Navistar International Corporation intends to close a manufacturing plant in Garland, Tex., one of two locations in the U.S. where it builds highway trucks. The commercial vehicle and diesel engine builder cited its need to reduce operating costs and optimize its manufacturing footprint for the decision, which will affect approximately 900 workers.
The plant will close in the first half of 2013, the company stated. Navistar expects its operating costs to be reduced by $25-$35 million annually as a result of the shutdown.
The Garland plant manufacturers “severe service trucks,” according to Navistar’s online records, including International WorkStar and International PayStar regional hauling trucks, the International TranStar, and the International MaxxPro Mine Resistant Ambush Protected (MRAP) vehicle for military applications.
Navistar indicated that orders now produced at Garland would be shifted to other North America operations — which would indicate Navistar’s plants in Springfield, Ohio, and/or Escobedo, Mexico.
The shutdown decision extends Navistar’s skein of troubles through this year, which have included a long dispute with the U.S. Environmental Protection Agency over the acceptability of its after-treatment technology for carbon emissions for heavy-duty diesel engines; pressure from shareholders to consider a merger or acquisition; and the displacement of the CEO in late August.
Now, Navistar also faces a sluggish industrial economy, too: sometime rival Cummins Inc. and commercial vehicle supplier Accuride Corp. recently cut their earnings forecasts and implemented cost-saving strategies, offering weak commercial-vehicle demand as the cause.
Recently Navistar reported a third-quarter profit of $84 million, down more than 60% year-on-year from Q3 2011 profits of $1.4 billion. Interim CEO Lewis Campbell has explained in several recent interviews that Navistar will consider closing or selling plants or any part of the business in order to restore its profitability.
"Closing a facility is always difficult because of its impact on the many great people who've been part of our company," stated Troy Clarke, Navistar president and COO, "but the fact is that Navistar has too much manufacturing capacity in North America and we must take quick action to improve our business and position the company for long-term success.
"We understand that these decisions affect employees and the community," Clarke continued. "We will treat people with respect and provide support to help them with their transitions."