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Sterling Trucks is eliminating one of its two remaining shifts and laying off another 720 workers as of November as the southwestern Ontario manufacturer joins the growing ranks of companies being squeezed by an economic slowdown in the U.S.

A year ago, Sterling laid off an additional 600 people in St. Thomas when another shift was cut, said Dave Elliott, president of the Canadian Auto Workers Local 1001.

Back when there were three shifts, "We built trucks pretty much 24 hours a day, five days a week," Mr. Elliott said.

But with the economy in a slump, "freight's not moving, construction is down - nobody is buying trucks."

"We really need the economy to turn around ... and hopefully the price of fuel can drop and people will start buying again."

The president of the St. Thomas Chamber of Commerce called the layoffs "devastating" news for the town, a manufacturing-dependent community south of London, Ont.

Bob Hammersley said there is "no way to understate how much impact 720 relatively high-paying positions have in a community."

Each one of those jobs, he said, "can spin to touch at least seven others that sell vehicles, that sell groceries right down to the neighbourhood gas station."

Mr. Elliott agreed, saying Sterling's younger and well-paid work force "puts a lot of money into the local economy" and warns the spinoffs "will be amazingly felt."

Nothing has been arranged yet regarding compensation for the affected workers, he added.

"We've got many meetings to sit down with the company to discuss what's going to be best for the membership."

The news comes just days after General Motors said it plans to reduce its North American salaried work force by thousands of people and cut truck production even further.

Last month, the auto maker said its truck-assembly plant in Oshawa, Ont., would be shut next year, eliminating 2,600 jobs.

The auto sector has been hammered by high gasoline prices and the weak economy, which have resulted in a dramatic shift in consumer tastes away from trucks and SUVs.

Sterling Truck is headquartered in Redford, Michigan, and is a subsidiary of Daimler Trucks North America of Portland, Oregon.

The facility produces a range of vehicles under the Sterling brand from small delivery trucks and highway rigs to cement mixers and garbage trucks.

A call to Sterling Truck early Thursday was answered by a security official who said the company would not be issuing a statement about the layoffs.

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