Navistar CEO: Right Plan and Strategy in Place
Navistar International Corp.’s interim chief executive said Tuesday (Nov. 6) the company will get smaller before it gets bigger but underlined that he will not have a fire sale on any business unit.
“We have the right plan and strategy in place to turn this company around in the next 12 to 18 months,” Lewis B. Campbell said during a session at the Baird Industrial Conference held in Chicago.
The Chicago Tribune reported that Campbell announced in September a number of cost-cutting initiatives, including selling or closing business units and laying off about 700 salary workers. The company’s overall goal then was to cut costs by $150 million to $175 million per year.
Campbell said Tuesday the layoffs were completed at the end of October and that the company expects to exceed its cost cutting goals. The company’s Navistar RV unit builds Monaco, Holiday Rambler and R-Vision recreational vehicles.
Last month, Navistar said it will close a truck assembly plant in Garland, Texas, in the first half of 2013 and move production to the company’s plants in Escobedo, Mexico, and Springfield, Ohio, to cut costs.
The plant closure is expected to reduce Navistar’s operating costs by $25 million to $35 million annually. Costs from the Garland plant closure, including buyout packages, are not expected to exceed $10 million before taxes in the fourth quarter. Next year, Navistar expects pre-tax charges ranging from $30 million to $50 million.
The Lisle, Ill.-based truck-and-engine maker employs about 900 salaried, hourly and third-party temporary workers at the Garland facility.
Campbell said he will be at the manufacturing facility in Mexico next week, when the plant will be building the first truck with an engine from competitor Cummins Inc. He added that Navistar has sold 300 trucks that will be made during the rest of the year.
Navistar spent more than $700 million developing an engine that does not meet 2010 federal emission standards. The truckmaker changed its course after reporting a second-quarter loss of $172 million.
Last month, it completed a deal to sell diesel engines from Cummins in its heavy-duty trucks. It will also use Cummins’ technology to make engines that meet federal requirements.
Campbell said Navistar ended the year with more than $1.4 billion in cash. He expects to start paying off debt by the end of fiscal 2013. To raise cash, Navistar sold about 11.4 million shares at $18.75 per share. The sale increased to 80 million the company’s common shares outstanding.
“I see a company that has a sense of urgency, that is being unleashed as we get problems behind us and address the next problem that we see we need to focus on,” Campbell said.