Navistar
International announced today that it has stopped making 6.4-liter Powerstroke
diesel engines for Ford after an apparent impasse between the two companies
over warranty obligations and price increases.
Public signs
of the dispute started in January, after Ford filed a lawsuit claiming
Navistar unjustifiably raised engine prices and has not been living up
to its end of the deal paying repair costs for PSDs under warranty.
In its public
rebuttal, Navistar accuses Ford of not honoring the terms of its contract.
Navistar spokesperson Roy Wiley says, "Navistar pays its suppliers
and employees under contract terms and it expects Ford to honor the terms
of its agreement."
The last
Powerstrokes were shipped to Ford last week.
Ford is depending
on a steady stream of these new oil burners to power its new 2008
Super Duty pickups. Diesels make up about 40 percent of all F-Series
sales for the Blue Oval.
In shutting
off the engine supply to Ford, Navistar will also (temporarily) shutter
its Powerstroke factory in Indianapolis, Indiana, leaving 1,200 workers
in neutral until the matter can be settled. Another factory in Huntsville,
Alabama will continue to make the same engine for non-Ford applications.
Navistar
and Ford have made significant investments in the 2008 Ford Super Duty
pickups. Navistar invested over $100 million to retool for 6.4-liter Powerstroke
production and Ford has suffered from poor sales of its entire F-Series
line, which the new pickup is expected to help correct with its class
leading capabilities.
An extended
production outage of PSDs is only sure to bring more pain to Ford, Navistar,
and their truck buyers.
