Navistar International Corp. said this week it will take a restructuring charge of as much as $456 million in the fourth quarter as it leaves the Brazilian truck market, and because of the uncertain future of a truck engine agreement
with Ford Motor Co.
Navistar told the Associated Press it will take a pretax charge of up to $210 million because of the delay and possible cancellation of a 1998 agreement to provide Ford with V6 diesel engines for the F-150 pickup truck, Econoline 150 vans, Ford Expeditions and Lincoln Navigators from model years 2002 through 2012.
Ford advised Navistar the agreement is no longer viable and the timing of its implementation is no longer predictable, according to Navistar officials. The agreement prompted Navistar to build an engine assembly plant in Huntsville, Ala., and to develop a V6 diesel engine, which it could sell only to Ford.
The action has no effect on plans by Ford and Navistar to build Class 6 and 7 commercial trucks at Navistar's plant in Escobedo, Mexico under a 50-50 venture named Blue Diamond Truck Co., or a contract to supply V8 diesel engines to Ford through 2012, officials said.
Navistar said it will exit the Brazilian truck market this week, resulting in a pretax charge of up to $70 million.
The Warrenville, Ill.-based commercial truck, school bus and diesel engine maker attributed its decision to exit Brazil to the more than 200% devaluation of the Brazilian real since 1998, which made profitable operations impossible. Navistar re-entered the Brazilian truck market that year after a 20-year absence. The company did not say how many jobs will be lost because of the move.
Earlier this year, Navistar announced plans to reduce operations at its Springfield, Ohio plant. The move resulted in the layoffs of 1,100 workers. It also announced plans to close it Chatham, Ontario heavy truck plant next year.