Navistar — a major Springfield employer — could be sold as the manufacturer has positioned itself to be attractive to a buyer or additional partners, industry experts said.
But a sale or more partnerships like a recent deal with GM to build trucks in Springfield likely wouldn’t hurt the plant here, analysts said, because the facility has been key to Navistar’s turnaround.
“They’ve actually moved a lot of production to Springfield and shutdown other plants elsewhere, so the Springfield plant is I think fundamental to the new Navistar,” said Vicki Bryan, a senior analyst at Gimme Credit, an independent research service.
The joint agreement with GM is expected to bring at least 300 new jobs to Clark County, and about $32 million in investment at the plant, including $20 million from the Detroit automaker. The new trucks are scheduled to go into production in 2018.
Navistar CEO Troy Clarke has told Reuters the manufacturer could do more partnerships like that GM deal if its remains a standalone company, but also said “there are companies out there that could use our ability to do that kind of stuff to grow their footprint in North America.”
Navistar is a significant employer in Clark County, with about 1,500 workers at its Springfield manufacturing plant, including management and contractors. Thousands of the company’s retirees also live in the region.
The company lost $184 million in 2015, but saw improvements in the bottom line and that trend is expected to continue, leaders told the News-Sun late last year. The loss was significantly less than 2014, when it reported a net loss of $619 million.
The recent rebound makes Navistar a stronger business partner, Bryan said. However, it also makes it a target for the likes of Volkswagen, which lacks a strong presence in North America.
“With or without buyout rumors, which do seem plausible, we continue to like Navistar’s odds despite tough market conditions,” Bryan said.
She was a fierce critic of previous Navistar leadership, but praised Clarke’s work in securing both the GM deal and a major military contract.
“This management team has done a significant job to rebound this company from the brink of collapse,” she said.
By reducing its debt, settling legal issues related to failed engine technology and streamlining its operations, she said Navistar has made itself more attractive to not only customers, but potential partners and companies looking to acquire.
The Springfield plant is part of that attraction, Bryan said, and likely wouldn’t be negatively affected by an acquisition.
“The company is now much smaller and more efficient and the footprint that exists is what would be attractive,” she said.
Navistar also reached a four-year agreement last year with members of the UAW Local 402, which represents the majority of workers at the site. It includes a successor clause that protects the membership under new ownership, union President Jason Barlow said.
“Right now it’s obviously all speculation,” he said.
Rumors of mergers and acquisitions have been common throughout the company’s history, including previous speculation about Volkswagen buying Navistar in the 1990s.
Last month, the Chamber of Greater Springfield, Navistar and Local 402 began circulating a letter statewide that asks governments throughout Ohio to consider Navistar when buying medium- and heavy-duty trucks. The letter was mailed earlier this month to more than 630 government entities throughout the state.
The chamber declined to comment Friday and leaders from Navistar couldn’t be reached for comment.
Navistar faces an unusual situation in that the truckmaker has a small group of shareholders who own a majority of the company looking to maximize profits, said former U.S. Rep. Dave Hobson, who has fought for years to keep the plant in Springfield.
“He has to be responsive to their desires and he’s unfortunately in a declining market and he’s trying to get his company profitable,” Hobson said of Clarke.
The relationship between the union and the company has improved in recent years, he said. The plant must make sure it’s the best of all the Navistar plants, Hobson said, including Mexico.
“It’s important that (Springfield) perform in such a way that they say ‘Wow, we can’t do anything here, this is going great, why would we change anything here’,” Hobson said.
Navistar has had a cloud over it off and on for decades, Clark County Commissioner John Detrick said. The company struggled with strikes in the 1970s and has seen employment fluctuate over the years. It also recently closed four plants in Texas, Alabama, Indiana and Brazil, he said, but the GM deal will bring buying power to the company.
“The trucking market hasn’t really come back,” Detrick said. “They’re all fighting for market share.”
Several other local companies have been purchased by larger corporations in recent years, showing a trend toward consolidation, Detrick said. Cascade Corp., which manufactures forklift extensions, was bought by Toyota. Eagle Tool was sold to Heroux Devtek, which specializes in building landing gear components.
“We’re in a changing corporate world,” Detrick said. “To be efficient, you sometimes have to give up your independence.”
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