Navistar International Corp.’s recent troubles all center around one issue: Without certification of the company’s heavy-duty diesel engine that they’ve invested in for eight years, the company could face major layoffs and billions in lost revenue.
Navistar — which employs about 800 people in its Springfield production plant — has been using 13-liter diesel engines that do not meet an Environmental Protection Agency rule that required engines to reduce nitrous oxide emissions by 95 percent by 2010.
Navistar’s troubles intensified this month when a federal court overturned an EPA rule that would have allowed Navistar or any manufacturer to continue using noncompliant engines in exchange for up to $2,000 in fines. The company’s stock dropped, and activist investors sought to gain more shares — prompting rumors of a takeover, change in management or even bankruptcy.
In court documents, the EPA argued that it needed to pass the rule or Navistar would have to stop almost all production and sale of its heavy duty engines.
“EPA estimated that Navistar’s inability to certify any Class 8 engines early in model year 2012 would cause layoffs of thousands of Navistar employees, the loss of billions of dollars in revenue to Navistar, and negative impacts on customers and suppliers,” according to federal court documents.
The court sided with petitioning manufacturers, including Mack Trucks Inc. It chose to overturn the EPA ruling and asked the EPA to set a final penalty ruling which is in the works.
A spokesman for Mack Trucks said it sued because the EPA passed the ruling without allowing compliant manufacturers to have any say in what the penalty should be or even know that it was an option.
“We’re happy with (the court’s) decision because we were not given right to make counter arguments,” said John Hartwell, Mack Trucks spokesman. “We don’t have anything else to say.”
Meanwhile, Navistar is still producing engines and trucks.
United Auto Workers Local 402 president Jason Barlow, who represents Springfield’s Navistar workers, was unavailable for comment. But previously he said that the plant is still ramping up for a production boost later in the year and that they are still receiving engines to build trucks.
“Unless the government steps in and says we can’t produce those engines anymore, we won’t see any loss,” Barlow said.
The company is still working with the EPA to get the engines certified, said Steve Schrier, Navistar spokesman.
For now “we continue to make and ship engines and our clients will continue to receive the products they ordered,” he said.
Springfield’s plant receives some of the noncompliant engines, but it mostly builds medium duty trucks that require a different engine, Schrier said.
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