The Chief Executive Officer of Navistar International, Lewis Campbell, says the company may close plants as part of its move to cut administrative and engineering spend to lower overall costs.
According to Campbell, the company is reviewing all operations beyond its core North American truck and parts business, Reuters reported. This review is to see whether any of its operations need to be fixed, sold or closed. The OEM will review whether it needs all 19 of its North American plants, the newswire said.
The OEM has mostly completed its white-collar layoffs and buyouts, which resulted in a reduction of the company’s workforce by around 800. Navistar is also reducing its engineering spending by 28%.
“More than likely we will have to adjust our footprint. And we are ready to do that. Since I’ve been here we have taken every single element of cost and said, ‘Is that where we want to be two years from now, one year from now?’ And if it’s not, let’s get a project in place to do something about it,” Reuters quotes Campbell as saying.
Navistar has already identified such operations that it could fix, close or sell. This action would result in an estimated increase in profits to the tune of around US$52m. By the end of this year, Navistar expects to complete identifying such operations.
The company will, for instance, eliminate the project concerning the largest version of the engine that failed to secure EPA approval. Instead, it will buy 15-litre engines from Cummins, and use Cummins’ technology in its 11- and 13-litre engines as well.
Navistar expects to sign a supply contract for 15-litre engines with Cummins by the end of October 2012, the newswire said. One unit that Navistar has decided not to sell, is its military trucks unit.
Meanwhile, the report said that Campbell intends to stay as the company’s Chief Executive Officer for two to three years. “I really think you can turn this company around in 12 to 18 months,” he said.
