Navistar Posts 3Q Gains, Will Buy Back Shares

Navistar International Corp., the Warrenville, Ill.-based truck and engine manufacturer, said it will buy back up to $175 million of its shares, or about 5% of those outstanding,  in a bid to prop up its flagging stock price, which has fallen 43% since April.

According to the Chicago Tribune, the announcement came as the company posted a $1.4 billion third-quarter profit, most of it coming from a massive $1.48 billion tax gain.

Navistar Chairman and Chief Executive Daniel C. Ustian said the tax benefit puts the company it its bestequity position in a decade.

“Given our strong cash position,” he said, “we are launching a significant buyback of our stock, which we believe is currently undervalued. We are also evaluating additional return on capital options and look forward to announcing them early in 2012.”

Navistar boosted sales in the third quarter by 9 percent to $3.5 billion from $3.2 billion a year ago during the same period.  Nine-month sales rose to $9.6 billion from $8.8 billion.

It also used the tax gain to shield restructuring costs in its manufacturing operations. Included in the third-quarter results were charges of $137 million for the company’s plans to close its Chatham, Ontario operations, restructuring of its custom products business unit, and costs associated with integrating engineering.

Third-quarter net income was $1.4 billion, or $18.24 a share, compared with $117 million, or $1.56 a share, a year ago. Taking out all the charges, adjusted earnings were 79 cents a share, compared to $1.44 during the 2010 third quarter.

For the year, Navistar expects 2011 adjusted earnings to track between $5 and $6 a share, which Reuters reported was down from its prior projection of $5.50 to $6 a share.

It forecast full-year revenue of $13.6 to $14.1 billion, slightly below its previous view of $13.6 to $14.3 billion, Reuters said.

The restructuring charges and a drop on government work helped produce a $75 million third-quarter lossin Navistar’s flagship truck business versus a $227 million gain a year ago. But it’s engine business posted a $32 million profit on improved intercompany sales and better margins versus $1 million last year. Parts segment profit rose to $70 million versus $52 million in the third quarter a year ago.

 

Coburg Begins Search to Occupy Monaco Plant

Much of Monaco RV’s 1 million-square-foot Coburg, Ore., facility will be idle by early next year when the company transfers its motorhome production to Wakarusa, Ind.

As reported by the Register Guard, Eugene, local economic development officials are working with Monaco’s parent, Chicago-based Navistar International Corp., to see if the transportation equipment giant could use the Coburg property for one of its other divisions.

Navistar makes International brand commercial trucks, school buses, military trucks, concrete mixers and other products.

“It’s still too early in the process to be able to speculate on that,” Navistar spokesman Steve Schrier said.

Jack Roberts, executive director of the Lane Metro Partnership, a business recruitment and retention agency, said he recently phoned Navistar officials offering to work with them to find another use for the Coburg site.

“They’re going to try to look for other potential uses in their divisions,” he said. “They said at the time they didn’t know of any, but they’re going to explore that.”

Roberts said he’s not pinning his hopes on that scenario because the same factors that drove Navistar’s decision to consolidate motorhome manufacturing in the Midwest also would apply to its other products.

“It seems odd to think they would move something out here after consolidating motor home manufacturing in Indiana,” he said.

“That didn’t seem likely, but we didn’t want to foreclose any opportunities.”

If Navistar can’t use the Coburg property itself, it would be attractive to other manufacturers, Roberts said.

“It’s a lot less limited in its use than the Hynix building (in west Eugene), for example, because it’s a large open space and it has a great location right there by I-5,” he said. “It’s a terrific space for a large manufacturer. We just have to find one.”

Inquiries about manufacturing space have picked up a bit this year, but usually in the range of 200,000 square feet, he said.

Roberts said he talked with Navistar a couple of years ago about possibly making some of its other products in Coburg.

“The reaction I got even then is their supply chain is all back there, and it’s a significant expense to try to bring it out here.”

 

 

Wakarusa is Enthused Following Navistar News

Good news travels fast in this small Indiana community in western Elkhart County.

The Goshen News reported that the morning after Navistar International Corp. announced it would move 400 manufacturing jobs from Oregon to Wakarusa, the town was buzzing with optimism.

As retiree Don Foster walked his Chihuahua down Elkhart Street near the post office Wednesday morning he was excited about the good news.

“I think it is good for the community,” he said. “It is going to put a lot of people back to work. That’s what we need.”

Foster and other town residents are well aware of the long-term economic woes that hit the town when Monaco Coach closed and terminated more than 1,000 people at its Wakarusa plant. Now, this new iteration of Monaco will be adding to the 250 employees producing Class A and Class C motorhomes at the massive complex that dominates the industrial park along Nelson Parkway.

Foster said he has friends who have worked in the recreational vehicle industry.

“Some of them,” he said, “have had a hard time finding work.”

‘That kind of excitement’

Down the street at the Chamber of Commerce, President Deb Shively had already met with her board of directors.

“It’s great news,” she said. “We are excited about that growth. And Utilimaster will be up to 1,000 employees by Labor Day and we feel Wakarusa is going to get back to where it used to be. There is that kind of excitement.”

Utilimaster converts box trucks for parcel delivery companies and a variety of other applications. The company has a joint venture with Isuzu Motors of Japan to build a line of new, light-weight vans and is adding jobs to fill orders.

Wakarusa developed in the 20th century as a hub of manufacturing activity. The small town — with its wide, tree-lined streets and early 20th century homes with large front porches — is bordered by industrial plants to its east. The industrial complexes reach out to Ind. 19 and line that highway to the north and south of C.R. 40.

Besides building RVs, Navistar builds its eStar electric truck in town. Visitors gawk at the site of the quiet electric trucks being test-driven around the town, something the locals have become used to.

“It’s like you are in the space age,” Shively said. “It is two extremes — it’s where small town USA and high-tech meet. It is very cool.”

Monaco and Navistar not only provide jobs to the town’s residents, Shively said, but the companies provide vital financial support for town activities. The companies returned as sponsors of the annual Maple Syrup Festival last year, Shively said.

“It was nice to see that support come back,” she said.

But it is the paychecks and the turn of those dollars from Monaco workers that will boost the local economy the most.

“Hopefully we will get people moving in and they will plug into the community, shopping locally and attending events,” Shively said.

Shane Weldy knows all about the hard hurt the economic downturn has visited upon Wakarusa families. He had been selling insurance for home warranties to local real estate agencies when the recession killed his career. Since then he and his wife, Charlotte, opened The New To You resale shop on Elkhart Street and also work part-time jobs as well to get by.

“Four hundred jobs is a lot,” Weldy said. “If we can get people to move to town it would be great for the community.”

He said people visit his store all the time who say they would like to live in Wakarusa. Now, with jobs being created in town, Weldy believes that will help sell homes.

“It’s definitely going to help the market,” he said.

To read  the entire article click here.

 

Oregon’s Lane County Maintains RV Presence

Oregon lost its bid to get Monaco RV LLC to concentrate its recreational vehicle production around Eugene, culminating in the loss of 450 jobs over the next several months.

But, according to a report in the Oregonian, state and company officials said Wednesday (Aug. 3) it wasn’t for lack of trying, and industry officials suggest that economic and manufacturing trends might have doomed the job-preservation effort from the start.

State and local economic development officials worked with Gov. John Kitzhaber’s office to offer Navistar International Corp. around $2 million in cash incentives to centralize its RV business at its Monaco subsidiary in Coburg, said Jack Roberts, director of the Lane Metro Partnership Inc. That could have expanded Monaco’s local employment from 600 to 1,000, he said.

Instead, Chicago area-based Navistar chose to invest $1 million in an existing Monaco plant in northern Indiana, long home to the nation’s largest collection of RV makers. Navistar also will move some executives from Monaco’s Coburg headquarters to its corporate campus in Lisle, Ill., where it makes buses and heavy-duty, International-brand trucks.

The decision eliminates 450 jobs in Coburg over the next nine months and signals a decisive shift in Oregon’s RV industry, which shrank considerably after the debt bubble burst and fuel prices jumped in the late 2000s.

The departure will leave the state with an industry making largely towable RVs which retail from $25,000 to $100,000 instead of $250,000 or more.

It also reflects a move by some large manufacturers to consolidate production close to suppliers to cut costs. Navistar officials said Monaco’s northern Indiana plant is closer to suppliers and its Warrenville, Ill., headquarters.

Monaco’s longtime rival Fleetwood, which filed for bankruptcy protection in 2009, was bought by a private-equity firm and promptly relocated from California to northern Indiana.

“Elkhart County in Indiana is arguably the RV capital of North America,” said Navistar spokeswoman Karen Denning. “Navistar’s headquarters are in the Chicago area, too, so there’s a proximity advantage for its engineers and support staff,” she said.

Still, the loss is a bitter pill for Lane County workers and politicians, who in 2008 won a similar bidding war with Indiana when Monaco was a standalone, publicly traded company. The financial crisis, credit crunch and spike in fuel prices drove Monaco Coach Corp. into bankruptcy, where Navistar purchased it in 2009.

Several companies making towable trailers — RVs that hook on to trucks — still call Oregon home. They also appear to be poised to expand.

Navistar plans to continue making towable RVs in Coburg while keeping some IT and finance jobs at Monaco’s headquarters there.

In April, Keystone RV Co., based in northern Indiana, bought its Pendleton plant along with an adjoining 10 acres for $3 million. The city had built the plant for the company.

“That kind of committed them to our area,” Pendleton city manager Larry Lehman said, noting that Keystone also purchased a plant abandoned by Fleetwood.

In La Grande, Northwood Manufacturing Inc. employs nearly 400 making travel trailers, fifth-wheels and truck campers. In 2009, owner Ronald Nash bought a plant vacated by Fleetwood in 2009 and opened Outdoors RV Manufacturing Inc. just a couple months later. It now employs 150 making towables, a company official said.

Trailer-chassis maker Lippert Components Inc. and window-maker Kinro also operate plants in Pendleton. Both are divisions of New York-based Drew Industries Inc.

Making lower-cost RVs regionally still makes economic sense, said Darin Nelson, the sales manager for Outdoors RV.

Shipping a towable RV to a dealer across country would add $3,500 to its $25,000 price tag, he said. Makers of $200,000 motor homes can more easily absorb those freight costs, Nelson said.

To read the entire story click here.

 

Oregon Facing Another Blow With Monaco Exit

Monaco RV LLC will quit making big luxury coaches in Oregon, and that means 450 Lane County workers will be out of a job by early next year.

The Register Guard, Eugene, reported that parent company Navistar International Corp. assembled its Coburg RV plant workers at 1 p.m. Tuesday (Aug. 2) and delivered the long-expected news: To reduce excess manufacturing capacity, Navistar will consolidate its Monaco coach manufacturing at its Indiana plant. That will leave only 150 employees in Coburg.

“One guy was actually clapping,” probably out of frustration, said Barry Phillips, a 30-year-old floor installer at the plant.

The announcement caps years of wildly swinging ups and downs for the local Monaco work force, which already had been winnowed down in recent years from 2,200 to 600.

The employees went from record-breaking production in the mid-2000s to increased furloughs as the recession took hold to a massive layoff in late 2008 to a takeover by Navistar and rehiring with pay cuts — and now to a shutdown of motor coach manufacturing, which means curtains for the welders, cutters, assemblers and painters who worked on the RVs.

Many already have faced foreclosure or bankruptcy.

Lydia Short, 23, has worked at the plant for about a year after moving to Eugene from Indiana. She said she won’t go back to Indiana because her husband is a student at the University of Oregon.

“I’ll look for a job,” she said, “and that’s hard to do in Eugene.”

The layoffs will happen sometime in the next six to nine months, Monaco spokesman Steve Schrier said.

“They will continue making motorhomes here throughout the transition. It will not be a light switch event,” he said. “But at the end of the day, diesel motorhomes will be made at Wakarusa, Ind.”

After Navistar ends RV production here, about 150 workers will remain in Coburg to continue producing towable travel trailers, operate the Monaco RV service center and maintain other finance and information system functions for the company.

Navistar, which also makes trucks and truck engines, is having a good year financially. In the second quarter, its profits soared 86% compared to a year ago, to $80 million on sales of $3.3 billion, company financial statements show.

The departure from Lane County of 450 RV manufacturing jobs will leave only about 450 transportation equipment manufacturing jobs in the county, regional economist Brian Rooney said.

That’s 10% of the jobs the sector had in its 2005 heyday, when about 4,500 workers in Lane County were churning out motorhomes.

Monaco notified Oregon officials a month ago that it would consolidate RV manufacturing either at Coburg or Wakarusa, said Jack Roberts, executive director of Lane Metro Partnership, which recruits businesses.

Lane Metro Partnership, along with the Oregon Economic Development Department and the governor’s office, put together a pitch to persuade Navistar to keep the plant here, Roberts said.

“I’ve heard unofficially that the package we put forward was as good or better than theirs, but the fundamental advantage of being in the Midwest where a lot of their suppliers are — and where their connections are — made the difference,” Roberts said.

Coburg’s loss is Wakarusa’s gain. Economic development officials there were “elated” when the company said it would create 400 new jobs at its consolidated plant by next year.

The loss of the Monaco jobs is another blow for Lane County, where the unemployment rate was 9.4% in July.

The RV manufacturing jobs are part of a dwindling class of employment that pays well and has good benefits but doesn’t require a college degree, Rooney said. The broader community also will miss the Monaco paychecks, he said.

“You take that income out of the economy, it has a multiplier effect but in a negative way,” Rooney said. “Those jobs help support retail and services — and that can affect other services.”

The laid-off Monaco employees will have a struggle to find comparable work.

“The manufacturing that is here has been pretty flat,” Rooney said. “Some (former employees) may have to move out of the area.”

Roberts said he’s not giving up on the RV industry as a job creator in Lane County yet.

The demographics are favorable, Rooney said. Retired baby boomers buy the luxury coaches. The stock market has recovered, some, from its historic lows. And gas prices have receded a bit.

“We would love to be a part of this,” Roberts said. “But if that doesn’t happen, we’ll just have to find something else.”

 

Elkhart County Welcomes Monaco Job Infusion

Indiana’s Elkhart County got the kind of news Tuesday (Aug. 2) that communities dream about, according to a report in the South Bend Tribune.

Navistar International Corp. announced plans to relocate all motor coach manufacturing for Monaco RV LLC from Coburg, Ore., to Wakarusa, creating up to 400 new jobs here by next year.

“We are elated,” said Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County.

“It’s terrific for the whole region,” said Phil Penn, president and chief executive of the Greater Elkhart Chamber of Commerce.

The jobs are mostly assembly-line production with employees earning $15 an hour or more, Heiden-Guss said.

Heiden-Guss said there were several reasons why Wakarusa was selected.

“I think Gov. Daniels and Secretary of Commerce Mitch Roob have worked very hard for the last couple years on consolidation projects to take place in Indiana because companies clearly, because of the market, are shrinking their product footprint. So when consolidations occur, normally our state is a contender for those projects.”

The logistics of Wakarusa and Elkhart County being so close to the Toll Road was another factor, she said.

“And thirdly, the supplier base and what already exists in Elkhart County as well as within the Michiana region,” she said. “From a cost of doing business, Indiana looks great.”

The fact that the company already employed 251 workers in Wakarusa did not hurt it, either, Heiden-Guss said. “They have a number of structures in Wakarusa that are not currently being used in full capacity,” she said.

Another factor was incentives given by the state of Indiana, which included offering Monaco up to $2.8 million in performance-based tax credits and up to $125,000 in training grants based on the company’s job creation plans, according to figures in a release by the Indiana Economic Development Corp.

“It’s a given in today’s society,” Heiden-Guss said. “Anytime you can offset the initial burden of cost for a company, you do what you can.”

Wakarusa’s big break was in stark contrast to places like Coburg where 450 workers will be impacted by the move. Navistar also announced that it would be shutting down Workhorse Custom Chassis LLC operations in Union City, Ind., affecting 225 employees, along with a Chatham, Ontario, truck manufacturing facility that has been idled since June 2009.

“We are trying to make the best use of our capacity and assets,” said Karen Denning, a company spokeswoman.

Tuesday’s announcement comes a little more than three years after Monaco Coach, which eventually went bankrupt with its assets being purchased by Navistar, announced in July 2008 that it was cutting 1,400 from its work force besides the 500 it had cut earlier that year.

Monaco RV, owned by Navistar since 2009, manufactures RVs under brand names Holiday Rambler, Monaco Coach, Beaver, Safari, McKenzie and R-Vision, and utilizes some of the same facilities that Monaco Coach used for years in Wakarusa.

Monaco RV will invest more than $1 million to bring the additional production to Wakarusa.

“These folks live all over the place, they shop all over the place,” Penn said. “We’re a mobile society. It’s good for the whole region.”

 

Demand, Expansion Drive Navistar Earnings

Navistar International Corp.’s second-quarter profit rose 72%, partly driven by strong product demand coupled with the vehicle and engine maker’s expansion efforts.

The Associated Press reported that the Warrenville, Ill., company, which makes military trucks, school and commercial vehicles, and is parent to Monaco RV LLC and Workhorse Custom Chassis, also said that its full-year results should come in toward the high end of its forecast for adjusted earnings. Navistar raised the low end of that guidance.

The company reported net income of $74 million, or 93 cents per share, for the three months ended April 30, up from $43 million, or 60 cents per share, a year ago. Adjusted earnings were $80 million, or $1.02 per share.

Analysts expected adjusted earnings of $1.14 per share, according to a poll by FactSet.

Navistar’s truck segment profit rose to $92 million from $76 million, while its parts unit profit increased to $74 million from $58 million. The engine division’s profit dropped to $2 million from $15 million.

Revenue climbed 23% to $3.36 billion from $2.74 billion, besting Wall Street’s estimate of $3.32 billion.

Navistar now expects full-year adjusted earnings of $5.50 to $6 per share. Its previous forecast was for earnings between $5 and $6 per share.

Analysts expected earnings of $5.34 per share.

Holiday Rambler Diesel Club Rallies in Indiana

Holiday Rambler owners in Indiana

Members of the Holiday Rambler Recreational Vehicle Club Chapter 419 hold their daily 4 p.m. social get together Wednesday (May 4) at the Holiday Rambler Diesel Pusher 419 Rally at the Elkhart County 4-H Fairgrounds April 30-May 5 in Goshen, Ind. The annual rally, under rare sunny skies in Elkhart County, drew 280 member coaches, 17 show coaches plus 20 vendor units. Also on hand were executives from Coburg, Ore.-based Monaco RV and its parent company, Navistar International Corp., Lisle, Ill. “We’re proud of what this chapter does because this is not just another rally, where we have a lot of entertainment and food and frivolity,” reports Dick Reidenbach, an Indianapolis resident and former president of Chapter 419. “We are about teaching people how to operate and maintain their Holiday Rambler diesel pusher motorhomes. That’s what we do. We have 150 seminars here in these six days.”

Monaco Dealer Congress: June 20-22 in Texas

Monaco RV LLC invites dealers to experience the “Next Generation of RVs” at their annual Dealer Congress. The event will be held at the Gaylord Texan Resort in Grapevine, Texas, June 20-22, according to a news release.

Monaco RV Dealer Congress 2011 will showcase new, upgraded and innovative products from each of its respective brands: Monaco, Holiday Rambler and R-Vision. The event will include entertainment along with special speaking guests, including Dan Ustian, CEO and chairman of Navistar International Corp.

Monaco RV chose the Gaylord Texan Resort for its Dealer Congress due to the close proximity to Navistar’s Garland Truck Plant. Tours of this cutting-edge, advanced technology plant will be available to all attendees, giving guests a glimpse of the vast resources available to Monaco RV as a partner with Navistar, a world-leader in transportation.

Formal invitations for this event will be forthcoming. For more information or questions regarding this event, contact Jade Vira at jade.vira@monacorv.com or at (574) 862-7511.

GE Ponders RVs for Recharging Electric Cars

Is the electric car charging station of the future a motorhome?

It could be in some circumstances, speculated Luis Ramirez, CEO of the Industrial Solutions Group at General Electric. Ramirez recently met with some consumers and customer groups in Oregon, and some asked whether it would be possible to use the engine of an RV to charge an electric vehicle (EV), U.S. Solar Market Insight reported. RV drivers often tow cars behind them as they travel on down the road. Coming up with a charging system for RVs would help open a niche market. Technically, it’s not impossible.

Ramirez and other GE executives are in the middle of a road trip to promote products such as the WattStation charging station and to create awareness about some of the issues that will face companies when EVs begin to hit the road in large numbers. It wasn’t your usual Silicon Valley audience. Instead of investors and job seekers, most of the attendees were executives from parking lot companies, some AAA representatives and many electricians — in other words, the people that are actually going to make this happen.

Navistar International Corp. is taking part in the tour.

Theft and security could become a problem for public charging stations. “There is a lot of copper in a charging station. We do have to worry about security,” said Ramirez.

In Europe, security is less of a problem because charging stations will have cables; drivers will be required to carry their own connections. The U.S. took a different approach. It lightens the load in a car, but it creates a potentially attractive target for those out there intent on stealing wire, manhole covers and other metal objects during this current commodity boom.

Speaking of commodity metals, scientists in GE labs are also working on electric motors that don’t require rare earth metals and use nonmetallic heat sinks. This is a significant development because rare earth materials like neodymium oxide have zoomed from $20,000 a ton in 2009 to $165,000 a ton this month according to my own spot check today.

Direct current is going to take off, Ramirez added. While the grid delivers AC power, distributing and using DC power within microgrids, datacenters or office buildings could help conserve energy by reducing the number of conversions power must undergo before it gets used. The conversions occur because most electrical equipment — batteries, motors, computers — actually run on DC. In a typical data center, power might get converted five times before it can be used to run servers; in a DC data center, the conversions can be reduced to one. Fewer conversions, fewer losses.

Back in December, Ramirez oversaw the $520 million acquisition of Lineage Power Holdings , which makes equipment for efficient AC-DC and DC-DC conversions. Other companies in this space include Validus DC Systems and Nextek Power Systems.

“With the right conversion architecture, you can bring efficiency to the 92-95% level,” he said, “DC architectures also use a lot less metal.”

One potential application: mining operations. Many remote mines have been completely automated with robotic trucks hauling dirt from deep inside the earth. Crushing rocks in mining operations alone accounts for 7% of the world’s energy consumption, he said. Switching to DC could help bring that number down.

One area, however, where DC will need some work is in high-speed charging stations. High-speed, or Level 3, charging is far faster than conventional charging and it relies on DC power. High speed charging, however, can accelerate the aging process in batteries. Research in this area is ongoing.

Consumers will likely have to drive the EV market, said Clarence Dunn, CEO of GE Fleet. (GE Fleet oversees its own fleet of 30,000 cars but also finances and manages fleets for others.) While fleet owners are interested in going electric, the price will have to come down through volume manufacturing before many fleet owners budge. And the only way to build volume will be with the consumer market.

Car companies are going to have to pay particular attention to the needs of the fleet buyers. Plug-in hybrids, particularly those retrofitted hybrids with lots of batteries in the trunk, are a difficult sell to companies with sales fleets. The trunk takes up the space the reps need for sample cases and other equipment.

GE, which wants to electrify half of its fleet by 2015, has to plan accordingly, as well. The average GE sales representative drives 85 miles a day. Ergo, a fully electric vehicle may not work for them, although a series hybrid like the Chevy Volt might be sufficient. Similarly, many in GE Health drive vans: not a great combo yet for batteries.

So far, pharmaceutical companies appear to be the first movers when it comes to electrifying fleets.

Battery swapping, the secondary market for batteries and other issues are hurdles the car industry and financing industry are going to have to overcome. “I do not want to finance a battery. That does not work for me,” Dunn said, or at least it doesn’t yet. If car companies can begin to prove that a battery will have an active life in a car for five years and that utilities will in fact buy partially depleted batteries for grid storage, bring on the documents.

The demographics of EV buyers do present some problems for utilities, said Matt Lecar, who oversees smart grid strategy at GE Energy. In California, a lot of the early buyers will live in Berkeley and San Francisco, where the grid is old and the power capacity for individual houses is somewhat low.

“I am sure if PG&E had their druthers, Fresno and Bakersfield would be the early adopters,” he said, because homes there already have mondo circuits to handle air conditioning capacity.

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