Navistar International Corp. told security analysts this week that it expects to double in size and become a profitable $15 billion company by the end of the next industry business cycle,
which typically spans an eight- to 11-year period.
Daniel C. Ustian, president and chief executive officer and newly named chairman-elect, said the goal of doubling in size is "bold and ambitious" and is tied to the company's plan to "create a new reality."
Ustian spoke to more than 150 security analysts and shareowners Monday in Manhattan.
"Industry leading quality and disciplined cost management will be enablers for our growth, and we expect to achieve our goal through product superiority and brand strength," Ustian said. "We plan to become a $15-billion company by increasing market share with existing products, through the introduction of new products in our current markets, as well as by finding new business opportunities in similar markets."
According to Ustian, the company's goal is to be "profitable at all points of the next cycle, and every cycle after that."
He cited two examples of the "new reality" -- the expansion opportunity into the military market and the company's competitive advantage with diesel engine expertise that will allow it to meet 2007 emission standards without the use of expensive catalytic converters.
Ustian said that recognizing the similar needs of many Armed Forces and commercial fleet owners, the company established a business unit to sell products and services to the U.S. military, including a repowered solution for the well-known military vehicle, the HMMWV or HUMVEE, which combines International's V-6 engine with an electric generator installed in the power train to address a wide array of applications.
Prior to the analyst meeting, International Truck and Engine Corp., Navistar's operating company, announced it no longer sees the need for complex diesel after-treatment for 2007 products and that International brand trucks will meet 2007 emission requirements without using costly NOx adsorbers.
"Our 2007 engine strategy ensures cost-effective compliance and secures our leadership," Ustian said. "By being able to eliminate the need for and expense of NOx adsorbers, we will meet 2007 environmental requirements while reducing complexity for our customers."
Ustian reaffirmed that the company expects United States and Canadian total truck industry retail sales volume for Class 6-8 and school buses in fiscal 2004 to total 304,500 units, up 16% from the 263,400 units sold in fiscal 2003. Looking further out, the company anticipates that industry retail sales volume will increase to approximately 400,000 units in its fiscal 2005 and to approximately 425,000 units in fiscal 2006.
According to Ustian, the company's forecast for 2004 retail commercial Class 6,7 and 8 industry truck sales volume is lower than that forecast by some other sources, but said that the company is historically conservative in its outlook.
As a reflection of the renewed vigor in demand, Ustian said that the company has increased production at its Springfield, Ohio assembly plant by 10 medium trucks per day to 177 units, effective Monday.