January 2014, TruckingInfo.com - WebXclusive
CORRECTED -- In May, Navistar International Corp. named Bill Kozek, a 26-year veteran of Paccar, as president of Navistar's North America Truck and Parts business. He succeeded Jack Allen, who was promoted to chief operating officer.
Kozek took the position at a time when Navistar was still trying to recover from what in hindsight was a poor decision to try to avoid using selective catalytic reduction to meet EPA 2010 emissions standards and use only in-cylinder technology and exhaust gas recirculation. The company was not able to get its MaxxForce proprietary engines to meet the EPA standard on time and was drowning in penalties. It announced in 2012 it would adopt SCR after all, both on its MaxxForce 13-liter and by offering Cummins engines.
Kozek spoke with HDT Editor in Chief Deborah Lockridge about the company's progress and his first six months on the job, shortly after the company announced disappointing fourth-quarter earnings. Here's the Q&A.
HDT: Navistar's third-quarter financial results were not what the company had hoped, dragged down by continuing problems with the EGR-only EPA2010 engines. (See "Navistar's Turnaround Progress Overshadowed by Warranty Problems) From your perspective, how would you summarize the news? What are the most important takeaways?
Kozek: I'll give you my emotional feel of it. We were certainly disappointed in the results, but we're not discouraged. We're working hard to do the right thing to move forward. The warranty numbers are not where we need to, be but again I think the product we're putting out today are as good as anybody's in the industry, and our goal is just to continue to work through it.
We've fixed a lot of [those engines], we've got some work to do to fix more of them, but the key takeaway to me is we're putting out a quality product that we can be proud of.
HDT: It's got to be frustrating, right?
Kozek: Sure it is. There's a lot of smart people here who are working on the issues. Yeah, we're frustrated. We're disappointed but not discouraged, and we're going to keep getting through this. The important thing is [the warranty issues are] not on the new products. The other thing is there's a fixed population out there [of problem engines], so as long as we can get those fixed and those trucks moving, and I think a lot of them already have, we'll be in pretty good shape moving forward.
HDT: There are more than a few people who had all but written off Navistar in the past couple of years. What about the company and its challenges made you want to make the move?
Kozek: A really good group of people. When I worked at Paccar, the people at International were good; the products were always tough to sell against. I knew the engine strategy was a problem and there would be some pretty big challenges to overcome, but it was an opportunity for me to be part of a turnaround that would be something I don't think I ever would have had at Paccar.
HDT: Can you tell us a little bit about the corporate culture?
Kozek: Speaking up is encouraged and we want to make the right decisions. I think part of [the problems Navistar has had] was we were in a situation where we didn't speak up enough in the last three years. Troy [Clarke, president and CEO of Navistar] encourages collaboration. He encourages you to think creatively, he encourages you to make the right decisions after having all the information in your hands. It's collaborative.
HDT: What have you learned about Navistar since coming onboard? Anything that surprised you?
Kozek: I will say I was surprised at the high quality of our customer service organization and how we take care of the customers. That's been a very pleasant surprise. Customers want us to succeed, and our customer service is as good as anyone in the industry. In fact I think it's the best in the industry.
I've been a little surprised from a negative standpoint that we haven't turned around our market share as quickly as I thought we would.
HDT: What do you feel you've accomplished in your first six months?
Kozek: The thing I'm proudest of is, we meet with a lot of customers, and we think we've got a right plan for each one of those customers. And the customers are very open and they understand the situation we're in and they try to help us through those situations. I think we've got a good team to get those things done.
We've started to improve our market share. It's not as fast as I would like but we're getting there.
And I think we're making the right decisions on our products. The [announcement adding the Cummins ISB 6.7-liter diesel to the medium-duty offerings] in September, for instance. We're really growing our relationship with our supply base, so it's more collaborative than it's ever been. That's not just Cummins, it's all our suppliers. We're a lot more likely to do some collaborative, outside the box type things than we were in the past.
Our relationship with the outside agencies, like EPA is significantly better.
Our relationships with dealers are stronger. We do a real good job of communicating with them. We may not always agree, but we're communicating very openly.