Navistar CEO: Right Plan and Strategy in Place

November 7, 2012 by · Comments Off on 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.


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Navistar Raises Over $14 Million in Stock Sale

November 6, 2012 by · Comments Off on Navistar Raises Over $14 Million in Stock Sale 

Navistar International Corp. said Monday (Nov. 5) it sold 763,534 shares to underwriters of a previous stock offering, raising more than $14 million for Navistar’s general fund.

The Chicago Tribune reported that the sale, at $18.75 per share, increases to 80 million its common shares outstanding.

Last month, the Lisle, Ill.-based truck-maker sold 10.7 million common shares at $18.75 per share, raising $192 million after discounts and expenses.

Analysts have raised concern’s about the company’s cash for months. Navistar spent more than $700 million developing an engine that does not meet 2010 federal emission standards.

Navistar changed course after reporting a second-quarter loss of $172 million. Last month, it completed a deal to sell diesel engines from competitor Cummins Inc. in its heavy duty trucks. It will also use Cummins’ technology to make engines that meet federal requirements.



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Navistar: Selling RV Unit a ‘Realistic Outcome’

November 1, 2012 by · Comments Off on Navistar: Selling RV Unit a ‘Realistic Outcome’ 

Troy Clarke

To address a number of topics prior to the Recreation Vehicle Industry Association’s (RVIA) 50th Annual National RV Trade Show, Nov. 27-29 in Louisville, Ky., Navistar International Corp. President & COO Troy Clarke agreed this week to field an array of questions on behalf of the Lisle, Ill.-based company, a global truck builder and parent company of Navistar RV. Clarke, a former GM executive like Navistar’s new chairman Lewis Campbell, joined Navistar in 2010 and assumed the reins of the company’s top day-to-day job in late August during rather turbulent times for the legendary Chicago-based firm. Here’s the highlights of that conversation: There have been quite a few changes for Navistar over the past several months and plenty of news reports in recent weeks about the company. What, in your view, is going on at Navistar these days?

Clarke: Yes, you’re right, we’ve had a good amount of change these past several months. One of the major announcements was the change in our engine strategy. For our commercial trucks and engines, we’ll begin to use the same emissions technology, a system called Selective Catalytic Reduction, or SCR, the same one used by our competitors. With this change in strategy, we’ve made several other important changes and announcements, including bringing on our new CEO, my boss, Lewis Campbell.

Together, Lewis and I have been working with the Navistar leadership team on a plan we call “Drive to Deliver,” which provides a renewed emphasis on our company’s North American truck and engine business and doing the things that need to be done to quickly turn the company’s performance around and drive shareholder value.

RVB: So, what are some of these things you’re doing to improve the performance of the overall company?

Clarke: Well, as we move to our new emissions technology, we’ve really tried to take some noise out of the system, address some of the criticism head-on and make some decisions that will help make this a smooth, swift and high-quality transition. We’re bringing back the Cummins ISX15 in our trucks and will use the Cummins SCR aftertreatment system for our heavy-duty engines.

We believe we have sufficient liquidity to make this transition, and we expect to end our 2012 fiscal year at the high end of our guidance of $875 million to $1.25 billion in operating cash. And, just last week we announced a public offering of stock that generated upwards of an additional $200 million to enhance our balance sheet. We did this to put to rest yet another uncertainty — the question of whether Navistar will have enough available liquidity to manage through the current industry downturn and bridge us through our new product launches throughout the year.

RVB: And how about your Navistar RV business? How will it be impacted by these developments?

Clarke: We are currently evaluating all parts of our non-core business, which we define as businesses outside our core North American truck, engine and parts businesses. We are making an assessment as to both their strategic fit and their current and anticipated return on invested capital – ROIC — using a disciplined process. We are moving quickly, and we will communicate those decisions when appropriate.

RVB: So, for the benefit of all those who regularly visit and generally follow the industry, the question looms: Do you consider Monaco, Holiday Rambler and R-Vision brands part of Navistar’s “core business?”

Clarke: Our focus is on restoring our North American truck, engine and parts businesses to their market leading positions. While we view our RV business as an important part of our what we do, we do not consider Navistar RV and our Monaco, Holiday Rambler and R-Vision brands to be a part of our “core” North American commercial truck, engine and parts business. So, RV is under review.

RVB: Then, if Navistar RV is under review, what does that mean for the Navistar RV business moving forward?

Clarke: It’s important to note that Navistar RV is not being singled out; all aspects of our business are on the table for review. As you know, there’s been some steady growth over the past few years in the RV industry, and we’re committed to the long-term viability of the RV business.

Navistar RV President Bill Osborne and the entire Navistar RV team are excited about the great new products we’re introducing at next month’s Louisville RVIA show and we are well positioned to take advantage of the growing RV industry.

RVB: What, specifically, are some of the things the company is looking to improve on the RV side of the business?

Clarke: When Navistar acquired Monaco out of bankruptcy a little more than three years ago, we implemented many changes to enhance the business. We recently completed a number of actions to improve our quality, increase efficiencies, reduce costs and better leverage the significant RV supplier base in northwest Indiana. So, many improvements have already been made.

RVB: And you closed down your Coburg, Ore., operations.

Clarke: Yes, in August of 2011, we announced the consolidation of our manufacturing operations from Coburg, Ore., to Wakarusa, Ind. and those actions are complete. Since January of this year, we have added more than 500 manufacturing employees to ramp up production in our Elkhart and Wakarusa facilities. In fact, our 2014 model year lineup and the RVs we’ll be showing next month at the Louisville Show represent the first RVs produced through our streamlined manufacturing processes. As a result, we’ll be able to provide our customers with the best combination of quality, comfort and affordability in the industry.

We’ve done some other things as well to improve the business. We’ve leveraged the sourcing and engineering strengths of Navistar to achieve improved scale, higher quality standards and improved costs. And, we also closed our Union City, Ind., RV chassis operations and have idled production of our Workhorse RV and step van chassis operations.

RVB: So, realizing that your evaluation is currently underway and looking in your crystal ball, what, realistically, does the future hold for Navistar RV? Is there a chance Navistar could sell or close its RV business?

Clarke: We are committed to the long-term viability of our RV business. With that said, there are really three potential outcomes for our RV business — close the business, sell the business or continue to invest in and grow the business.

Well, I can tell you, we have no plans to close the business and have not studied a closure scenario. It is not our plan to do so. In the last three years, we’ve made significant investments and have taken actions that have delivered improvements in the performance of the business. Right now, we are simply evaluating all of our businesses to ensure they are delivering the appropriate “Return on Invested Capital” and have the right strategic fits.

Selling the business is a realistic potential outcome and would support our efforts to maintain the future viability of the business. If a sale were to occur, Navistar would be looking to sell to a buyer who can create more value in the RV business than we can.

If someone else can maximize its value, that is ultimately best for all stakeholders. That’s another option and one that we are closely evaluating. Now, this would not be a distressed sale. We don’t have that need. As I said, we have the cash necessary to manage our emission transition plan. And, we have already made investments in the business and have taken actions that are driving improvements in the business.

RVB: Any other closing comments, Troy, or anything else you’d like our readers to know?

Clarke: Let me end with where I began. When evaluating our businesses, and in this case, Navistar RV, we are using a disciplined process to assess both return-on-invested capital and strategic fit and the close/sell/grow options. We want to make these decisions in a timely manner to address the uncertainties for our employees, customers and dealers, but we won’t sacrifice performing the due diligence that’s required. My commitment is that when we have made a decision and are ready to announce that decision, these key stakeholders will hear about it first from us.


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Navistar to Close Truck Assembly Plant in Texas

November 1, 2012 by · Comments Off on Navistar to Close Truck Assembly Plant in Texas 

Navistar International Corp. said it intends to close a truck assembly plant in Garland, Texas, by the first half of 2013 as part of its efforts to cut costs, according to a report in the Chicago Tribune.

“Closing a facility is always difficult because of its impact on the many great people who’ve been part of our company,” Troy Clarke, Navistar president and chief operating officer, said in a statement. “But the fact is that Navistar has too much manufacturing capacity in North America, and we must take quick action to improve our business and position the company for long-term success.”

Navistar employs about 900 salaried, hourly and third-party temporary workers at the Garland facility. Production will be moved beginning in January 2013 to the company’s plants in Escobedo, Mexico, and Springfield, Ohio.

The plant closure is expected to reduce Navistar’s operating costs by $25 million to $35 million annually. The company’s overall goal is to cut costs by $150 million to $175 million per year.

The truckmaker, parent to Navistar RV, has already laid off about 800 salaried workers. Navistar expects those job cuts to save the company $70 million to $80 million annually.



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Navistar Mulls Asset Sales; No Deep Discounts

October 30, 2012 by · Comments Off on Navistar Mulls Asset Sales; No Deep Discounts 

Truck and engine maker Navistar International Corp. is willing to look at the possible sale of any part of its business as it tries to return to profitability but it is not willing to consider fire sale prices for its assets, interim Chief Executive Lewis Campbell said on Monday (Oct. 29).

Reuters reported that Campbell, who replaced CEO Dan Ustian in August, said he came out of retirement because he was excited about the prospect of turning around an iconic American business. The company is about halfway through an analysis of every business it operates, he said.Inflatable Ultimate Playground cheap

“Every business we have, like it or not, is going to go through the eye of the ROIC needle,” Campbell told an auto industry conference in Las Vegas that was monitored via the Internet. ROIC refers to returns on invested capital. Any business that does not improve within a reasonable time, “we might try to monetize it,” Campbell said.

The company is cutting costs and is weighing asset sales, targeting savings of up to $175 million next year. It has also sold 10 million common shares to raise funds for capital spending and other initiatives, creating a cushion in case of a severe slump in demand.

Navistar had struggled to win U.S. regulatory approval for a new diesel engine technology that it dropped in August, saying it would buy engines from Cummins Inc (CMI.N). The Navistar engine design could not be saved, Campbell concluded early in the review of the business, he said.

Earlier this month, it agreed to appoint three new members to its board, avoiding a proxy fight with activist investors Carl Icahn and Mark Rachesky, who have demanded changes. Icahn had criticized the company’s product strategy, called its appointment of the new CEO “ill-advised,” and had demanded representation on the board.

Navistar has laid off or bought out some white-collar workers, is reducing engineering spending, 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.

The Lisle, Illinois-based company, which also makes Monaco recreational vehicles, school buses and military vehicles, may take further steps beyond those already outlined if the U.S. economy turns out to be “abnormally lousy” next year, the interim CEO said.

“We have plenty of cash so we’re not fire-saling” assets, Campbell said, adding Navistar would likely end its quarter with about $1.25 billion in cash, the top of its forecasted range or somewhat above it.

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Report: Icahn Grabs Stake in Navistar Offering

October 26, 2012 by · Comments Off on Report: Icahn Grabs Stake in Navistar Offering 

Billionaire investor Carl Icahn bought nearly 15% of the 10.7 million shares issued Thursday (Oct. 25) by Navistar International Inc. to ease concerns about the commercial truck and engine maker running out of money.

Fox Business reported that five of Icahn’s investment funds bought 1.6 million shares, paying $18.75 a share, or a total of $29.9 million, according to a filing late Thursday with the U.S. Securities and Exchange Commission (SEC).

The additional shares raised Icahn’s Navistar holdings by 15.5%. That’s the same percentage Navistar’s total share count increased by with the additional 10.7 million shares. As a result, Icahn’s stake in Navistar stays unchanged at about 14.9%, just under the 15% threshold to trigger Navistar’s antitakeover plan.

The company’s board enacted a so-called poison-pill plan in June when activist investors such as Icahn and his former protege Mark Rachesky began buying large blocks Navistar’s depressed stock. Both Icahn and Rachesky had 14.9% shakes in Navistar before the company’s stock offering Thursday.

Earlier this month, Navistar’s directors agreed to add Rachesky and a representative for Icahn to the company’s board. Icahn and Rachesky also were given the authority to select another director who both men agree on. In exchange for representation on Navistar’s board, Icahn and Rachesky agreed to refrain from nominating an alternative slate of directors at the company’s 2013 annual meeting. The deal defused a potential showdown over control of the company between the incumbent board and activist investors.


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Navistar to Hold Public Offering on 10M Shares

October 24, 2012 by · Comments Off on Navistar to Hold Public Offering on 10M Shares 

Navistar International Corp. today (Oct. 24) announced the commencement of a public offering of approximately 10 million shares of its common stock. In addition, the company will grant the underwriters a 30-day option to purchase up to approximately 1.5 million shares of common stock.

According to a news release, the company intends to use all net proceeds from the offering for general corporate purposes. J.P. Morgan Securities LLC, Goldman, Sachs & Co., BofA Merrill Lynch and Credit Suisse Securities (USA) LLC are acting as joint book-running managers for the offering.

The securities described above are being offered pursuant to a shelf registration statement previously filed with and declared effective by the Securities and Exchange Commission (SEC) on Oct. 24. A preliminary prospectus supplement and the accompanying prospectus relating to these securities has been filed with the SEC and is available on the SEC’s website at


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Navistar, Cummins Finalize Engine Partnership

October 22, 2012 by · Comments Off on Navistar, Cummins Finalize Engine Partnership 

Navistar International Corp. today (Oct. 22) announced it has reached definitive, long-term supply agreements for heavy-duty diesel engines and emissions aftertreatment technologies with Cummins Inc.

According to a news release, Navistar will offer the Cummins ISX15 in its International ProStar, PayStar and 9900 models. In addition, Navistar will utilize the proven Cummins Emission Solutions aftertreatment system for the company’s proprietary heavy-duty big bore engines.

“This agreement represents a natural extension of the long-standing relationship between Navistar and Cummins and our history of collaboration in serving our mutual customers,” said Troy Clarke, Navistar president and COO. “With the addition of the Cummins ISX15 and the use of the proven Cummins aftertreatment system, we are on a clear path to providing customers with proven, reliable and fuel-efficient clean engine technology.”

Engineering teams from both Cummins and Navistar have been working in close collaboration over the past several months to integrate vehicle, engine, and emissions aftertreatment systems. With a formal, finalized agreement, the teams are now focused on a swift, well-executed and high-quality launch.

Navistar will begin its initial pilot builds of the International ProStar+ with the Cummins ISX15 in November 2012 with first customer shipments in December 2012. The International ProStar+ with MaxxForce 13 and the Cummins Emission Solutions SCR-based aftertreatment system will enter initial pilot production in March 2013 with regular production to begin in April 2013.

The remaining line-up of heavy-duty truck models will transition to SCR-based clean engine technology in a phased launch throughout 2013 based on volume and customer demand.

During the transition, Navistar will continue to build and ship EPA-compliant trucks in all vehicle classes using appropriate combinations of earned emissions credits and/or non-conformance penalties.

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Navistar Announces Jack Pope Will Join Board

October 17, 2012 by · Comments Off on Navistar Announces Jack Pope Will Join Board 

Navistar International Corp. announced that John C. (Jack) Pope has been appointed to the company’s board, replacing David D. Harrison, who elected to retire after serving five years as a board member.

According to a press release, Pope is chairman of PFI Group LLC, a financial management firm that invests primarily in private equity opportunities.

Pope’s appointment and Harrison’s retirement are effective immediately, maintaining the total number of Navistar board members at 10, nine of whom are independent.

Pope’s appointment is in addition to the recently announced appointments of Vincent J. Intrieri, Mark H. Rachesky and a third director to be designated and mutually agreed upon by Icahn Partners and MHR Fund Management.

“Jack Pope is a well-respected, deeply experienced business leader, who will provide our board and management team with new insights and perspectives as we continue to implement our strategy and the necessary actions to turn the company’s performance around and drive long-term profitability and shareholder value,” said Lewis Campbell, Navistar’s chairman and CEO. “I also want to thank David Harrison for his many contributions and five years of dedicated service to Navistar.”




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Jim Hebe Announces Retirement from Navistar

October 8, 2012 by · Comments Off on Jim Hebe Announces Retirement from Navistar 

James L. Hebe, Navistar senior vice president, North America Sales Operations, today announced his retirement. Truck Trend reported that Hebe, 63, has led the company’s North American Truck sales and marketing efforts since re-joining the company in 2008.

“Jim Hebe has been a significant figure in our industry for four decades,” said Jack Allen, president, Navistar North America Truck & Parts. “We have benefited greatly from his many contributions, perhaps none more important than Jim’s passion for developing deep customer relationships, which has become embedded within Navistar’s sales and marketing team. We thank him for his service and wish him the best in retirement.”

Hebe began his career at International Harvester (Navistar’s predecessor) in 1971 as a management trainee in Boston, and later became a heavy truck salesman for International Trucks. After leaving International Harvester, Hebe held leadership roles of increasing responsibility with American LaFrance, Kenworth Truck Company, and Kenworth of Tampa, culminating with his appointment to chairman, president and chief executive officer of Freightliner in 1992.

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Report: Navistar Settling With Icahn, Rachesky

October 8, 2012 by · Comments Off on Report: Navistar Settling With Icahn, Rachesky 

Truck maker Navistar International Corp. said Monday (Oct. 8) it will replace two board members as part of an agreement with its largest shareholders to avoid a proxy fight.

According to the Chicago Tribune, the announcement comes a month after billionaire investor Carl Icahn made public a letter calling the Lisle-based company a poster child for abysmal business decisions and poor corporate governance and demanding four board seats for the company’s largest shareholders.

“I am glad to have reached an agreement that provides strong shareholder representation on the board and look forward to working diligently with the board to enhance value at Navistar,” Icahn said in a statement.

Navistar appointed Vincent J. Intrieri and Mark H. Rachesky to its 10-member board. They will replace Eugenio Clariond and Steven J. Klinger, who will retire.

Intrieri has worked for entities related to Icahn since October 1998. Rachesky is the president of MHR Fund Management LLC, an investment firm that he founded in 1996.

The three directors will stand for election at the company’s 2013 annual meeting of shareholders.

“We are pleased to have reached an agreement with Icahn and MHR as we believe it is in the best interest of the company and all of its shareholders,” said Michael N. Hammes, Navistar’s independent lead director.

Navistar troubles stem from an engine technology that cost Navistar $700 million to develop since 2001 but failed to reduce levels of smog-causing nitrogen oxide enough to meet 2010 federal standards.

Icahn, hedge fund manager Mark Rachesky and Franklin Resources Inc. together own about 50 percent of Navistar.

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Navistar is Ahead of Schedule on New Engines

October 8, 2012 by · Comments Off on Navistar is Ahead of Schedule on New Engines 

Navistar International Corp. is preparing to deliver a revamped line of truck engines ahead of its April schedule and to outline a new set of financial targets, said interim Chief Executive Lewis Campbell.

According to the Wall Street Journal, Campbell said 13-liter and 11-liter engines that comply with federal emissions regulations could reach the market in March rather than April. In the meantime, deliveries of Navistar trucks with Cummins Inc.-built 15-liter engines will begin by the end of the year. All these engines will help the company regain lost market share, said Campbell, who predicted the Navistar-built engines will offer better fuel economy than rivals’ engines.

Campbell said Navistar internally has identified business units or projects he would close or sell to raise margins following the failed engine-emissions strategy pursued by former CEO Dan Ustian. He declined to name those units. In a separate report by the Chicago Tribune, analysts have cited the company’s Navistar RV unit, formerly Monaco RV LLC, as well as some of Navistar’s foreign operations, as among businesses that could be sold.

The costs of the failed emissions strategy caused Navistar’s profit and stock price to plummet and attracted calls for change from activist investors, including billionaire Carl Icahn.

“We’re doing a lot of things right,” he said in an interview Thursday at the company’s new headquarters outside Chicago. “If we haven’t made dramatic progress in the next 12 months, I’d be shocked.”

Navistar posted a $241 million loss for the nine months ended July 31, compared with a profit of $1.47 billion in the same period a year ago as costs associated with the engine strategy rose and revenue from truck and engine sales stalled.

Key to revitalizing Navistar is improving the company’s North American truck operations, Campbell said. The company will be dialing down overseas growth initiatives where returns are lagging. Under Ustian, Navistar initiated an overseas expansion strategy in a bid to expand the company’s sales.

“It didn’t make sense to me to be too aggressive globally when we haven’t fixed North America,” Mr. Campbell said.

The businesses or projects he plans to close or sell would cut a combined $260 million in annual revenue, including $50 million from the closed 15-liter engine project, but generate $52 million in savings, according to a company presentation.


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Navistar CEO Considers Further Cuts, Closings

October 5, 2012 by · Comments Off on 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.


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Report: Navistar Moving Past Emissions Issue

September 26, 2012 by · Comments Off on Report: Navistar Moving Past Emissions Issue 

Navistar International Corp. won’t apply SCR to its 15-litre MaxxForce engine and will instead lean on Cummins Inc. for its high-horsepower requirements, Jim Hebe, senior vice-president of North American sales operations confirmed during a press briefing in Salt Lake City.

Truck News reported that it’s the first official confirmation that the company won’t pursue its own 15L engine once it uses up its remaining emissions credits and can no longer pay non-conformance penalties for engines that don’t meet EPA2010 emissions standards.

“Our intention is to continue to build them as long as we can and then phase into the Cummins ISX15,” Hebe told a small gathering of truck journalists here today. “It’s a shame, it’s a great engine.”

Hebe said anticipated demand for the 15-litre MaxxForce would not support the cost of further developing the engine and applying SCR exhaust aftertreatment to it. International will focus on its higher volume MaxxForce 13 engine, which will combine selective catalytic reduction (SCR) exhaust aftertreatment with Navistar’s in-cylinder solution to form what it has dubbed In-Cylinder Technology Plus (ICT+).

Officials indicated Navistar is already building International trucks with Cummins engines and that the existing Memorandum of Understanding between the two companies will soon become an official supply agreement.

Hebe provided some insight into what went wrong with Navistar’s EGR-only emissions strategy. He still believes pursuing a non-SCR emissions solution was the right call, however he admitted it was a mistake for the company to put all its eggs in one basket.

“Two decisions were made in this company in August 2008,” Hebe said. “One was to go EGR and the other was to go it alone. The decision to go with EGR was not the wrong decision, but the decision to go it alone was the wrong decision. What really, in the end, created the biggest issue was not EGR, it was that we ran out of time and we ran out of credits. If we had stuck with a partner in the engine business, we would have had more time to develop our in-cylinder solution and probably at the end of the day, we would’ve gotten that. That’s water over the dam now.”

Navistar has been hosting more than 700 dealer reps at its Vocational Boot Camp in Salt Lake City over the past few weeks, and Hebe said dealers are clearly more comfortable with the company’s current path.


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Navistar Closing Down Workhorse to Cut Costs

September 12, 2012 by · Comments Off on Navistar Closing Down Workhorse to Cut Costs 

Workhorse Custom Chassis is going out of business and is due to shut down in October, though Navistar International Corp., its owner since 2005, is saying little about it.

According to a report on, spokesman Steve Schrier confirmed the news and responded to questions by referring to statements in the company’s recent 10Q disclosures to the federal Securities & Exchange Commission (SEC).

Workhorse stopped making its W42 and W62 van chassis early this year, one competitor said, and final production is apparently imminent of motorhome chassis. Production should wrap up this month, a worker at the plant in Union City, Ind., said before directing further questions to Navistar headquarters in Lisle, Ill.

However, Navistar’s eStar electric van, though managerially connected to Workhorse, remains an active product, Schrier said. Introduced in 2009 with the help of a federal grant, eStar captured early sales from several customers for use in California, which encourages use of zero-emissions vehicles with its own grants.

Nonetheless, “the commercial viability of electric vehicles is what drives sales in this market,” Schrier said. With no engine or conventional drivetrain and the comparative simplicity of electric components, maintenance and operating costs are very low, even if purchase prices are high.

And although A123 Systems, which supplies batteries for the eStar and other electric vans, is in bankruptcy, “individual suppliers are not impacting our eStar business,” Schrier said. About 100 were built at the Navistar-Monaco plant in Wakarusa, Ind., last year.

Workhorse was started in 1998 by investors who took over production and sales of General Motors’ popular P-series Stepvan chassis when GM dropped it. GM gasoline and diesel engines powered vehicles which, like competitors’ chassis, got bodies from outside suppliers. Large delivery fleets like FedEx, UPS and Frito-Lay were among its customers.

Navistar acquired Workhorse seven years ago and it seemed a good fit, as Navistar diesels would find another outlet, even if emphasis was still on gasoline.


It also seemed that the new subsidiary might be strengthened through its association with a big corporation whose history from the 1930s into the ’60s included the popular Metro van. For a short time Workhorse offered an integrated chassis-body product called MetroStar.

The Great Recession a few years later hurt both parties, and Navistar executives’ losing bet on their non-SCR “in-cylinder solution” to diesel emissions limits contributed to heavy financial losses. These prompted serious cost-cutting.

Two financial reviews showed that Workhorse could not recover investments in it, the 10Q statement said. So earlier this year Navistar ordered Workhorse to stop accepting orders for W-series chassis and to begin to “idle” the business. It has taken a $10 million charge as part of shutdown expenses.

Schrier could provide no information on warranty and parts & service support for existing Workhorse chassis.

Executives at Freightliner Custom Chassis Corp., a major competitor, said one result of Workhorse’s closure has been more interest from customers in gasoline power, something that Workhorse specialized in. FCCC last year began offering General Motors’ 6-liter Vortec 6000 gasoline V-8, the same engine that Workhorse used toward the end.

Until late last week, Navistar’s website listed Workhorse as one of its truck brands and offered a link to the Workhorse site. A newly redesigned website now lists only International and Mahindra International as Navistar’s truck brands.

But Workhorse’s site as of this writing is still active and describes the W series commercial and motorhome chassis, and gives no hint of their demise.


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