Navistar Plans Job Cuts of ‘a Few Hundred’ by Sept.

This story appears in the Aug. 19 print edition of Transport Topics.

Truck and engine maker Navistar International Corp. said it plans to cut “a few hundred” jobs companywide by early September in a move to reduce costs.

Navistar is working to determine the number of jobs to be cut, spokeswoman Elissa Maurer told Transport Topics on Aug. 9. She wouldn’t specify where the cuts would take place but said they will be mainly in North America.

In addition to the employee layoffs, the company potentially could cut about 140 contractors, Maurer said.

“We need to continue to cut our costs and right-size our business,” she said.

“This has not been an easy decision, but it’s something that’s necessary,” she added. “We’ve done the right things, but we need to do them better and faster.”

The cuts were announced in an Aug. 6 internal letter to employees from CEO Troy Clarke and Chief Operating Officer Jack Allen.

Navistar has about 15,000 employees globally, including about 3,000 at its Lisle, Ill., headquarters.

Navistar’s market share in the Class 8 truck business dropped after its previous engine technology failed to meet the U.S. Environmental Protection Agency’s 2010 emissions standards.

The company has been transitioning its trucks to engines with selective catalytic reduction, the same technology used by all of its competitors to meet federal requirements. Earlier, Navistar had tried to use exhaust gas recirculation to meet the EPA standard.

Navistar is now selling International trucks equipped with Cummins ISX 15 engines that use SCR, as well as vehicles outfitted with its own 13-liter MaxxForce engines with SCR aftertreatment supplied by Cummins Inc.

Last week, Navistar separately announced that it has received more than 10,000 orders for trucks with the ISX 15 since reintroducing the third-party engine.

Bill Kozek, the new president of Navistar’s North American truck and parts business, described the orders milestone as a “testament to customer acceptance.”

Navistar began shipping ProStar models with the ISX 15 in December, launching its transition to SCR. Since then, the company has added Cummins and MaxxForce engines with SCR to several other truck models. Navistar said the majority of configuration options for SCR-powered International heavy-duty models were nearing completion in August.

In June, Navistar reported a loss of $374 million in its fiscal second quarter that ended April 30, more than twice its loss in the corresponding period a year earlier.

“We have met or exceeded so many goals we’ve set for ourselves; we thought that progress would come faster. It didn’t, but it is coming,” Clarke said on the company’s June 10 quarterly call with analysts.

He also said the company was “overachieving” in its efforts to reduce its structural costs by $175 million.

Earlier in the year, the company cut costs by closing its manufacturing plant in Garland, Texas, and moving production to its facilities in Springfield, Ohio, and Escobedo, Mexico.

Navistar’s U.S. Class 8 market share has declined every year since 2009, according to retail sales figures from WardsAuto.com.

In 2009, market share for Navistar’s International brand crested at an industry-leading 28%, although that year also was the worst for truck sales since 1983.

From there, Navistar’s market share slipped to 25.1% in 2010, 21% in 2011 and 17.9% in 2012. Through seven months, the company’s share for 2013 is down to 14.5%.

In the past two months, however, Navistar’s Class 8 sales totals have shown month-to-month gains, from 1,938 in May to 2,225 in June and 2,402 in July.

Kozek recently told Transport Topics thatthe company is confident it has bottomed out on market share and expects to show improvement by the end of the company’s fiscal year on Oct. 31.