EPA OKs Navistar 13-Liter Engine
This story appears in the April 22 print edition of Transport Topics.
The U.S. government has certified Navistar’s MaxxForce 13 engine as being compliant with 2010 emissions regulations, enabling the company to begin shipping approved heavy-duty vehicles by the end of April.
Navistar now has two types of engines — 13- and 15-liter models — that use selective catalytic reduction technology to hit the nitrogen oxides level set by the U.S. Environmental Protection Agency.
“We wanted to be able to ship completed trucks by April 30, and here we sit in the middle of the month and we’re ready,” said Jack Allen, who was promoted to chief operating officer the same day as the engine announcement. A 31-year Navistar veteran, Allen had been president of North American trucks and parts.
The MaxxForce 13 uses SCR aftertreatment from Cummins Inc., and it complements the Cummins ISX15 engine that Navistar is now selling. The company filed for certification with EPA on Jan. 7 and got a final decision April 16. Allen described the three-month certification as “a very iterative process.”
“There was a lot of interaction with EPA and [the California Air Resources Board] about onboard diagnostics and other issues,” he said.
Until July, the original equipment manufacturer had been pursuing exhaust gas recirculation, which it could not get to meet federal requirements. That left Navistar dependent on using emissions credits and paying noncompliance penalties to EPA.
The MaxxForce 13 announcement gives Navistar, which is based in Lisle, Ill., a workable heavy-duty menu of engines, but the company still needs to roll out SCR engines for its medium-duty lineup. Allen said those engines are still on pace to change over in 2014. Until the change, the company will use its stock of emissions credits, he said.
A South Carolina truck dealer who sells Navistar’s Internationals welcomed the news of certification.
“This issue has had an impact. Competitors, including Freightliner, have been very vocal, and it’s hurt sales,” said Richard Ryan of Carolina International Trucks in Columbia.
“This news has tremendous significance . . . and it takes a lot of noise out of the system,” said Ryan, who represents International dealers on the American Truck Dealers board.
Ryan said his shop technicians already have been training on repair procedures for SCR engines, whether MaxxForce or Cummins.
Meanwhile, Troy Clarke — who had been COO before Allen — was promoted to CEO, effective on April 15; Allen now fills the vacancy created by Clarke’s promotion. Lewis Campbell was interim chairman and CEO from August until April 15. Campbell had replaced longtime chairman and CEO Daniel Ustian, who left as troubled mounted.
“Navistar’s new management team continues to claw back corporate credibility, receiving EPA certification ahead of month’s end,” analyst Jeffrey Kauffman wrote clients of Sterne, Agee & Leach on April 17.
“While we don’t expect meaningful market share improvement until the 2014 order season, this is another milepost that continues to chip away at the bear story in Navistar shares,” said Kauffman.
“This announcement is another step towards a turnaround for the company, as it works past compliance, emissions, and margin issues,” analyst Ann Duignan told clients of J.P. Morgan Securities.
Allen said certification is “a really important milestone,” but it does not solve all of the problems at Navistar, which has a net loss of $2.98 billion for the 12 months ended Jan. 31 — although two-thirds of that came from a noncash tax matter.
“Our turnaround plan contains a multitude of steps,” he said. “We’ve changed our strategy, put new products on the market that customers are testing,” he said.
Allen said the MaxxForce 13s will be shipped from Navistar’s Huntsville, Ala., plant to ProStar truck assembly sites in Escobedo, Mexico, and Springfield, Ohio.
While the new 13-liter engines meet EPA regulations, Allen said there is still an inventory of older MaxxForce 13s requiring the company to pay penalties.
“We’ll be phasing those down through the end of the calendar year,” he said.
