Navistar Promotes Clarke to CEO as Campbell Exits Company

[kscarbel]

Bloomberg / March 8, 2013

Navistar stock rose the most in more than 4 years after naming a new CEO who said the money-losing truckmaker may return to 2011 market share as soon as the 4th quarter.

Navistar soared 28% to $31.89 at the close in New York, the biggest daily gain since November 2008. On April 15 President Troy Clarke will become CEO, interim boss Lewis Campbell will leave and James Keyes will become chairman, the company said today. Navistar said first-quarter cash use was less than forecast.

The money-losing truckmaker may have as much as 18 percent of the market for Class 8 trucks in the U.S. and Canada in the August-to-October quarter, up from 11 percent for the one that ended in January, Clarke said today. A new engine with improved performance gives Navistar a chance to win over fleet owners, the largest couple hundred of which account for 80 percent of sales, he said.

“Because you’re talking to other businessmen whose own businesses are cyclical and function in an environment of excess capacity, it becomes a very pragmatic and commonsensical discussion,” Clarke said in an interview. “I’ve been surprised at the brand loyalty they have evidenced toward us. We have a very fair chance to go in and earn this business based on the performance of our products.”

Meeting Clarke’s target would restore Lisle, Illinois-based Navistar’s market share above its 2011 level of 17 percent. The company’s market share for Class 8 trucks, the backbone of interstate hauling, was 24 percent as recently as 2010.

Cash Position

The net loss for the November-to-January fiscal first quarter narrowed to $123 million from $153 million a year earlier, the company said in today in a statement. While it was the fourth loss in the past five quarters, Navistar ended the period with $1.19 billion in manufacturing cash and near cash, topping a forecast of $950 million to $1.05 billion.

“There’s a lot that’s encouraging here,” Brian Sponheimer, a Gabelli & Co. analyst in Rye, New York, said in an interview. “But they are by no means out of the woods just yet.”

Sponheimer has a buy rating on Navistar.

Navistar gained 15 percent this year through yesterday, compared with the Standard & Poor’s 500 Index’s 8.1 percent gain, after dropping 43 percent last year and 35 percent in 2011.

Mark Rachesky and Carl Icahn are the company’s two biggest shareholders, each with almost 15 percent. Icahn said he supports the promotion of Clarke, 57, a former General Motors Co. (GM) executive who joined Navistar in 2010.

“In my view over the past year Troy Clarke has been the leading force in improving the company’s manufacturing operations and cost structure thereby proving that he is the right man to lead Navistar,” Icahn said in a statement.

Short Tenure

Campbell, former CEO of Textron Inc. (TXT), said when he joined the company in August that he expected “significant improvements” in the next 12 to 18 months. Campbell said on his first conference call with analysts and investors that he and his wife bought a house in the Chicago area. “As they say in poker, I am all in,” he said.

The truckmaker had ousted Dan Ustian as CEO that month after an inquiry from regulators about its accounting and disclosures. As CEO, Campbell reversed course on an engine strategy that had failed to meet 2010 federal emission standards. He cut costs and focused on Navistar’s North American truck, engine and parts businesses.

Keyes was chairman and CEO of Johnson Controls Inc. (JCI), the largest U.S. auto-parts company, stepping down as chairman in 2003.

Navistar also avoided a proxy fight when the company agreed to add board members. Navistar added Rachesky as well as Icahn representatives, Vincent Intrieri and Samuel Merksamer, to the board in October and December.

The timing of Campbell’s departure is a bit of a surprise, Sponheimer said, “however the board, by and large, is new and did not choose the CEO, so it’s less of a surprise than it probably should have been.”

[kscarbel]

So Campbell is bailing after just 6 months as Navistar CEO. With his Textron background, Campbell wasn't the least bit qualified to run Navistar. And now the board is putting their money on Clarke, a former GM car guy who is just as much trouble to Navistar as Ustian and Campbell were. He knows how to talk a very good line, but he's not a truck guy.

I'm a Mack man, but to see decades of talent leave Navistar in recent years due to the arrogant and incompetent management of Ustian and Clarke is sad by any measure.

[mackniac]

hopefully Campbell will not leave with a f...g big bonus !!

[Red Horse]

So KSC, what do you think this new guy's view of Bluediamond is? As Ford was International's main competition in class 7 and a worthy competitor in 8, I can't see how they will run the risk that Ford could again be viable. Before the 6.0 "divorce", they had a good mutually beneficial relationship but now-different story.

[kscarbel]

So KSC, what do you think this new guy's view of Bluediamond is? As Ford was International's main competition in class 7 and a worthy competitor in 8, I can't see how they will run the risk that Ford could again be viable. Before the 6.0 "divorce", they had a good mutually beneficial relationship but now-different story.

Let’s go over the history. Ford and Navistar formed the 50/50 joint venture Blue Diamond Truck Co. LLC in 2001 in Escobedo, Mexico to jointly build medium trucks.

The propaganda speak was Ford wanted to tap the expertise of a company known for heavy trucks, while Navistar said it wanted to work with a global leader in lighter commercial vehicles.

But the companies began fighting in 2006, blaming each other for defective Powerstroke diesel engines popular in Ford pickups (injector failures).

The companies sued each other in 2007 and settled 2009. As part of the settlement, Navistar took over 75% of Blue Diamond which continued to produce F-650s and F-750s.

Under the new arrangement, Ford dealers were unhappy with the competiveness of the product (lack of product upgrading) and the way Navistar controlled the pace of deliveries.

In October 2011, Ford announced it will move F-650/F-750 production out of Blue Diamond and back to the U.S., assembling the trucks in Avon Lake, Ohio. Ford’s press release stated “The shift in truck production will mean the end of Blue Diamond Truck LLC, the joint venture Ford has with Navistar to build the trucks”. The release further said “The change was prompted by the business needs of Ford.”

As shown in Navistar’s 2011 10-K, Ford notified Navistar in December 2011 of its intention to dissolve the Blue Diamond Truck joint venture effective December 2014.

So to answer your question, Blue Diamond is over and Ford has moved on. The installment of Clarke as Navistar’s new CEO has no effect on the situation.

Note: The 1997 F-650/F-750 was supposed to share the all-new HN80 cab with the new AeroMax and Louisville, but the heavy truck sale to Daimler changed the fate of Ford’s medium truck range.

[Red Horse]

Let’s go over the history. Ford and Navistar formed the 50/50 joint venture Blue Diamond Truck Co. LLC in 2001 in Escobedo, Mexico to jointly build medium trucks.

The propaganda speak was Ford wanted to tap the expertise of a company known for heavy trucks, while Navistar said it wanted to work with a global leader in lighter commercial vehicles.

But the companies began fighting in 2006, blaming each other for defective Powerstroke diesel engines popular in Ford pickups (injector failures).

The companies sued each other in 2007 and settled 2009. As part of the settlement, Navistar took over 75% of Blue Diamond which continued to produce F-650s and F-750s.

Under the new arrangement, Ford dealers were unhappy with the competiveness of the product (lack of product upgrading) and the way Navistar controlled the pace of deliveries.

In October 2011, Ford announced it will move F-650/F-750 production out of Blue Diamond and back to the U.S., assembling the trucks in Avon Lake, Ohio. Ford’s press release stated “The shift in truck production will mean the end of Blue Diamond Truck LLC, the joint venture Ford has with Navistar to build the trucks”. The release further said “The change was prompted by the business needs of Ford.”

As shown in Navistar’s 2011 10-K, Ford notified Navistar in December 2011 of its intention to dissolve the Blue Diamond Truck joint venture effective December 2014.

So to answer your question, Blue Diamond is over and Ford has moved on. The installment of Clarke as Navistar’s new CEO has no effect on the situation.

Note: The 1997 F-650/F-750 was supposed to share the all-new HN80 cab with the new AeroMax and Louisville, but the heavy truck sale to Daimler changed the fate of Ford’s medium truck range.

Thx for your comments. I just hope Ford has some good performance/oversight language in place. Think of the risk. Navistar is supposed to keep cranking out a quality product while Ford gears up to fight them again head on- in class 6 and 7 and probably vocational class 8 too.