Navistar has completed its strategic alliance with Volkswagen Truck and Bus, a deal that’s expected to bolster the truckmaker’s finances and lead to extensive collaboration between the manufacturers.
The deal calls for Volkswagen to buy a roughly 17-percent equity stake in Navistar and invest about $256 million in the Illinois-based truckmaker. Volkswagen will also have the right to appoint two members to the truckmaker’s board and the deal also provides the German company with a strategic foothold in the U.S. truck market.
Navistar is a major Springfield employer with about 1,500 current workers and thousands of retirees in the area. The company has also worked to boost hiring in preparation for two joint agreements with GM.
The closing of the deal follows all necessary regulatory approvals, finalization of agreements relating to the procurement joint venture and the technology and supply collaboration, and satisfaction of other closing conditions, Navistar leaders said in a statement.
“This alliance with Volkswagen Truck and Bus marks a significant milestone in our company’s history, and we expect it will create multiple benefits for both companies in both the near and long term,” said Troy Clarke, Navistar’s chairman, president and CEO in a statement. “Now that the transaction has closed, we will move quickly to collaborate with an industry-leading, strategic partner to increase our global scale, strengthen our competitiveness, and provide our customers with expanded access to cutting-edge products, technology and services.”
Navistar officials have previously said the agreement likely won’t have an immediate impact on its Springfield manufacturing plant. However, it could potentially mean more products produced in Clark County in the future.
Even if the deal doesn’t provide immediate benefits in Springfield, it still provides more stability for the company’s facilities in Springfield long-term, said Horton Hobbs, vice president for economic development at the Chamber of Greater Springfield.
“It’s a significant announcement,” Hobbs said. “It may not make an impact today but long-term, it certainly sets our community up for growth. That’s really what we’ve wanted for a long time.”
For the truckmaker, the agreement means more financial flexibility. For Volkswagen, its Truck and Bus Division will gain access to the North American market, where it previously wasn’t represented. The company’s brands include MAN and Scania.
The companies will also work together to develop new technologies and establish a joint procurement venture for purchasing. Initially, the deal will focus on common power-train systems, but will also allow more collaboration for future commercial vehicle development.
The Springfield plant also is gearing up to begin production of a cutaway model of GM’s G Van beginning this year. Navistar and GM also made a joint agreement in 2015 to build medium-duty trucks in Springfield.
Those deals provided security, along will millions in new investments in a plant that as recently as 2010 had as few as 300 workers. Local leaders have credited better relations between the UAW Local 402 and the company’s management for making those deals possible.
“It’s a very positive sign for not only the company but the community and we’re excited to hear this (VW) announcement,” Hobbs said.
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