A plan by Navistar and GM to build medium-duty trucks in Springfield will secure the plant’s future, experts said Wednesday, and could draw more jobs to the region from suppliers.
Navistar announced a joint agreement with General Motors on Wednesday to assemble medium-duty trucks in Springfield. The agreement will mean at least 300 new jobs here and a more than $12 million investment in the plant, a sharp turnaround for a company that local leaders once feared was close to abandoning Clark County.
The agreement, which was in the works for about a year, will instead give the Springfield facility an increasingly prominent role with Navistar moving forward, said Mike McDorman, president and CEO of the Chamber of Greater Springfield.
In 2010, the Springfield facility had as few as 300 workers. But the truck maker has since changed its corporate leadership, restructured and shuttered other sites to cut costs and become more efficient.
Navistar also reached a four-year contract earlier this year with members of the UAW Local 402, which represents the majority of workers at the Springfield site.
“The new leadership came in and saw the new opportunity in Springfield to turn things around and we’re seeing that now,” McDorman said.
The plant now employs about 1,500 workers, including management and contractors, and thousands of company retirees still live in the region.
Both companies will collaborate to develop the trucks jointly, using Navistar’s expertise in chassis configurations and manufacturing capabilities, and GM’s commercial components and engines. The companies didn’t disclose specifics of the deal, or provide information about the truck that will be produced.
The agreement will allow Navistar to strengthen its product lineup and GM to expand its Chevrolet commercial truck portfolio, according to information from Navistar.
“By working with an industry-leading company like GM, we’ll be able to enhance our medium-duty product and leverage our scale and expertise in manufacturing medium-duty trucks,” said Bill Kozek, president of truck and parts for Navistar in a news release.
Production is scheduled to begin in 2018, and most of Navistar’s $12 million investment will go toward upgrades at the Springfield plant and new equipment to produce the new vehicles.
The deal could also boost job growth at local companies that provide parts to Navistar and attract new companies, said Horton Hobbs, vice president of economic development at the chamber. Local officials said they will promote the nearby Champion City Business Park in Springfield as a natural location for potential suppliers who want to be close to Navistar.
The fact that GM and Navistar see increasing demand for the medium-duty trucks is a sign the economy is improving, said Bernard Swiecki, an analyst for the Center for Automotive Research. Commercial orders for a variety of durable goods, including severe service trucks, dried up during the recession.
In the light auto industry, each assembly plant job typically means as many as nine additional jobs for area suppliers, he said.
“If the demand from the commercial sector is high enough that we’re adding capacity for these vehicles, that’s a pretty darn good sign,” Swiecki said.
Earlier this week, the Ohio Tax Credit Authority approved a 60 percent, six-year income tax credit for Navistar. The new jobs will mean $10.3 million in additional payroll and allow the Springfield plant to retain more than $38 million in existing payroll, according to information from the state.
The state tax credit is valued at about $643,000, said Stephanie Gostomski, a spokeswoman for the Ohio Development Services Agency. She cautioned that it’s an estimate and the actual value depends on the number of jobs and the new payroll the company actually generates.
GM exited the medium-duty truck business when it restructured in 2009 during the height of the Great Recession, said Bob Wheeler, a spokesman for GM.
“We wanted to get back into this specific medium-duty business and we had the opportunity to work with Navistar and get back in the class 4/5 business that we’re really excited about,” Wheeler said.
Collaborating to produce a vehicle isn’t uncommon in the industry, he said, and it allows GM to return to the market quickly.
“This is a segment that our dealers are asking for since we got out of the business a few years ago,” Wheeler said. “It will really help our dealers who sell and service this vehicle with adjacent sales. We also sell pickup trucks, vans, cars, crossovers and now medium-duty trucks. When we walk into a fleet or commercial or government accounts, we can sell them across the board whatever they would need.”
Troy Clarke, Navistar’s new CEO, previously served as an executive for GM and has a long history of working with the unions, said Jason Barlow, president of the UAW Local 402, which represents the majority of the Springfield plant’s workforce.
Union leaders were aware the joint project was a possibility when negotiating their most recent contract, Barlow said. But they kept the issues separate until the labor deal was secured because that was more important locally. The Springfield site was also in competition with Navistar’s truck facility in Escobedo, Mexico, for the work, he said.
The company was in a difficult position a few years ago, especially after it had to regroup when its engine technology failed to meet U.S. EPA standards. But Barlow said Navistar’s corporate management and union leaders have worked well together, and the manufacturer is close to becoming profitable again.
“They’ve restructured and they’re getting back to what made us famous in the past, which is building a quality truck,” Barlow said.
McDorman credited Barlow’s leadership with the UAW for helping make the deal work.
Navistar has a long history in Springfield, he said, dating back as far as the late 1800s. Its fortunes have often been tied to the region’s success.
“We grew up as a manufacturing town then declined as a manufacturing town,” McDorman said. “Now with companies like Navistar, we’re seeing manufacturing come back and we’re seeing jobs associated with manufacturing come back. And that’s a big thing for Springfield.”
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