Navistar International Corp. today (Dec. 17) announced it is shipping its first 300 International ProStar+ Class 8 on-highway tractors equipped with the Cummins ISX15, according to a press release.
“Reaching its ‘OK-to-Ship’ milestone on Dec. 14 – five days ahead of schedule – demonstrates the tremendous progress we’re making in delivering our first SCR-based Class 8 trucks to the marketplace,” said Troy Clarke, Navistar president and COO. “Working collaboratively and fully integrated with our Cummins colleagues, the team has beat an aggressive launch timeline while ensuring the highest levels of quality.”
The International ProStar+ with MaxxForce 13 and Cummins Emission Solutions SCR-based after-treatment system is on-track for initial pilot production in March 2013 with regular production to begin in April 2013.
The remaining lineup 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.
Activist investor Carl Icahn blasted back at the board of Navistar International Corp. on Tuesday (Sept.11), demanding four seats on the board of the embattled U.S. truck and engine maker and criticizing the company’s description of his campaign as “threats.”
“My comments are not threats, they are demands that I take very seriously in light of my substantial investment, and as should you, in light of your fiduciary obligations,” said Icahn, the company’s third-largest shareholder, with a 14.9% stake.
Reuters reported that the Lisle-based company, which on Monday had dismissed an open letter Icahn wrote to its board and shareholders as “threats, attacks and disruptions,” did not immediately respond to Icahn’s new missive.
Navistar last month named a new CEO, Lewis Campbell, who is charged with returning it to profitability after a failed effort to develop a new style of diesel engine failed to win U.S. regulatory approval.
Navistar is parent to RV builder Navistar RV, formerly Monaco RV LLC.
Navistar International Corp.’s Chairman, President and CEO Daniel C. Ustian has retired from the Lisl, Ill.-based company, effective immediately.
According to a news release, the Navistar board has appointed Lewis B. Campbell, former chairman, president, and CEO of Textron Inc., as executive chairman and interim CEO.
The truck and engine maker also announced that it has promoted Troy A. Clarke, currently president of Truck and Engine operations at Navistar, to the position of president and COO of Navistar.
“Lewis Campbell is a high-caliber executive who brings to Navistar deep and broad strategic, technical and operational skills and a proven track record of leadership with global industrial companies – including 24 years of experience in product design, engineering and manufacturing in General Motors’ automotive, trucking and component businesses and seventeen years in senior leadership positions at Textron including more than 10 years as chairman, president and CEO. We are very pleased to have him join the team,” said Michael N. Hammes, Navistar’s independent lead director.
Regarding Ustian’s retirement, Hammes noted, “We appreciate Dan’s many contributions and accomplishments during his 37-year career at Navistar. Under his leadership, Navistar’s revenue grew from approximately $7.7 billion to approximately $14 billion as the company significantly expanded its global reach and diversified its product portfolio, including the addition of Navistar’s military business. We thank Dan for his dedicated service and wish him all the best in the future.”
Navistar, parent to Monaco RV LLC, has been under fire in the wake of its inability to meet deadlines for new emission standards and a second quarter loss of $172 million. The company is also the target of a formal U.S. Securities and Exchange Commission (SEC) inquiry into accounting and disclosure matters.
Truck and engine maker Navistar International Corp. today (Aug. 2) announced significant actions that build on the company’s previously announced introduction of ICT+ (In-Cylinder Technology Plus) and are designed to enhance the company’s competitive position and drive profitable growth and shareholder value. According to a press release, these actions include:
• Adopting a U.S. market proven aftertreatment solution to accelerate delivery of ICT+, Navistar’s next generation clean engine solution;
• A market transition plan for Class 8 engine sales
• Securing a $1.0 billion loan commitment, which further enhances Navistar’s liquidity.
“The actions announced today establish a clear path forward for Navistar and position the company to deliver a differentiated product to our customers and provide a platform for generating profitable growth,” said Daniel C. Ustian, chairman, president and CEO for Navistar, which is parent to Monaco RV LLC.
In the release, Navistar also reported it is the target of a formal U.S. Securities and Exchange Commission (SEC) inquiry into accounting and disclosure matters and withdrew its full-year earnings forecast until it releases third-quarter results.
The company said it expects to post an adjusted third-quarter pre-tax loss of $80 million to $115 million but expects to return to profitability in the fourth quarter. Navistar will report third-quarter results in September.
As previously announced, the introduction of ICT+ leverages the advances Navistar has made in clean engine technology, while also providing greater certainty for its customers, dealers, and other key constituents. To accelerate delivery of ICT+, Navistar has entered into a non-binding memorandum of understanding, under which Cummins Emission Solutions would supply its proven urea-based aftertreatment system to Navistar. This would be combined with Navistar’s advanced in-cylinder engine to create ICT+.
Navistar expects that by combining Cummins’ aftertreatment system with its existing MaxxForce engines, its ICT+ will meet 2010 U.S. Environmental Protection Agency (EPA) emissions regulations and position the company to meet greenhouse gas (GHG) rules in advance of 2014 and 2017 requirements. “With this clean engine solution, we are taking the best of both technology paths to provide our customers with the cleanest and most fuel efficient engines and trucks on the market and to meet stringent U.S. emission regulations,” Ustian said.
Market Transition Plan
During the transition to ICT+, Navistar will continue to build and ship current model EPA-compliant trucks in all vehicle classes using appropriate combinations of earned emissions credits and/or non-conformance penalties (NCPs). The company continues to have productive discussions with the EPA and the California Air Resources Board (CARB) regarding its transition to ICT+.
As part of the expanded relationship with Cummins Inc., Navistar plans to offer the Cummins ISX15 engine in certain models, expanding the company’s vehicle lineup and on-highway market opportunity. Navistar plans to introduce the Cummins ISX15 engine as a part of its North American on-highway truck line-up beginning in January 2013 and to begin the introduction of ICT+ in its MaxxForce 13-liter in early 2013.
Financing Commitment & Cash Update
The company anticipates that its manufacturing cash will be between $575 million and $625 million at the end of the third quarter. Additionally, to support these actions and to improve its financial flexibility, Navistar has entered into a firm commitment letter with a group of banks led by JPMorgan Chase Bank, N.A. and Goldman Sachs Lending Partners LLC and including Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse pursuant to which the banks have committed to provide an up to five year $1.0 billion senior secured term loan. A portion of the proceeds from this financing will be used to pay down the existing borrowings under Navistar’s ABL credit facility.
Navistar also provided an outlook for fiscal third quarter 2012 and withdrew its full-year fiscal 2012 guidance until the company releases its third quarter results in September, at which time it will provide an updated full-year outlook. The changes reflect the company’s transition to the ICT+ engine solution, its ongoing work with EPA regarding this solution, and uncertainty regarding overall global demand for trucks and engines, particularly in key markets such as India and Brazil.
Navistar’s overall market share for the fiscal third quarter is projected to remain flat: Class 8 at 17-18%; Class 6-7 at 35-36%; and school bus at 48-49%. The company’s third quarter revenues are expected to be $2.8 billion to $3 billion. Navistar expects fiscal third quarter adjusted manufacturing segment profit to be between $15 and $40 million, excluding the impact of the company’s engineering integration and non-conformance penalties. Including the impact of these charges the manufacturing segment profit is estimated to be between a $15 million loss to $15 million of profit. Navistar expects an adjusted pretax loss of between $115 million and $80 million. Including the impact of the engineering integration and non-conformance penalties Navistar expects a pretax loss of between $145 and $105 million.
“We expect to sustain our current market share through the balance of the year, and with the addition of ICT+ and an expanded model lineup, improve our market share in 2013,” Ustian said. “We expect to return to profitability in the fourth quarter and believe the company will be in a position to improve margins in 2013 as we realize the benefits of our integration and ongoing cost reduction initiatives. We look forward to providing further details of our plan to drive shareholder value on our third quarter results conference call in September.”
It’s been almost two and half years since Navistar International Corp., a leading truck and engine builder, completed the purchase of certain assets of Monaco Coach Corp. for about $47 million. The motorhome builder was renamed Monaco RV LLC and, according to the plan, would operate as a wholly owned affiliate of Warrenville, Ill.-based Navistar Inc., Navistar’s principal operating company, and would be headquartered in Coburg, Ore. To gauge the progress forged by Navistar since the June, 2009, acquisition, “Capital Talk,” an Internet TV show co-sponsored by RVBUSINESS.com and RVNN.TV, seized the opportunity last week (Oct. 19) to chat with Andrew J. (A. J.) Cederoth, executive vice president and CFO of Navistar International Corp. Here, with Monaco Director of Marketing Ryan Lee sitting in on the interview, are the edited nuts and bolts of that conversation.
Capital Talk: Looking back, A.J., how have things gone since June of 2009 when Monaco, a very proud brand in the North American motorhome business, was picked up out of Chapter 11 bankruptcy by Navistar in the middle of a recession.
Cederoth: Well, it’s gone really well. I think we’ve looked at the opportunities to integrate our manufacturing philosophies and our engineering philosophies together with the Monaco brand. And I think you touched on it very well.
It’s a brand that we’re happy to have, and we looked at that as an opportunity in 2009 to branch out into a new business for Navistar and to attract a new customer base for Navistar and to do that in a more cost-effective way, leveraging the scale that we can bring to the market, and then also leveraging a little different approach to design and manufacturing that we think can create a competitive advantage around the Monaco brand.
Capital Talk: So you’ve found that truck building and motorhome building are compatible skill sets.
Cederoth: Yes, we have.
Capital Talk: Having said that, is Navistar as committed today to this market as it was in the middle of that recession when they picked up the Monaco brand?
Cederoth: Oh, I think we’re more committed to it than ever. I think what you’ve seen us do with Monaco is introduce the Vesta (Class A motorhome in July of 2010) and put a new product out in the marketplace that I think really distinguishes the Monaco brand.
And then of course, we’ve gone out and we’ve added leadership to the team. We’ve added Bill Osborne (who succeeded Monaco President Kay Toolson this past summer in overseeing Monaco as vice president of custom products for Navistar Inc.’s Truck Group) to our team. He comes to us from Ford Motor Co. with a little different bent on the industry – more toward the consumer market than the traditional truck market.
And I think Bill’s experience at Ford and in manufacturing and marketing through his opportunities that he had at Ford really gives us the leadership that we need to take Monaco to the next level.
Capital Talk: The relatively recent announcement of the consolidation of Monaco in Wakarusa, Ind., and the departure from Oregon was big news in this business niche. How is that going?
Cederoth: It’s going really well. And I think that’s just us taking our strategy to the next level, combining our loose chassis business with the manufacturing of our RVs and bringing them closer together so that we can take advantage of the natural synergies of the management team — streamline our communication, bring the business a little closer to Chicago where they can be closer with our design engineers; and really facilitate the execution of our strategy.
And Indiana is really where 80% of the RVs are made, anyway. So that was the natural place for us to put that business.
Capital Talk: The advantages to this move to consolidate motorhome operations in Wakarusa?
Cederoth: Well, I think it just gets down to the basics, right? I mean, we can more efficiently manufacture the chassis closer to the RV facility and decrease the transportation cost and the amount of working capital that it takes to run that business. I think by bringing it into Indiana, we get closer to our design engineers here in Chicago. We’re able to leverage that cooperative effort a little easier when we’re only two hours apart. And then of course, bringing them closer allows us to put a little more effective control around that business and leverage the purchasing scale that we think we bring to the business.
Capital Talk: So, how does the simultaneous closing of the Workhorse (commercial truck chassis) operations in Union City, Ind., relate to this gameplan?
Cederoth: Well, it just allows us to take advantage of the synergies — get a little more efficient with the manufacturing of our loose chassis and bring that closer to the manufacturing elements of our RVs.
Capital Talk: As for dealer support, we noticed a story rather recently from Guaranty RV in Oregon — Shannon Nill — in which he stands by Monaco through these transitions and is very vocal about it. How has the dealer support been nationally of late?
Cederoth: Well, as you’ve said, we’ve been moving through a very difficult part in the economy and we appreciate the support that we’ve had from the dealers who have stuck with us from June of ’09 through today. And I think this is a business that’s dependent on a good relationship with the dealers, and I think what we’ve seen is we’re trying to put the best product we can in the marketplace that not only meets our customers’ needs, but is a product that the dealers would be proud to sell.
Capital Talk: We’re looking shortly at RVIA’s National RV Trade Show in Louisville at the end of November, first of December. Can you tell us what the industry should look for at the Monaco exhibit down there?
Ryan Lee: Sure. I can step in there and talk a little bit about that. For the 2012 RVIA show we’re going to have a new 2012 Monaco Dynasty that no one has seen before. We’re very excited to bring it back. It’s an iconic nameplate. We’ve also done a great job in bringing back the 2012 Endeavor, which can be built fully from the ground up through vertical integration — from chassis, engine, and house — all built by Navistar.
And then our total line we’ve done a really good job of revamping. R-Vision has brought back the Trail-Lite nameplate. We have a travel trailer and a fifth-wheel that’s going to be debuted. And then on the Holiday Rambler side, we’ve taken the Aluma-Lite nameplate and we’ve brought that from a fifth-wheel to a travel trailer, now to an ultralight product.
So I think coming to our display, you’re going to see some great 2012 products. But most importantly, to the point that A.J. made earlier, we’ve taken that Vesta DNA look and we’ve brought that across the Monaco brand; and then with the new Trip (Class A, a companion product to the Vesta), we’ve also taken that DNA and brought that across the Holiday Rambler brand.
So you’re going to see a family resemblance for our diesel product that is unlike anything else in the industry, and we encourage everyone to come to the display. We’re going to be at booth 3000, and we feel like we’ve got the best lineup for the next generation of RVs.
Capital Talk: And so the Vesta (the first motorhome developed in a collaborative effort between Navistar and Monaco) was really the rallying cry for new product development at Monaco, was it not?
Lee: Yeah. I mean, the product development, the look and the feel, it is a rallying cry. And we’ve been able to take the design engineers and the design team from Navistar and we’ve brought that look and that feel into the Monaco scenario.
I believe that with the overall strength that Navistar brings for purchasing, the product design, the look and feel, we’ve brought products to the marketplace that are unlike any others out there. And we wouldn’t have been able to leverage that or do that without the strength of Navistar behind us.
And as we move into our new facilities and with Bill’s background — coming from Ford, but most importantly, as an engineer — he’s really brought a lot of new techniques and new ideas to the team. And I think you’re going to continue to see new products and new looks coming from Monaco, Holiday and R-Vision that are going to be unlike the competition can match.
The Workhorse Custom Chassis plant in Union City, Ind., that assembles chassis for trucks, large vans and motorhomes, will be shut down by mid-November, affecting the jobs of about 225 employees.
As reported by the Indianapolis Star, the move was part of parent Navistar International Inc.’s consolidation plan laid out in early August that included moving motorhome operations from Coburg, Ore., to Wakarusa, Ind. Navistar said Workhorse operations would be consolidated into other existing facilities for greater efficiency and productivity.
Word of the Union City closing was in a letter from the company and posted on the website of the Indiana Department of Workforce Development on Monday (Sept. 12). The company said that 173 jobs represented by United Auto Workers Union Local 494 will be affected at Union City.
An August statement from Navistar indicated the total number of jobs impacted by the changes at Union City was about 225. Union officials said that higher number includes non-union workers.
Union members said they were recently informed of the layoffs but have not yet been advised if they will receive any severance or other compensation.
The Union City plant, which assembles the chassis of trucks, vans and buses for large customers including UPS, is one of the largest employers in the community that straddles the Indiana-Ohio state line north of Richmond.
Workhorse Custom Chassis was formed in 1998. The operation was formerly known as Union City Body and once had nearly 1,100 workers.
The 209,000-square-foot plant was bought in 2005 by Navistar’s International Truck and Engine Corp. division.
The company website indicates it is the largest strip chassis manufacturing facility in the world, referring to the type of internal framework used as the foundation for motor homes, large step vans and similar vehicles. The plant only makes the chassis portion of the vehicles.
Navistar International Inc. is one of nine vehicle manufacturers who will take part in an electric vehicle experience tour in seven U.S. cities, sponsored by General Electric, that will bring GE experts together with local businesses, industry leaders, and public sector stakeholders for educational workshops, test drives, and dialogue on the business case for EV ecosystems.
GE has already committed to purchase 25,000 EVs by 2015 for its own fleet and for fleet customers. It owns one of the world’s largest vehicle fleets, operates a leading global fleet management business, and offers a portfolio of product solutions including charging stations, circuit protection equipment and transformers that touch every part of electric vehicle infrastructure development. The company is hosting the EV Experience Tour to help other businesses and key stakeholders understand technical and business approaches for deploying pure electric and plug-in hybrid electric vehicles.
Navistar’s role in the tour was not immediately revealed.
The company builds the eStar electric truck at a former Monaco Coach Corp. RV plant in Wakarusa, Ind. The eStar, now used by Fed Ex, is a possible candidate to take part in the tour, but that detail could not be confirmed.
Each day-long stop in cities along the tour will include presentations by GE and community leaders, workshops to help stakeholders with EV planning, deployment, and integration strategies and test drives.
Scheduled Tour dates are:
- San Francisco, March 10.
- Seattle, March 15.
- Los Angeles, March 17.
- San Diego, March 22.
Additional EV Experience Tour dates will be announced in Austin, New York City and Washington, D.C. for Spring 2011.
“GE is playing a leadership role in the transformation to smarter transportation solutions and a smarter electrical grid,” said Luis Ramirez, CEO, GE Energy Industrial Solutions. “Our EV Experience Tour is an important way for us to engage communities across the United States in the discussion about the economic and environmental advantages of EV deployment.”
GE is also working with GE are GM, Ford, Toyota, Smith Electric Vehicles, Mitsubishi, Coda, Smart, THINK and other organizations on the tour.
“We’re committed to helping our customers learn what electric vehicles can do for their organizations,” said Clarence Nunn, President and CEO of GE Capital Fleet Services. “Each of our tour stops will give participants first-hand exposure to the technical and business considerations for EV deployment and put them on a path toward adoption.”
GE’s EV Experience Tour and electric vehicle program are part of its ecomagination business strategy to accelerate the development and deployment of clean energy technology though innovation and R&D investment. In support of the tour, an electric vehicle readiness toolkit is available on ecomagination.com to help municipalities, customers, and individuals prepare for wide-scale electric vehicle deployment.
The economic future may be uncertain, but Indiana is on the right track.
That was the gist of comments made by Grow Indiana Media Ventures LLC President and Managing Editor Gerry Dick at Thursday’s Wake-Up, Goshen! event put on by the Goshen, Ind., Chamber of Commerce, The Goshen News reported. Dick is also the creator and host of the Inside INdiana Business TV show, featuring business news from across the state. The show has earned him four Emmy nominations.
During his presentation, Dick said recovery in Indiana has been uneven. He gave the example of Navistar International Inc., which announced this week it will be relocating its headquarters from Fort Wayne to Lisle, Ill., a suburb of Chicago. The move will affect more than 1,000 jobs. He also said there has been some concerns about a so-called “jobless” recovery, in which employers who were forced to lay off employees became more efficient, so when they began calling back workers, they only needed half the amount they laid off.
“If you look beyond the headlines, though, there has been some positive news,” he said.
Dick pointed out a large amount of investment has been made in the state by a surprising source — the auto industry. Chrysler is investing $300 million for a new transmission line at a Kokomo plant, and GM is also investing hundreds of millions of dollars into efforts in the state, he said. And despite its uncertainty and plethora of skeptics, the hybrid/all-electric auto industry is also building steam.
“(Indiana Secretary of Commerce Mitch Roob) is of the opinion that it will happen and it’s going to happen in Indiana,” he said.
Among the businesses driving the industry in Indiana, he said, are Navistar International Corp. — building electric delivery vans in Wakarusa for Fed Ex, EnerDel — manufacturing lithium-ion batteries for hybrid/all-electric vehicles and Remy Electric Motors, LLC — building a new electric drive system to be available by the second quarter of 2011. He also mentioned several other similar companies.
Another major investment referenced by Dick was made by Dow AgroSciences, which spent $340 million on a project in Indianapolis that led to the creation of 550 jobs. He also made note of an increasing number of green energy businesses in the fields of wind energy (Indiana is the second-fastest growing wind production state in the country), wind farm components and the solar energy industry.
Dick gave one specific example of something Indiana is doing right, referencing a pharmaceutical company that was incubated at Indiana University. Its creators are from San Diego, he said, and they planned to move the company there, but eventually decided to put it in the Indianapolis area. He said they made the decision after determining they had a better chance for success in Indiana than in California.
“Ten years ago, or even five years ago, I don’t think that would have happened,” Dick said.
That new collaboration between public, private and academic entities, he said, has been a major boost to the state. Technology parks and business incubators have been popping up all over Indiana. Dick said the most successful is probably Purdue University’s research park. Purdue also has technology centers in several other locations across the state. He also pointed out the University of Notre Dame’s Innovation Park and sister Ignition Park.
“Colleges and universities big and small around the state are getting in the game,” he said.
Dick identified four areas he said should be the focus of business in general in the state moving forward — life sciences, information technology, distribution of logistics and advanced manufacturing.
“Manufacturing is and will continue to be an absolutely critical part of the economy in Indiana,” he said.
He added that the biggest challenges facing progress in the state are the work force and K-12 education, noting that approximately 1 million Hoosiers lack basic work force literacy skills.
“Leadership is what’s going to save the day as we come out of the recession,” Dick said.
At each of the Wake-Up, Goshen! events, an “insta-poll” question is asked, the results of which are shared after the speaker concludes. Thursday’s poll question asked whether or not northern Indiana’s congressional delegation should support the $50 billion economic stimulus legislation aimed at putting Americans back to work through more infrastructure projects. The result came back as an even 50-50 split.
A sprawling RV service center in Wildwood, Fla., built in 2003 near the junction of I-75 and the Florida Turnpike by now-bankrupt Monaco Coach Corp., has become a full-service motorized and towable RV dealership.
Alliance Coach Inc. opened in September under new ownership — 10 days after the 62,000-square-foot service center went on the auction block during Monaco Coach Corp’s. Chapter 11 bankruptcy proceedings.
”When Monaco built this, they needed a factory service center on the Eastern Seaboard,” said Cy Whisnant, Alliance Coach general sales manager, who for 15 years was vice president of Tennessee-based Buddy Gregg Motorhomes overseeing that company’s sales operation in Lakeland, Fla., until it closed.
The new owners are Brett Howard and Carolyn Champion, who had operated the facility as Monaco employees, and Holiday Rambler motorhome owner Alan Shapiro, all of whom teamed up to bid on the property.
”With his help, they bought the entire facility and the ground around it and formed an alliance, hence the name,” Whisnant said. ”Over $1 million in parts came with the building.”
The facility sits on 30 acres and has 40 indoor and 26 outdoor service bays along with a 40-site campground.
Alliance Coach initially operated as a service center. But the company in December took on the Monaco McKenzie and R-Vision towable lines from Monaco RV Inc., a new company created when certain Monaco Coach assets were purchased by Chicago-based truck and engine builder Navistar International Inc.
Alliance Coach later obtained the local Holiday Rambler and Monaco motorized franchises, and expects the first shipment of Monaco motorhomes to be delivered by early July. More recently, the dealership added Holiday Rambler towable brands.
Currently, Alliance Coach has $1.8 million in Monaco RV motorized and towable inventory, and in addition to new models, also is selling used RVs, some on consignment.
Alliance’s sales department is open six days a week, while the service center, headed by Michael Hawkins, operates Monday through Friday. Dennis Burke will join the company as F&I manager on Monday.
Currently, Alliance Coach will service any brand of motorhome or towable RV and is certified to provide warranty work on Tiffin motorhomes and Workhorse and Spartan chassis.
As a service center that can do collision repair, Alliance Coach also has its own metal fabrication, woodworking and upholstery shops in addition to two 65-foot paint booths. Alliance Coach employs 35 people, 25 of whom are service technicians.
”It’s incredible what we can do here,” Whisnant said. ”We can do everything here for an RV but build them.”
And good fortune came quickly, he reported.
”Since the day they opened here, it’s just been absolutely packed,” Whisnant said. ”And here it is in the middle of summer, which isn’t the high season in Florida, and the shop is nearly full.”
Since Alliance Coach opened as a Monaco RV dealership in March, business has steadily increased, Whisnant said, with floorplan and retail financing arranged through Bank of America.
”Sales have been picking up and we are seeing people putting more significant amounts of money down to get financing in place and a lot of cash buyers have been coming in who don’t need any financing whatsoever,” Whisnant said. ”Right now, we are exclusively Monaco RV, but we are leaving our options open.”
Alliance Coach plans an open house Friday and Saturday (July 2-3). An updated website — www.alliancecoachonline.com — will be completed by the end of July.
Allison Transmission Inc., the premier global designer and manufacturer of medium and heavy-duty automatic transmissions and hybrid propulsion systems, today (June 3) announced it has manufactured its one millionth 1000/2000 Series transmission.
Jim Wanaselja, vice president of North American Marketing Sales and Service for Allison Transmission, will present Bob Mann, vice president of Dealer Sales for Navistar International Inc., with the milestone transmission during a ceremony held at Allison’s world headquarters this afternoon, according to a news release.
“Allison Transmission is proud to be able to share this important milestone with our valued customer Navistar,” said Wanaselja.
Mann appreciated Navistar’s involvement with the celebration. “On behalf of Navistar, I would like to express how much we value our corporate relationship with Allison Transmission, and what an honor it is to receive not only a great product, but a legendary one at that,” said Mann.
1000/2000 Series transmissions are used in a variety of applications including, distribution, construction, school buses, emergency vehicles and motorhomes. Allison fully automatic transmissions, with torque converter technology, provide superior vehicle performance, increased productivity, reduced driveline wear and tear and lower overall vehicle life cycle costs.
Truck maker Navistar International Inc. says it is exploring a joint venture with a Chinese vehicle manufacturer to build diesel engines for commercial vehicles in China.
Navistar said today (Oct. 30) the proposed 50-50 joint venture with Anhui Jianghuai Automobile Co. would establish a research and design center in China’s Anhui province, according to Associated Press.
Diesel engines produced under the joint venture would be used primarily in China as well as certain export markets.
Navistar says the joint venture would be governed by an eight-person board consisting of four members from each company.
The venture still requires approval by each company’s board of directors, as well as other approvals before it moves forward.
Despite a bankruptcy court judge’s ruling late Friday (May 22) approving the sale of Monaco Coach Corp. to a unit of Navistar International Inc., it remains unclear whether Navistar will resume production at any of the plants in Oregon or Indiana or rehire any of the 2,000 employees laid off just before the company filed bankruptcy.
U.S. Bankruptcy Judge Kevin Carey approved the $50 million sale after learning there were no other bidders for the assets of the RV manufacturing company, which has major manufacturing plants in Coburg, Ore., and northern Indiana, according to The Register-Guard, Eugene, Ore.
“We don’t have any answers either – no tangible answers,” said Mike Johnson, a middle manager at Monaco’s Coburg plant until he was laid off in March. “It’s just a big question mark.”
During Friday’s court hearing, Monaco attorney Malhar Pagay told the judge an “ancillary benefit” of the sale could be some rehiring.
“(Monaco’s) former employees may be called upon by Navistar to restart some of the plants that were shuttered,” Pangay said. “I also note that the debtor’s former dealers will enjoy a revitalization of the Monaco brand, and depending upon Navistar’s determination, may have a relationship with Navistar.”
The sale is scheduled to close June 2.
Roy Wiley, spokesman for the $14 billion truck and engine builder, declined comment on the fate of the Coburg plant. Navistar has 17,000 employees at plants in Ohio, Alabama, Arkansas, Oklahoma and Canada.
“It’s not done until it’s done. It’s a step in the process,” Wiley said. “Ask me after June 2, and I’ll probably be able to tell you more.”
Options for Navistar might include restarting some of the factory production now, keeping everything idle until the economy improves substantially, or shifting Monaco production to some of Navistar’s existing facilities.
Navistar’s $52 million purchase price would not be enough to repay Monaco’s secured creditors, including the $38.2 million owed to lender Bank of America and $37.4 million claimed by lender Ableco.
The sale dims the chances that unsecured creditors will recover any of the money Monaco owed to them.
Unsecured creditors – those who have no legal hold on a company’s physical assets – typically are paid only after secured creditors have been satisfied.
The sale might eventually benefit local suppliers, though, if Navistar restarts RV production.
Because Friday’s ruling carried no definitive answers about whether the Coburg plant would reopen, workers and community members reacted to the news with muted optimism.
“We look at all of this as potentially good news. That’s how I view it,” said Coburg Mayor Judy Volta.
Kevin Penn, a former team leader at Monaco, has been working part time in landscaping and has signed up for some summer classes, but he said he’d be ready to go back to the plant.
“It would be really good if they could get the company going again. I’ve seen a lot of people from the company who still don’t have jobs,” he said.
Former Monaco supervisor Sandy Kadash has been looking for work.
“Nothing has come up so far,” she said. “We made a pretty good living there and it’s kind of hard to think about taking a step backwards.”
Kadash said she keeps in contact with Monaco’s human resources department.
“It sounds like they’re getting stuff ready, but I’m not sure anybody knows for sure what that means yet,” she said. “From everything that I’ve been told, it’s a good thing.”
During the bankruptcy proceedings, Monaco has kept an administrative and sales staff at the headquarters.
It would be nice, Kadash said, if the sale meant the end of limbo for Monaco employees, who were put on unpaid leave for months before their official layoff.
Kevin Gallagher, who fabricated doors for the motorhomes, said he doubts Navistar would hire anything close to the whole Monaco crew back.
“I still think the market is terrible for motorcoaches,” he said. The market won’t rebound until the national housing crisis has passed and RV buyers can again tap into their home equity for cash. “I’m not going to get overly whoop-de-do about it,” he said.
The Oregon Office of Economic Analysis predicts employment will decline an average of 5.3% this year and drop 0.7% in 2010, according to The Register-Guard, Eugene.
It isn’t until the first quarter of 2011 that Oregon’s economy will see job growth of more than 2%, according to the forecast.
State forecasters predict that the struggling transportation equipment industry, which includes manufacturers of trucks, boats, railcars and RVs, will take the biggest hit to employment this year. The state predicts job losses of 28% this year, then 5% next year before growth of 3.4% returns in 2011.
Lane County had built itself into a center for RV production, but its two dominant manufacturers of luxury motorhomes, Country Coach LLC of Junction City and Monaco Coach Corp. of Coburg, sought bankruptcy protection earlier this year. Country Coach is operating with just 94 employees, down from a peak of about 1,800 workers in 2006, and Monaco terminated all of its 2,000 employees when it filed for Chapter 11 bankruptcy protection in early March.
(Monaco was due back in a Delaware bankruptcy court today for the auction of its recreational vehicle division. Navistar International Inc. has offered $52 million for the business but company officials continue to decline to talk about why it has bid for the division and what its plans are. The court is scheduled to authorize the sale on Friday and complete the transaction on June 2.)
Other RV manufacturers nationwide are struggling. All manufacturers combined are forecast to ship 7,000 to 8,000 Class A motorhomes this year, said Frank Magdlen, an RV analyst with the Robins Group in Portland. Not long ago, Monaco alone shipped that many coaches in a year, he said.
“That’s how precipitous the drop was,” Magdlen said. He predicts that Lane County’s RV manufacturers will bottom out this year and begin a slow road to recovery in 2010 and 2011.
The industry’s return is predicated on consumer demand, he said. Consumers have to feel secure enough about their job prospects and finances to make the investment. Plus, financing has to be available.
RV financing should be stronger toward the second half of this year and back to more normal activity in 2010, Magdlen predicted.
Even though Monaco Coach Corp. has struck a deal to sell its major assets to a subsidiary of Navistar International for $52 million, the Coburg, Ore.-based RV maker is racing to close the deal before it runs out of money and creditors run out of patience, according to The Register-Guard, Eugene, Ore.
At a hearing Friday (April 24) in U.S. Bankruptcy Court in Delaware, an attorney for Monaco said the company had signed an asset purchase agreement with Workhorse International Holding Co., a Navistar subsidiary. The company’s main secured lenders – Bank of America and Ableco – have agreed to provide it with at least one more week of operating cash while Monaco officials try to “get them comfortable” with what they would be paid in the sale, said Robert Orgel, one of Monaco’s bankruptcy attorneys.
“How much they are to be paid is the key issue,” Orgel said. “The amount it takes to satisfy them may well be harder to achieve the longer it takes us to close a sale because we are incurring expenses every day and the ability to sell assets is limited.”
When it filed for Chapter 11 bankruptcy on March 5, Monaco owed Bank of America $38 million and Ableco $37 million. In a Chapter 11 case, a financially stressed company is given protection from creditors while it reorganizes its finances.
Orgel asked Judge Kevin Carey for an expedited schedule so the company could be put up for auction and the deal could be consummated by June 1. If the sale doesn’t close by then, creditors could move to liquidate Monaco.
But an attorney for the committee for unsecured creditors, Donald Detweiler, told the judge that the sale appears to benefit only the two lenders. Liquidation of Monaco’s assets or some other alternative may provide a better return to unsecured creditors, he said.
“There may be a better way to see value than what’s being proposed here,” he said.
Carey said he expects any reorganization plan to provide some value for unsecured creditors.
“The court can’t create value when value isn’t there, but I want a fair shot at unsecured creditors getting there,” he said.
Unsecured creditors are those that don’t have any legal claim on a company’s land, buildings or equipment. They get paid only after creditors with secured positions, often banks, get paid. If they get paid, unsecured creditors are likely to get something less than the total amount they’re owed. The company has thousands of unsecured creditors.
In a court filing, Monaco attorneys argued that an asset sale to a buyer that would operate the RV maker as a going business would provide the most benefit to everyone concerned. Doing so would “create direct value for creditors, saving 2,000 or more jobs in communities in Oregon and Indiana … and creating ongoing value and revenue for a large number of (Monaco) vendors, dealers and other creditors.”
It’s not clear from the company’s court filings how many people would be employed in Coburg and Indiana if the factory were to resume production.
Navistar, a massive Illinois corporation that builds diesel engines, school buses, heavy trucks and military vehicles, announced a month ago that it had signed a nonbinding letter of intent to buy Monaco’s core assets for up to $50 million. On Wednesday (April 22), Monaco signed an asset purchase agreement with Workhorse, a Navistar subsidiary serving as a “stalking horse” purchaser. In bankruptcy cases, a stalking horse bid sets a threshold price so that other potential bidders can’t low-ball the purchase price.
Judge Carey will conduct another hearing this week on bid procedures and other issues, including whether the secured creditors are willing to extend additional operating credit to Monaco while the sale moves forward. A sales auction would be conducted in mid-May, followed by another hearing May 22 at which Monaco would be seeking court approval for a sale and creditors could seek to block it.
Under the terms of the deal, Navistar would obtain certain manufacturing facilities located in Indiana and Oregon. In addition, Navistar will acquire all brands, intellectual property, inventories and equipment relating to Monaco’s motorized and towable recreational vehicle segments.
The deal would not include Monaco’s resort properties, which the company is attempting to auction separately. Nor would it include its Roadmaster Cargo Trailer business and several industrial properties.
“We are excited to move forward with the tremendous resources of Navistar supporting our great products,” Monaco CEO Kay Toolson said. “Everyone at the company is ready and committed to again build the highest quality RVs in the industry, offer the best customer support and bring jobs back into the communities in which we operate. We appreciate the patience of our employees, dealers, suppliers and RV owners as we navigated through this challenging environment.”
The company said it appears that no proceeds from the sale would be available for distribution to shareholders.