Can International reach for the stars?

With much recent uncertainty surrounding the future of Navistar and its local operation NC2, GAVIN MYERS sought some clarification from the horse’s mouth.

According to Elissa Maurer, manager of external communications at Navistar, the company’s fortunes are on the up. A lot has happened, both domestically and in international markets, over the last year and a bit; with the company’s “Drive to Deliver” campaign being a driving factor.

“Launched in August last year, the campaign put the focus on 2013 being Navistar’s ‘turnaround year’,” says Maurer. “Through this the company underwent leadership changes, set high cost structure targets and strong cash guidance principles, among other strategic imperatives.”

Among these changes have been:

• the introduction of Selective Catalytic Reduction-based clean engine technology to comply with the United States emissions regulations;

• the signing of a joint venture with Chinese truck maker Jianghuai Automobile Corporation (JAC);

• numerous new and replacement appointments to the board of directors and executive and management staff;

• the closing of the company’s Garland, Texas, truck manufacturing operation, as part of its efforts to reduce costs and optimise its manufacturing footprint;

• the sale of the company’s stake in the Mahindra Navistar Automotives Limited (MNAL) and Mahindra Navistar Engines Pvt Ltd. (MNEPL) operations to Mahindra & Mahindra;

• the sale of some assets of recreational division Navistar RV to Allied Specialty Vehicles (ASV).

A review of the company’s financial reports indicates that quarterly operational losses have been both up and down over those of the previous year, since the “Drive to Deliver” campaign was implemented. However, Maurer says: “Navistar has exceeded its cash guidance targets for the last two quarters and is currently on target to reach its goal. It has also enjoyed several successful product launches recently.”

On the local front, the company is holding fire while it evaluates the current South African business model – as it is doing for each of its international business units. In April, Navistar announced that it intends to “restructure NC2 South Africa to improve profitability, strengthen its competitiveness and better serve its customers and dealers”. Depending on performance over the next few months, options for the future of NC2 could include improving its product offering and an accompanying focus on parts
and service.

On the other hand, Maurer points out that there are several business model options that could include the potential sale of NC2. She is quick to note, however, that no matter what the outcome, parts and service backup and support will always remain for local International operators.

“We will look at other options to make sure the business remains viable,” she says. “Contract manufacturing could be an option as well.” Following the departure of Paul Henning as managing director of NC2 South Africa, the local operation is being run by Bernardo Valenzuela, Navistar director of global operations.

It is clear that Navistar’s actions over the past year have indeed begun to have the desired effect. For the last remaining American heavy commercial vehicle brand to stand alone (i.e. to not have been taken up by one of the larger, usually European, groups) this is certainly no mean feat.

However, one can only hope that, whatever happens locally with NC2, the same positive moves can be repeated. It would certainly be a terrible shame to see one of the country’s longest-standing, most charismatic original equipment manufacturers closing its showroom doors.