Ford and Navistar settle lawsuits, quit diesel supply deal
The days of the Power-Stroke diesel in the Ford Super Duty pickup seem to be about to end. Ford and its long-time diesel engine supplier Navistar have been bickering through their respective lawyers for the better part of the last two years. Ford has accused Navistar of building defective engines with excessive warranty costs. Meanwhile, Navistar accused Ford of breach of contract for developing its own diesel engine for light duty trucks. The dueling suits have now been settled with Ford agreeing to pay an undisclosed sum to Navistar. It appears that this is, in effect, an early termination fee as the companies will end their diesel supply deal at the end of 2009. The joint medium duty truck programs between the companies will continue for now, although Navistar will take a larger stake.
The question that remains unanswered is what happens to the availability of diesel engines in the Super Duty trucks. Without Navistar, Ford would be the only builder of heavy duty pickups without a diesel. Diesel market penetration has fallen in this segment in the past year as diesel prices skyrocketed. Ford has already shelved its light duty diesel program, so it can't use that engine.
[Source: Ford]
NAVISTAR AND FORD MOTOR COMPANY REACH NEW BUSINESS AGREEMENT
Companies to Continue To Collaborate on Medium Duty Trucks and Other Initiatives
DEARBORN, Mich. and WARRENVILLE, Ill. (January 13, 2009) – Ford Motor Company (NYSE: F) and Navistar International Corporation (NYSE: NAV) have reached an agreement to restructure their ongoing business relationship and settle all existing litigation between the companies.
As a result of the agreement, the companies will end their current diesel engine supply agreement effective Dec. 31, 2009. However, the companies will continue to collaborate on a range of initiatives, including their existing Blue Diamond Truck and Parts joint ventures. Navistar will acquire additional equity in the Blue Diamond joint ventures, which will continue to offer dealers and customers F-650 and F-750 medium duty trucks, as well as parts support for a variety of Ford products, including Ford's PowerStroke Diesel-equipped trucks. Ford and Navistar also will continue their diesel engine supply relationship in South America. As a result of the agreement, Ford will make a payment to Navistar.
"Navistar and Ford benefitted from a successful partnership that provided value to both companies for nearly three decades. However, it's in our best interests to resolve our conflict and continue our relationship with each other in other areas," said Dan Ustian, Navistar chairman, president and chief executive officer. "The next phase of our relationship is consistent with Navistar's strategy to diversify our customer base, while continuing to provide value to both companies through our existing joint ventures and our supply agreement in South America."
"We are pleased to have reached an agreement with Navistar that we believe is in the best interest of both companies," said Mark Fields, Ford's president of The Americas. "This agreement comprehensively addresses our business relationship with Navistar and will help both companies focus on meeting the needs of our current and future truck customers."
About Ford Motor Company
Ford Motor Company, a global automotive industry leader based in Dearborn, Mich., manufactures or distributes automobiles across six continents. With about 224,000 employees and about 90 plants worldwide, the company's core and affiliated automotive brands include Ford, Lincoln, Mercury, Volvo and Mazda. The company provides financial services through Ford Motor Credit Company. For more information regarding Ford's products, please visit www.ford.com.
About Navistar
Navistar International Corporation (NYSE: NAV) produces International® brand commercial and military vehicles, MaxxForce™ brand diesel engines, IC brand school and commercial buses, and Workhorse® brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Navistar is also a provider of truck and diesel engine parts. Another affiliate offers financing services. Additional information is available at www.navistar.com.
Reader Comments (Page 1 of 1)
jharlan 10:40AM (1/16/2009)
I thought Ford owned Cummins, and in fact the Cummins engine was the standard engine in the F650 and F-750 medium duty trucks. I own an F350 with the Navistar 7.3 L engine and it's been great, but I began hearing of problems with the engines when they went to the Navistar 6 L engine. Subsequently they went to a 6.4 L engine and I think the new ones are 6.7 L.
Can anyone clarify this?
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ambush 10:53AM (1/18/2009)
Yeah I'm not sure about the 6.7 but all the other sizes are right for sure.
I'm pretty sure on the 750 you can get a cat or a cummins.
SteveO 8:54PM (2/12/2009)
The F-650 and 750 offer a Cummins 6.7L or a Cat 7.2L
The Navistar 6.0L engine was a new design when it came out. However the when the 6.4L came out, it was somewhat based off of the 6.0L (using at least the same block).
I have heard that many people have experienced problems with the 6.0L, however no I know who has one has had any problems?!? The best stories I've heard are of the 6.4L when it first came out; many were shooting flames out of the tailpipe due to problems with the new aftertreatment system.
The 6.7L you speak of is probably the Scorpion engine that Ford has been working on themselves for the 2010 - 2012 year range. This is the reason they were sued by Navistar for breech of contract.
jim 10:55AM (1/16/2009)
Cummins would be a logical supplier and with possibility, if not likelihood that Dodge will disappear, Cummins will be a motivated vendor.
Cummins is a publicly traded company on the NYSE as CMI
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Schmeltz 12:34PM (1/16/2009)
It was such a smart, business savvy move for Navistar to go to court over this with errr-umm their customer, Ford, (note sarcasm). Seriously, Navistar should have stood behind and corrected any problems with their engines, period. Now they lost Ford as a customer and doubtfully will get any other auto company customers either after this debacle.
Ford, give Cummins or Catepillar a call, I'm sure either may be interested. Perhaps even Detroit Deisel. Or here's another interesting prospect as well, how about John Deere?
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me 1:24PM (1/16/2009)
Ford does not own Cummins ! Repeat after me: Ford does not own Cummins.
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me2 1:28PM (1/16/2009)
"Ford, give Cummins or Catepillar a call, I'm sure either may be interested."
Caterpillar does not build on road engines anymore, not even for heavy trucks.
"Perhaps even Detroit Deisel."
Detroit *Diesel* is owned by Mercedes and didn't even build diesels for Chrysler. I doubt it would build them for Ford.
"Or here's another interesting prospect as well, how about John Deere?"
John Deere builds tractor engines, not automotive engines. HUGE difference.
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Brn 2:02PM (1/16/2009)
If we read the article: "Navistar accused Ford of breach of contract for developing its own diesel engine for light duty trucks".
This has been my understanding for the last few years. Ford wants to build their own diesel, not buy it from someone else.
The article goes on to say that Ford shelved the above product. I don't know why they can't pull it off the shelf.
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John 10:38AM (1/20/2009)
All I know is that at the place I work at, we have 53 e-350 and e-450 vans that has the 6.0L powerstroke, This engine is junk, we have replace 25 engines so far due to lifter failing since they have roller lifters, and out of tho 25 replaced engines, we have replaced 3 engines under warrenty due to connecting rod breaking and coming tru the side of the block. Navistar should have made a better engine.
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Trex 10:59AM (1/22/2009)
Navistar is a joke ! The 7.3 diesel was the best diesel engine a company could make, but as usual it lasted to long. The 6.0 and the 6.4 are the reasons that the Ford Super Duty has gone down in sales. If Ford was smart , they would go to Cummings and use their engine. Ford would have the best looking truck and the most dependable .
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Cory 9:00PM (2/04/2009)
It seems that for cummins, who owns 61+% of Navistar through Inquardo Inc, and a majority portion of Izusu who is the subsidiary owner of duramax, is making the right move to really corner the diesel market as Ford is the only hold out with no ownership on cummins.
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mechanikat 2:01PM (3/13/2009)
Cats in pickups? I don't think so. Cat lothes aftermarket tweeking of their products. Don't ask how I know. They will void your warranty in a heart beat. Anyway if you study the exploded shop diagrams of the 6.9-7.3 and the infamous 3208 you could see they are VERY simular only differences c.i. displacement. water pump, injection pump. never see this mentioned. I don't know the design origins of the two engines..may be someone out there does. but check it out for yourselves
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mechanikat 10:24PM (3/14/2009)
On another note has anyone tried to get warranty work done on their Dodge by a Cummins dealer? I got chased off. Dodge dealers problem they said( I was told that they would entertain doing none warranty work for $120 an hour)
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cam 9:12AM (4/24/2009)
wow i have a 2004 f350 with the powerjoke 6.0 man what a joke it is if some body had any brains they would have keep the 7.3 and for what they say it could not meet the epa wrong you can make any meet the epa the 6.0 is a big pile of junk the have no power and don't last the cost to much to fix and the injectors are the biggest pile of junk ever made and who ever remans the needs to learn how to do it right
i have got my last ford with a powerjoke ever the 6.4 is even a bigger joke but ilike the truck but man i hate the engine
i drove a f350 with a cat in it and wow it was hot
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