Navistar suspends diesel engine production; says Ford not honoring terms

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Jim Higgins - 26 Feb 2007 18:16 GMT

Stiffing your suppliers is a dumb thing to do

Navistar suspends diesel engine production; says Ford not honoring terms
http://www.detnews.com/apps/pbcs.dll/article?AID=/20070226/UPDATE/702260402

Navistar International Corp. said today that it has halted production of the
Power Stroke diesel engine it makes for Ford Motor Co. because of a contract
dispute.

Warrenville, Ill.-based Navistar is the exclusive diesel engine supplier for
Ford's heavy duty pickup trucks. In a statement today it said it "pays its
suppliers and employees under contract terms and that it expects Ford to
honor the terms of its agreement."

Ford officials could not immediately be reached for comment.

In January, Ford sued Navistar, saying the engine maker was not complying
with warranty cost-sharing agreements and that it had unjustifiably raised
prices on its products. The suit said at the time that Navistar had
threatened to cut off shipment if Ford did not pay the new prices for its
engines.

Navistar said it will stop making the 6.4-litre Power Stroke at its
Indianapolis and Huntsville, Ala. factories but that the Huntsville plant
will continue production for other customers.

--
"If they pull a knife, you pull a gun. If they put one of yours in the
hospital, you put one of theirs in the morgue."
Sean Connery, "The Untouchables"

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C. E. White - 27 Feb 2007 02:09 GMT

> Stiffing your suppliers is a dumb thing to do

But letting your supplier stiff you is OK?

Apparently both Ford and Navistar have issues with the deal on the engines.
As I am sure you are aware their were a lot of problems with the 6.0L
PowerStroke engines. Ford blames Navistar for supplying defective engines. I
am sure there is a contract specifying Navistar's warranty obligations. It
seems Ford does not think they are being met. Navistar also has a contact
with Ford to supply 6.4L engines at a given price. I am sure there are
provision in the contract for price renegotiation. Rather than negotiate per
the contract, Navistar is trying to unilaterally raise the price. Rather
than let the courts sort this out both sides have pushed the launch buttons
on the bombers. I am sure Navistar believes Ford can't afford to screw up
the launch of the new SuperDuty and therefore they can force Ford to accept
their terms. If I was running Ford, I would be tempted to tell Navistar to
go to h**l. I doubt if either company can afford to screw up the
relationship, so probably within two weeks both sides will recall the
bombers, and settle this. Navistar will probably get a price increase, and
Ford will probably get the warranty money. Both sides will declare victory
and kiss and make up for the public. However, in fact Navistar will be the
actual winner. They will merely be paying the warranty cost out of the
extorted extra charges for the new engines and after the warranty costs are
paid, they will make a lot more money. Ford should start making plans to
dump these turkeys.

Ed

> Navistar suspends diesel engine production; says Ford not honoring terms
> http://www.detnews.com/apps/pbcs.dll/article?AID=/20070226/UPDATE/702260402
[quoted text clipped - 24 lines]
> hospital, you put one of theirs in the morgue."
> Sean Connery, "The Untouchables"

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Lynn McGuire - 27 Feb 2007 18:22 GMT

> extorted extra charges for the new engines and after the warranty costs are
> paid, they will make a lot more money. Ford should start making plans to
> dump these turkeys.

Ford allready dumped these guys for the V6 turbo diesel that was
to go into the expedition and F150 trucks. Ford spent about $1e9
and gave up on them.

I dont understand why Ford just didnt go get the Volvo V6 turbodiesel
or the VW V6 turbodiesel. Both are sold here in the USA already.

Lynn

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