The
legal dispute between Ford and Navistar opened a second front
yesterday.
In
a press
release posted to Navistar's website, Navistar says it
has filed a new lawsuit June 4th in the Circuit Court of Cook
County Illinois seeking, "at least hundreds of millions of dollars,"
in damages because Ford, "intends
to introduce a new diesel engine that actually was designed by
International Truck and Engine Corporation."
The
release also says that Ford
is developing a 4.4-liter diesel motor that will be built at
a Ford factory in Chihuahua, Mexico and will be used in
the F-150 light duty full size pickup by late 2009 or 2010.
An ugly
and very public
legal dispute between
Ford Motor Company and Navistar International over warranty obligations
and high prices for diesel engines just keeps getting uglier.
In an amended
counter-suit against Ford, Navistar claims that Ford is internally
developing a replacement for the brand new 6.4-liter Power Stroke diesel
engine that Navistar supplies for use in Ford's 2008
Super Duty pickups. Navistar is
seeking more than $2 billion in compensation if Ford fails to honor
its purchase contract with Navistar, which runs through 2012, saying it
has received indications that the new diesel motor will be ready for
introduction before that date.
The dispute
started in January when Ford filed a lawsuit in Michigan state court
against Navistar, arguing that Navistar unjustifiably raised engine
prices and had not been paying its share of repair costs for Power
Stroke diesel warranty claims. Ford says it has spent $1 billion
on repairs and recalls to fix problems with legacy 6.0-liter Power
Stroke diesel engines the 6.4-liter replaced. Ford further contended
that the purchase contract allowed it to debit Navistar's invoices
to recover these costs, which it had done up to $160 million after
filing suit.
In late
February, in response to Ford's legal and financial actions, Navistar
stopped shipping Power Strokes, causing an interruption in Super
Duty manufacturing estimated to be about 4,000 units of production.
In early
March the
Michigan judge presiding over the case issued
a consent decree forcing Navistar to resume Power Stroke shipments
and ordering Ford to pay half of the amount it had debited while the
two continued to work out
their differences. Along with the $80 million
payment to Navistar, Ford also agreed to pay $7,673 per engine instead
of the $6,167 it believed to be the fair price until the dispute is
finally settled.
