Navistar — a major Springfield employer — lost a net $97 million this year as the heavy truck market remained weak, but that’s half of what it lost last year.
The truck maker also reported revenues of $8.1 billion this year, compared to $10.1 billion last year.
Navistar employs about 1,500 workers at its Springfield plant and has thousands of retirees in the area. The facility here is gearing up to begin production of a cutaway model of GM’s G Van beginning in early 2017.
“We are well positioned to further our results,” said Troy Clarke, CEO and president of Navistar during a conference call Tuesday.
The trend of weak demand in the U.S. and Canada for heavy-duty trucks is likely to continue into at least the first half of next year, Navistar leaders said Tuesday.
Navistar also has made progress finalizing an alliance that calls for Volkswagen to purchase a roughly 17-percent equity stake and invest about $256 million in the truck manufacturer. That includes receiving antitrust approvals in the U.S. and Poland and seeking similar approvals in Brazil and Mexico.
The deal will likely close in the first quarter of next year.
The company will also continue to look for opportunities to reduce costs, including reducing materials costs and improving the efficiency of manufacturing processes, said Walter Borst, Navistar’s executive vice president and CFO. Revenues next year are expected to be similar to 2016.
Many of Navistar’s competitors face similar challenges in a weak truck market. But Navistar also lost a big bet on new engines in recent years that didn’t meet emission standards and faced significant fines if it didn’t abandon the technology.
The company gave up ground to competitors as it struggled to recover from that blow, eventually switching to Cummins engines.
“They’ve obviously gone through much more of a ringer than the other companies because they went down a different path for their engine,” said Stephen Volkmann, an analyst with Jefferies.
More recently, the company’s finances have stabilized and Navistar is just one of several firms trying to navigate a period of weak truck sales.
Company officials mentioned their recent agreement with GM several times during Tuesday’s conference call, saying workers in Springfield are busy preparing to begin production next year. The vans can be sold to a variety of commercial customers and used for purposes ranging from ambulances to hotel or airport shuttles and moving vehicles.
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Navistar will reopen a manufacturing line in Springfield that has been closed since about 2001 to build the vans. The two manufacturers also made a separate joint agreement in 2015 to build medium-duty trucks in Springfield, along with a pledge to add at least 300 jobs for that work over the next three years.
Clarke said Tuesday the new partnership with Volkswagen shouldn’t have a significant impact on the GM deals.
“We’re continuing to work together very well and I don’t see that as an issue on the horizon,” Clarke said.
The Volkswagen alliance will give Navistar more access to new technology and make it easier to weather downturns in the market moving forward, Volkmann said.
“At the end of the day I think we’ll see more Volkswagen components and drive trains and so forth working their way through the product,” Volkmann said. “This will make (Navistar) a stronger global company with better ability to work through cycles and technology investments. If I were in Springfield, I’d be pretty optimistic about the outlook.”
The Springfield News-Sun will continue to provide unmatched coverage of Clark County’s top employers, including Navistar. The paper has provided extensive coverage of the company’s attempts to regain profitability, including coverage of recent deals with GM and Volkswagen.
By the numbers:
$34 million — Reported net loss in fourth quarter
$97 million — Navistar’s net loss in 2016
$184 million — Navistar’s net loss in 2015