Ford, Navistar in Venture to Build Trucks
In an effort to save costs in a tightening truck segment, Ford Motor Co. will form a joint venture with truck and diesel engine maker Navistar International Corp. to produce medium-duty commercial trucks in Mexico, the companies said Monday.
The 50-50 venture will produce Class 6 and 7 trucks--used as dump trucks, moving vans, firetrucks and other commercial vehicles--that are based off a common chassis and that will be marketed separately under the Ford F650 and F750 series and under Navistar’s International brand.
No name has yet been given to the venture, and neither Ford nor Navistar would provide details of the new company’s financing.
The market for such trucks has become much more competitive in recent years with manufacturers consolidating and growing bigger. Aside from Ford and Navistar, Volvo and DaimlerChrysler’s Freightliner division are major players.
“This alliance will be an investment in the future of both companies,” Jim Donaldson, Ford’s group vice president of global business development, said in a conference call. “It will create a global center of excellence for the design and production of world-class commercial trucks and separately explores expanded diesel truck engine applications.”
The numbers are not great. Ford now produces about 1,000 of the trucks a month and Navistar somewhat more. For Ford, that’s half the number of medium-duty trucks it made a few years ago, underscoring the tight competition in the sector and the shifting market.
Ford and Navistar would not say the production volume they expected at Navistar’s Escobedo, Mexico, plant, which will begin making the trucks in a couple of years.
Navistar Chief Executive John Horne said the venture will help spread costs between the partners. “Scale is absolutely important,” he said. “We need to do this for the cost structure, and we need to do it to support development and investment for products to come. Both companies can share in the benefits without [shouldering] all the investment.”
Neither Horne nor Davidson would comment on possible job reductions or the magnitude of savings that could be realized.
Based in Chicago, Navistar International had $8.5 billion in revenue last year. Dearborn, Mich.-based Ford had sales of $170 billion last year.
Ford shares closed up 88 cents at $27.80, and Navistar shares slipped 86 cents to close at $26.86, both on the New York Stock Exchange.
