You have reached your limit of free articles this month.

Enjoy unlimited access to SpringfieldNewsSun.com

Starting at just 99¢ for 8 weeks.

GREAT REASONS TO SUBSCRIBE TODAY!

  • IN-DEPTH REPORTING
  • INTERACTIVE STORYTELLING
  • NEW TOPICS & COVERAGE
  • ePAPER
X

You have read of premium articles.

Get unlimited access to all of our breaking news, in-depth coverage and interactive features. Starting at just 99c for 8 weeks.

X

Welcome to SpringfieldNewsSun.com

Your source for Clark and Champaign counties’ hometown news. All readers have free access to a limited number of stories every month.

If you are a News-Sun subscriber, please take a moment to login for unlimited access.

Navistar orders up, but analyst questions future

About 900 people work at Springfield assembly plant.


Navistar secured the most orders on medium and heavy duty trucks that it has seen in almost two years, but at least one analyst who tracks the company raised concerns that the trend may not be sustainable.

Navistar International Corp. disclosed this week that it had secured about 5,900 orders for its medium and heavy duty trucks. The company, which employs about 900 people at its Springfield plant, assembles heavy and medium duty trucks at its facilities in Springfield and Escobedo, Mexico. It marked the company’s largest number of orders since December 2011.

The new trucks will be built at both facilities, although its not clear how the work will be split, said Steve Schrier, a spokesman for Navistar. It’s too early to tell what the surge in orders will mean for the company, but Schrier said the company is working to become more efficient and improve its profits after recent struggles that included an attempt to develop its own engine technology that failed to meet carbon emission standards.

“It’s part of our turnaround plan, and market share is really the next important step in our turnaround,” Schrier said.

The orders were roughly split equally between medium and heavy duty trucks. Officials from the United Auto Workers Local 402, which represents many of Springfield’s Navistar workers, could not be reached for comment.

“It just means we got a good month of orders in September,” Schrier said.

The increase in orders provided a bit of good news for the company, which announced just last month that it was planning to cut 500 jobs company-wide after a disappointing earnings report. In September, the company had reported losses for the fourth straight quarter and announced as many as 500 jobs would be slashed by the end of October, mostly salaried and contract employees. Those cuts were expected to have a minimal impact on operations in Springfield.

But Vicki Bryan, a high-yield analyst with Gimme Credit who has followed the company, provided a more skeptical analysis.

“While we are encouraged at the surge in Navistar’s orders, albeit versus a low base, we remained concerned that this may not translate into sustainable sales trends over the near term,” Bryan said.

She said the orders for trucks equipped with Navistar’s own engines were overshadowed by customer preferences for truck equipped with engines built by its competitor Cummins.

“We suspect the jump in orders may have been achieved via special promotional pricing with continued heavy discounting and incentives necessary to win over customers, which doesn’t cover Navistar’s prohibitively high costs and keeps intense pressure on liquidity,” Bryan said.

Earlier this month, Navistar also announced plans to raise about $200 million through a private offering of bond notes, along with $270 million in borrowing from a company financing subsidiary that can be used to reinvest in the company, including paying down debt, Schrier said.

However, if the heavy and medium duty trucking industry continues to improve in the next few years, it could help Navistar in the long run, said Ken Kramer, who follows the trucking industry for Global Insight, an economic forecasting and consulting firm.

The housing and construction markets are expected to improve in the next two years, which should benefit the trucking industry as a whole, Kramer said. If that’s the case, he said Navistar could improve its share of the market.

“I think the overall market looks good, which bodes pretty well for Navistar,” Kramer said.



Reader Comments ...


Next Up in Community News

Almost 100, South Florida man says it’s time to retire
Almost 100, South Florida man says it’s time to retire

Scattered throughout Fred Sergio’s waterfront home in South Florida are dozens of hand-whittled wooden canes, each a piece of the past half-century of Delray Beach’s history. Sergio will celebrate his 100th birthday Tuesday — and amazingly, his retirement from the city as grounds supervisor at Miller Park. When asked to recall...
Waitress moved to tears after receiving $1,000 tip
Waitress moved to tears after receiving $1,000 tip

A 20-year old waitress from Canada was shocked and moved to tears last Saturday when a customer left her a $1,000 tip for a dinner that cost $87.15, ABC News reported. Jennifer Peitsch is a waitress at Mongo's Grill in Winnipeg, Manitoba. She was working an unusually busy shift, which meant longer waits for customers and added anxiety for the waitress...
Bacon keeps sizzle in 109-year-old woman’s life
Bacon keeps sizzle in 109-year-old woman’s life

A 109-year-old woman from southern Illinois says living a clean life has a lot to do with her longevity. And a love for bacon doesn’t hurt, either.
Vermont CEO paying employees to go to Women’s March
Vermont CEO paying employees to go to Women’s March

The co-owner of a Vermont-based company offered her employees two nights in a hotel and airfare up to $250 to walk with her in a protest Saturday in Washington, D.C., The Huffington Post reported. >>Complete coverage of Donald Trump's inauguration  Donna Carpenter, the CEO and co-owner of Burton Snowboards, told Cosmopolitan that ...
3 killed when car hits pedestrians on Australian street
3 killed when car hits pedestrians on Australian street

A man deliberately drove into a pedestrian-filled street in Melbourne, Australia, on Friday, killing at least three people and injuring 20 others, police said. Officials told The Associated Press that the incident was not terrorist-related. Early Friday afternoon, a man was seen driving in erratic circles in the middle of a major intersection in downtown...
More Stories