Navistar’s Springfield plant is a key to turning around the truck maker’s fortunes, company officials said Thursday, one day after Navistar announced a plan to cut 500 jobs.
The company-wide reductions will have little, if any, effect on the more than 900 people who work in Springfield, according to company and local union officials.
“They’re our focal point in improving our business and will be minimally impacted by these reductions,” Navistar spokesman Steve Schrier said of the Springfield plant.
On Wednesday, Navistar International Corp. reported losses for the fourth straight quarter and said 500 jobs will be slashed by the end of October. Those reductions will largely focus on salaried and contract employees, said Schrier.
The Springfield facility produces medium duty, heavy duty and severe service trucks. Schrier said the Springfield plant, along with a facility in Escobedo, Mexico, have the flexibility to produce several varieties of the company’s products.
One year ago, Navistar had three truck manufacturing plants, including the facilities in Mexico and Garland, Texas. The Texas facility has since closed and workers in Springfield and Escobedo picked up the work that was previously done there. The company’s confidence in Springfield made that consolidation possible, Schrier said.
Local union officials agreed that the cuts should have a minimal impact on the Springfield facility.
“That’s primarily all management and exempt positions corporate-wide,” said Jason Barlow, president of the United Auto Workers Local 402. The union represents many of Springfield’s Navistar workers.
The Springfield plant once employed more than 7,000 people in the 1970s to a low of about 300 just three years ago. Since then, more positions and work have been added, but the overall company has struggled financially.
Analysts this week had expected revenue for the company of about $2.92 billion, but Navistar’s revenue actually fell 12 percent to $2.82 billion in the three months that ended on July 31.
Analysts who monitor the company said Navistar will have a tough road as it struggles to improve its fortunes. Much of the problems the company has had in recent years stem from an attempt to develop an engine technology that failed to meet 2010 carbon emission standards. Since then the company eventually decided to forgo its own technology and rely on an engine technology used by competitors.
“Navistar is under the gun to get its wheels out of the ditch after finally abandoning its colossally failed proprietary emissions system produced in all its legacy engines and trucks,” Vicki Bryan, a senior high yield analyst said in a report for research firm Gimme Credit after Navistar’s latest results. “As it struggles to reinvent its entire product line in a matter of months, its biggest challenge will be to maintain sufficient cash to fund the transition that will secure its future.”
While the cuts are always a difficult decision, Schrier said it is a necessary step that must take place as the company tries to turn its financial situation around.
“At the end of the day I think we’re really making some tough decisions that will bring us back to profitability,” Schrier said.