Officials with Ford and Navistar International had more details on their new Blue Diamond Truck Co. joint venture in a teleconference Tuesday.
Both companies said economies of scale and the cost savings that come with it are the main reason for the deal, which calls for Ford to move its medium duty truck production in Mexico City to Navistar’s medium-duty truck plant in Escobedo, Mexico.
Navistar’s Jack Allen, who will serve as the general manager of Blue Diamond Truck Co., said the 50-50 venture is an expansion of an ongoing partnership between Ford and Navistar.
“From International’s perspective, there is a great opportunity for us to grow in truck sales in both existing new product and market segments and also opportunities for both companies to leverage the core competencies that we have,” Allen said. “The result will be a better cost, quality and performance to our product, and it will also drive scale in the areas of purchasing and manufacturing for our company and make our product development process faster and more efficient.”
According to Allen, the joint venture will allow Navistar to enter into market segments it would not be able to on its own because of the “investment versus the sales opportunity.” He said, “New product will be across a broader base of vehicles, so we will be able to develop new vehicles, [to] leverage the strengths of the Ford product development process and the International product development process to bring vehicles to market quicker.”
Navistar, which is currently building 5,000 to 10,000 medium trucks a year at the Escobedo facility, wants to increase the build rate there to as much as 35,000 a year with the joint venture.
For a time there will be an overlap in the production of the trucks at the Mexico City plant through November 2002, while pre-production will begin even earlier at the Escobedo plant.
Describing Blue Diamond as a “work in progress,” Allen said the venture will design, develop and manufacture the medium-duty trucks, while sales, marketing and distribution will be handled separately. The trucks will be branded as Ford or International and will be sold through each company's existing dealer networks. An eight-person executive board, consisting of four members each from Ford and Navistar, will manage Blue Diamond.
Ford’s Dave Tarrant, who will serve as the Commercial Truck Strategy Manager for Blue Diamond, said the JV is a result of finding that the best way both companies can be strong players in the Class 6 and 7 truck market is to “leverage both companies' extended resources."
Tarrant said Ford's goal is to grow back to being a major player in Class 6 and 7. "We'd like to be back at 27 percent of the market, building 20,000 to 35,000 units per year," he said. "We have a plan to be in this business and be a winner in it."
Allen says the plan is for a joint product development effort led by Navistar in close collaboration with engineers from Ford. Tarrant added that some truck parts will come from Ford, others from Navistar, while others will be new.
According to Tarrant, the first product of the JV will be the common chassis medium truck, which will use Ford cabs, front end sheet metal and the derivative of the Navistar high-performance chassis.
“It will use both Ford and Navistar powertrains and will be uniquely Ford. It will have the benefits of scale for the chassis parts, but it will look like a little bit better version of our existing medium-duty truck.”
Although officials would offer few details to their future plans, they said they are working on longer term ideas to develop new products for the class 3 through 5 markets.
When asked if they would get back into the Class 8 heavy truck market, officials reiterated Ford cannot compete in that market until after its non-compete agreement expires in 2008, resulting from the sale of its heavy truck business to Freightliner in 1998. They said they have plenty of time to make such a decision but did note “it was obvious that big [Class] sevens are in the cards since they are derivatives of the products we have already.”
Both companies said economies of scale and the cost savings that come with it are the main reason for the deal, which calls for Ford to move its medium duty truck production in Mexico City to Navistar’s medium-duty truck plant in Escobedo, Mexico.
Navistar’s Jack Allen, who will serve as the general manager of Blue Diamond Truck Co., said the 50-50 venture is an expansion of an ongoing partnership between Ford and Navistar.
“From International’s perspective, there is a great opportunity for us to grow in truck sales in both existing new product and market segments and also opportunities for both companies to leverage the core competencies that we have,” Allen said. “The result will be a better cost, quality and performance to our product, and it will also drive scale in the areas of purchasing and manufacturing for our company and make our product development process faster and more efficient.”
According to Allen, the joint venture will allow Navistar to enter into market segments it would not be able to on its own because of the “investment versus the sales opportunity.” He said, “New product will be across a broader base of vehicles, so we will be able to develop new vehicles, [to] leverage the strengths of the Ford product development process and the International product development process to bring vehicles to market quicker.”
Navistar, which is currently building 5,000 to 10,000 medium trucks a year at the Escobedo facility, wants to increase the build rate there to as much as 35,000 a year with the joint venture.
For a time there will be an overlap in the production of the trucks at the Mexico City plant through November 2002, while pre-production will begin even earlier at the Escobedo plant.
Describing Blue Diamond as a “work in progress,” Allen said the venture will design, develop and manufacture the medium-duty trucks, while sales, marketing and distribution will be handled separately. The trucks will be branded as Ford or International and will be sold through each company's existing dealer networks. An eight-person executive board, consisting of four members each from Ford and Navistar, will manage Blue Diamond.
Ford’s Dave Tarrant, who will serve as the Commercial Truck Strategy Manager for Blue Diamond, said the JV is a result of finding that the best way both companies can be strong players in the Class 6 and 7 truck market is to “leverage both companies' extended resources."
Tarrant said Ford's goal is to grow back to being a major player in Class 6 and 7. "We'd like to be back at 27 percent of the market, building 20,000 to 35,000 units per year," he said. "We have a plan to be in this business and be a winner in it."
Allen says the plan is for a joint product development effort led by Navistar in close collaboration with engineers from Ford. Tarrant added that some truck parts will come from Ford, others from Navistar, while others will be new.
According to Tarrant, the first product of the JV will be the common chassis medium truck, which will use Ford cabs, front end sheet metal and the derivative of the Navistar high-performance chassis.
“It will use both Ford and Navistar powertrains and will be uniquely Ford. It will have the benefits of scale for the chassis parts, but it will look like a little bit better version of our existing medium-duty truck.”
Although officials would offer few details to their future plans, they said they are working on longer term ideas to develop new products for the class 3 through 5 markets.
When asked if they would get back into the Class 8 heavy truck market, officials reiterated Ford cannot compete in that market until after its non-compete agreement expires in 2008, resulting from the sale of its heavy truck business to Freightliner in 1998. They said they have plenty of time to make such a decision but did note “it was obvious that big [Class] sevens are in the cards since they are derivatives of the products we have already.”
media brand
0 Comments
See all comments