Navistar's closures set to have significant knock-on effects
By: John Mortimer, Friday, January 30, 2009, AutomotiveWorld.com
What is bad news for workers at Ford's Chihuahua Engine Plant (CEP) in Mexico. The decision by Ford and Navistar International to terminate their engine supply agreement, which Ford announced on 13 January 2009, ends a long-running spat between the two companies, one result of which is Navistar's decision to shutter both plants in Indianapolis.
Following the agreement Ford will be making and fitting its own 4.4-litre and later, 6.7-litre V8 engines into its F-Series pick-up trucks from 2010. Both of these engines will be sourced from CEP where the latest machining and assembly facilities are being installed. These new engines will replace the 6.4-litre V8 PowerStroke engine from Navistar's Eastside plant in Indianapolis.
The loss of the Ford business, coupled with the economic downturn means that PowerStroke volumes will decline from some 350,000 a year to about 75,000 a year (for school buses and military applications) and this volume is simply not enough to justify retaining the facility.
Ironically also, through the the spat, Ford has elbowed a potential competitor out of the marketplace, making further scope for its own products. However, it may also provide an opportunity for Navistar to make greater utilisation of its non-unionised Huntsville, Alabama plants with additional products.
The two companies say they will continue to work on other initiatives through existing partnerships, including the joint-venture Blue Diamond Trucks business in Mexico. Vehicles leaving the plant with International badges are powered by the company's 7.6-litre I6 diesel while Ford-badged vehicles are currently fitted with Caterpillar or Cummins engines. This must raise a possible long-term concern for Navistar that Ford might opt at some stage to use its own 6.7-litre V8 for these vehicles.
Meanwhile, closure of the Indianapolis engine plant suggests that Navistar was unsuccessful in finding alternative customers for the 6.4-litre power unit. Chrysler, Ford and
Published on Friday, January 30, 2009
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