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Navistar International Corp. said late Tuesday it will close its truck plant in Ontario, Canada, that has been idled for two years due to labor issues.

The Chatham, Ontario, plant has been idled and employees have been on layoff status due to the company’s inability to reach a collective bargaining agreement with the Canadian Auto Workers union.

Chatham’s production has already been absorbed by other Navistar truck plants, the company said in a statement.

“From a capacity standpoint, we are well positioned to meet demand expected in the last half of 2011 and further increases in 2012,” said Dee Kapur, president, Navistar Truck Group. “We’re seeing tremendous benefit from our flexible manufacturing strategy, which allows us to build more trucks — and a wider variety of them — at various plants.”

Chatham employed about 500 workers who had been producing 35 Class 8 tractors a day, mostly International ProStars and Lone-Stars in both sleeper and day cab models, Navistar said when it first idled the facility in June 2009.

Two different CAW chapters represented union members at the plant.

Navistar also said it will “significantly scale back operations” at its Monaco motor coach manufacturing plant in Coburg, Ore., affecting about 450 workers.

Motor coach production will be consolidated at its Wakarusa, Ind., plant and some Monaco functions will be moved to Navistar’s headquarters in Lisle, Ill.

The company’s Workhorse Custom Chassis subsidiary will close its Union City, Ind., plant, affecting about 225 employees. Those operations will be consolidated into other existing Navistar facilities for greater efficiency and productivity, Navistar said.