Navistar CEO Considers Further Cuts, Closings
Embattled U.S. truck and engine maker Navistar International Corp. is cutting administrative and engineering spending and may close factories as it lowers costs, the company’s newly named CEO said on Thursday (Oct. 4).
The maker of International-brand trucks is reviewing all operations beyond its core North American truck and parts business to see whether any need to be fixed, sold or closed, as it seeks to revive profits, CEO Lewis Campbell said in his first interview since taking the reins at Navistar on August 27.
Navistar has largely completed a wave of white-collar layoffs and buyouts that led to about 800 job cuts. It is also reducing engineering spending by 28%, and will review whether it needs all 19 of its North American factories at a time when a shaky U.S. economy is hitting demand for trucks.
“More than likely we’ll have to adjust our footprint. And we’re ready to do that,” said Campbell. “Since I’ve been here we’ve taken every single element of cost and said, ‘Is that where we want to be two years from now, one year from now?’ And if it’s not, let’s get a project in place to do something about it.”
Navistar shares have tumbled some 32% over the past year as the company struggled to win U.S. regulatory approval for a new style of diesel engine. It ended the effort in July and chose to adopt the engine technology used by rivals such as Paccar Inc and Volvo AB .
The Lisle, Ill.-based company, which also makes Monaco recreational vehicles, school buses and military vehicles, lost $241 million through the first nine months of its fiscal year ending Oct 31, after charges of more than $200 million to repair engines made in 2010 and 2011.
Analysts do not expect Navistar to return to profitability until the third quarter of fiscal 2013, according to Thomson Reuters I/B/E/S. Navistar had 19,000 employees at the end of its last fiscal year.