to Ford: No Diesel for You!
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.