Here we go again - Round 2 - Diesel Truck Forum -
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post #1 of 8 (permalink) Old 05-04-2007, 11:19 AM Thread Starter
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Here we go again - Round 2

Int'l counter-suing Ford

Navistar Files Counter-Complaint against Ford That Asks for Damages

WARRENVILLE, Ill.--Navistar International Corporation announced today that it has filed a counter-complaint against Ford Motor Company for breach of contract and is seeking damages.
Navistar filed its counter-complaint following a hearing before Judge John J. McDonald of the Circuit Court of Oakland County, Michigan. The hearing related to a lawsuit filed by Ford against Navistar involving 2007 engine pricing and prior period warranty claims. Navistar counter-sued, stating that pricing is consistent with contractual agreements, that the warranty claims are entirely without merit and that Ford has stopped honoring the terms of an agreement under which engines were built. Navistar amended its counter-complaint in todayís filing. Two previous hearings have been held and Judge McDonald has asked the two companies to meet privately to see if a settlement to the dispute could be reached prior to a trial.
At todayís hearing, Judge McDonald set a schedule for discovery and other events in the case.
Navistarís principal operating company, International Truck and Engine Corporation, has been the exclusive diesel engine supplier for Fordís heavy-duty pickup trucks since 1979 and recently launched a new 6.4L Power Strokeģ diesel engine that meets 2007 emissions standards while increasing performance, durability and fuel economy.
Ford, using International-manufactured Power Strokeģ diesel engines, has enjoyed leadership market share of close to 50 percent for many years. Navistar believes the new Power Stroke 6.4L diesel engines provide Ford the opportunity to maintain or improve this leadership position.
The amended counter-complaint filed today states that Fordís breach is based on indications that Ford plans to develop its own diesel engine for introduction prior to 2012. Fordís failure to honor the contract, which runs through 2012, entitles Navistar to damages that have been preliminarily calculated to more than $2 billion, the complaint states. In addition, Navistar states that Fordís actions are interfering with supply-base agreements.
Navistar International Corporation is the parent company of International Truck and Engine Corporation. The company produces Internationalģ brand commercial trucks, mid-range diesel engines and IC brand school buses, 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. A wholly owned subsidiary offers financing services. Additional information is available at:
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post #2 of 8 (permalink) Old 05-04-2007, 11:50 AM
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Great, given Fords past performance with customer service and poor quality control. I'm not sure if them building their own engine is such a good idea?
Hell at the current rate we may not have to worry about it. They may not be around by then?

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post #3 of 8 (permalink) Old 05-04-2007, 12:47 PM
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Sounds like Ford is in deep ****. They are clearly can't afford what international want for these motors. I think Ford is paying Navistar around $7,800 per motor.

"The argument escalated when Ford reportedly took the unorthodox move of subtracting the amount of money it said Navistar owed from the agreed-upon price for the new diesel mills. Ford reportedly began paying Navistar only $6,167 of the agreed upon per-unit price of $7,673." Newsweek article.
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post #4 of 8 (permalink) Old 05-04-2007, 02:50 PM
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Originally Posted by jmcholden
Great, given Fords past performance with customer service and poor quality control. I'm not sure if them building their own engine is such a good idea?
Hell at the current rate we may not have to worry about it. They may not be around by then?
Yeah, their previous performance, both in construction and warranty/customer service are a little less then perfect.

I am beginning to wonder about the fact that they may not be around by the 2012 model year.

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post #5 of 8 (permalink) Old 05-04-2007, 10:46 PM
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Considering they leveraged everything and are still loseing money and market shares it sure doesn't look good. I'm not sure what it takes money wise to start production on their own engines but it can't be cheap?

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post #6 of 8 (permalink) Old 05-04-2007, 10:58 PM
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I'll add my findings too. Saw this one on a news update at work today:

Navistar alleges Ford plans to bail
Diesel supplier cites breach, sues for $2 billion
Cleveland Plain Dealer 05/04/2007
Author: Robert Schoenberger

A dispute between Ford Motor Co. and its diesel-engine supplier escalated this week as Navistar Corp. accused the automaker of breaching a contract.

Navistar is asking for $2 billion in compensation.

Through its International Truck & Engine division, Navistar has supplied diesels to Ford since 1979 for use in some of the commercial vans built at the Ohio Assembly Plant in Lorain County and in heavy-duty trucks made in Kentucky and Mexico.

The current exclusive contract to supply engines ends in 2012, but Navistar says Ford plans to develop and launch its own diesel in 2010.

Strict diesel emissions standards start that year, so either Ford will have to have its own engine ready or Navistar will have to spend millions to adapt the current 6.4-liter motor.

In its suit, Navistar said that the automaker has done little to encourage the company to ready a 2010-compliant engine and that Ford has told companies such as fuel-injector supplier Siemens that it does not plan to use the Navistar engine past 2010.

"In its present weakened state, Ford has turned desperate," Navistar said in a counterclaim to a lawsuit filed by Ford in January.

The company added that Ford is trying to "squeeze" the supplier into taking poor contract terms, thinking that Navistar "is either afraid to challenge Ford's hegemony or so desperate for business that it will tolerate ever-mounting debts from a behemoth."

Ford Motor Co. spokeswoman Kristen Kinley declined to say whether the company is developing its own engines, but added, "Navistar's allegations are unfounded."

She said that while both sides continue to seek a settlement, Ford is preparing for a trial in its quest to get hundreds of millions of dollars from Navistar to pay for recalls of the problem-riddled 6-liter diesel engine that Ford sold starting in the 2002 model year.

"We intend to prove our claims through the court process, not in the press," Kinley said.

The dispute between the companies started in January when Ford withheld payments from Navistar and sued the company for not paying some recall expenses.

Navistar said it is not responsible for mechanical problems with the engine, blaming the recalls on "Ford's inability to properly train its mechanics."

Following Ford's suit, Navistar stopped engine shipments to Ford's Kentucky Truck Plant, where the launch of the 2008 F-Series Super Duty truck was under way.

The lack of engines led to plant shutdowns for both companies before a Michigan court issued an order forcing Ford to release payments.

About the same time, Ford decided to stop ordering the older 6-liter engines for use in E-Series vans. Traditionally, Ford sold about 5,000 diesel-powered vans per year, primarily to ambulance companies. Ambulance makers have complained that the lack of a diesel Ford will make ordering new vehicles difficult. Ford had about 90 percent of the market.

In its court filing, Navistar said Ford asked it to adapt the 6.4-liter engine for use in E-Series vans for release in 2009 but canceled that request this year.

Tom Rhein, owner of Detroit-based diesel research and consulting group Rhein Associates Inc., said the decision to cut the diesel van engine probably came from the deterioration of the relationship between the two companies.

He traces the roots of the dispute to 2002. As Ford was getting its first complaints about 6-liter engine problems, it decided to cancel a contract for Navistar V-6 diesels to use in F-150 pickups and sport utility vehicles.

In regulatory filings, International said that decision cost it $181 million, because it had already begun tooling a plant in Alabama to make the engines. Ford paid an undisclosed sum to Navistar in 2003 to settle those issues.

Rhein said he believes Ford will have its own diesel engine ready for commercial trucks and vans by 2010 and a lighter-duty V-6 as early as next year.

He added that he believes such engines would be built in Mexico, despite excess capacity at its engine campus in Brook Park.

Ford declined to discuss its engine development and production plans.

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post #7 of 8 (permalink) Old 05-04-2007, 11:29 PM
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So does that mean no more ordering diesels?
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post #8 of 8 (permalink) Old 05-05-2007, 12:08 AM
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Thats BS, a judge didn't rule "Ford to release payments".

what a judge did order is International to resume production per the terms of the contract.
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