Navistar International Corp. announced that its operating company, Interna-tional Truck and Engine Corp., is placing its engine group in a new wholly owned subsidiaryto better showcase its growing role in overall operations.
John R. Horne, Navistar Chairman, President, and Chief Executive Officer, said the engine group will continue to serve both its OEM customers and the International truck group while achieving stand-alone status.
"As our engine group has grown from a captive internal supplier to our truck group to a major supplier to Ford and a leader in developing clean, quiet, and odorless diesel technology, its sales, earnings, and margins have increased dramatically," Horne said. "However, it has been difficult for investors to value this business appropriately because it has been buried within what they generally perceive as a heavy-truck business. The creation of a wholly owned subsidiary recognizes the increasingly important role that our cutting-edge diesel engine technology plays in the overall success and continued growth of the value of this corporation."
Horne said that Dan Ustian, President of the Engine Group of International Truck and Engine Corp., will be President of the new subsidiary. No other personnel changes are planned. The name of the subsidiary will be International Engine Corp.
Horne said the new direction positions the company's engine business "to take its place as the premier diesel engine business in the world."
"Diesel engines continue to gain broad market exposure and more drivers are experiencing diesels' superior performance and fuel economy as well as the quality and reliability that have been diesel's underlying strength," he said. "The combination of the superior fuel economy of the diesel engine and the high cost of gasoline that we have experienced recently should ensure the continued dieselization of the heavy pickup truck market and push other gasoline applications toward diesel."
According to Ustian, the new subsidiary is positioned to leverage product and manufacturing technology globally, moving beyond the traditional commercial truck applications in which diesel has been used.
Ustian said International developed a new line of high-technology, high-performance diesel engines designed to meet stringent emissions regulations and explore new markets. These engines will help International and its customers meet reduced diesel emissions standards in advance of the 2004 compliance deadline set by the Environmental Protection Agency.
"Diesel is truly a global fuel, available in developed and underdeveloped nations," Ustian said. "Our vision is to bring clean diesel technology to a new and affordable level, helping transportation systems of all nations achieve their economic and clean air goals."
International's Indianapolis, IN, engine plant produced more than 300,000 diesel engines in 1999, working around the clock, seven days per week. It has been designated a "high volume" production facility that will focus on producing next-generation diesel engines for Ford Motor Co. scheduled to be introduced in 2002. The company has a contract to design and manufacture high-technology diesel engines for Ford's over 3855-kg (8500-lb) GVW vehicles through 2012.
A new high-tech engine plant is under construction in Huntsville, AL, to produce a new generation of V6 diesel engines. A third engine facility in Melrose Park, IL, produces premium International engines for International medium- and severe-service trucks and buses.
Additionally, a joint venture with Siemens Automotive involves the introduction of electrohydraulic digital valve fuel injectors at a plant to be operated by Siemens in Richland County, SC. These next-generation diesel fuel injectors incorporate proprietary digital valve technology under license from Sturman Engine Systems, LLC.
Indianapolis Casting Corp. and the Waukesha Manufacturing Facility, both of which produce castings and other engine components, will also become part of International Engine Corp.
Jean L. Broge
AEI October 2000
