Ustian said.

Currently, the Chatham plant is producing an average 35 trucks per day on one shift with about 900 active employees. At its peak, the plant was producing more than 120 trucks per day on two shifts. In addition to active employees, there are about 1,300 union employees on layoff status.