Four takeaways from Navistar’s Analyst Day

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Truck News / February 5, 2015

On Wednesday, Navistar held its first Analyst Day since February 2012, when the previous regime was still steadfastly defending its EGR-only emissions strategy. The hosting of an Analyst Day this year, and the debut of a new marketing slogan ‘It’s Uptime at International,’ suggests the truck and engine manufacturer has begun a new chapter and put behind it some of its most challenging times.

There was plenty of optimism on display as the company walked visiting investment analysts and trucking journalists through its latest developments.

Here are four key takeaways:

Streamlining repairs

Navistar executives had lots to say about the company’s OnCommand Connection remote diagnostics platform. While most OEMs already offered something similar, Navistar came to market with its system in a different way, offering all-makes coverage and not committing itself to a single hardware provider.

“We’re (hardware) agnostic,” explained Mike Cerilli, vice-president and general manager of OnCommand Connection. “Every other manufacturer has chosen a hardware provider. We have partnered with the largest and most significant hardware providers in the industry and we cover 90% of those customers in the industry who already have telematics. And we look at all makes and have visibility into competitive brands. Most of our customers have multiple brands of trucks – very few have a single-source OEM provider.”

There are currently more than 80,000 trucks being monitored by OnCommand Connection, Cerilli said, with the hope of reaching 150,000 units by the end of the year.

This allows Navistar to produce “health reports” on its customers’ vehicles in real-time. It also helps International dealers better service trucks when they require attention, by determining in advance of the truck arriving at the shop what parts are required and what work needs to be done. These “health reports” can also be pulled from trucks not connected to OnCommand Connection in as little as five minutes using a handheld tool.

Navistar currently is producing about 250,000 such health reports each month, which are then stored in a portal for future reference – something Navistar says is unique to the industry.

The company has also streamlined repairs through improved product design. Previously, the high- and low-temperature EGR coolers were assembled as a single unit, connected by a valve. Repairing any of those three elements required a $2,000 repair lasting seven hours. A redesigned system now allows the individual components to be repaired without pulling the entire system from the vehicle – a job that can now be done for as little as $460 using a new tool designed by Navistar.

Product improvements

While Navistar has been busy with its transition to an SCR engine line, it has made some subtle enhancements to its products to reduce weight and lower production costs.

Its transition to SCR has allowed it to move to a smaller EGR cooler and cooling package, reducing weight by about 50 lbs.

Chet Ciesielski, director of engineering with Navistar, also indicated the chassis fairings were simplified and the material used in their construction optimized to reduce weight. Mounting brackets were shrunk or eliminated for further savings and a one-piece fairing design was adopted.

The upper section of the skyrise sleeper was redesigned to remove about 72 lbs of weight, without impacting driver comfort, Ciesielski said.

Navistar also reduced the amount of precious metals within its diesel oxidation catalyst, without any impact on the system’s performance, Ciesielski indicated. And the DEF tank was sourced from a global supplier reducing weight by about 10%.

More changes are currently being studied, including a thinner tailpipe and fewer or lighter mounting brackets for components.

Growth in the severe-service market

Steve Gilligan, who oversees Navistar’s severe-service truck segment, sees the opportunity for growth this year.

The segment is traditionally quite steady, Gilligan noted, because of its diversity. Standing before a stock WorkStar set for delivery to a Canadian dealer, Gilligan said the severe-service segment is defined not only by application, but also region and customer type.

Canada, for example, represents among the largest populations of one- to 25-unit buyers.

“Having the largest dealer network gives us the largest opportunity to re-establish share in this (fragmented) market,” Gilligan said.

He also said he’s upbeat because Navistar is starting from a strong market share position in many regions. And it’s also somewhat insulated from sharp declines in the Western Canadian oil and gas segment, where International has not traditionally been among the strongest players.

They key to Navistar’s resurgence in the severe-service market will hinge on its ability to land sales with state/province, county and municipal governments, Gilligan explained. He said he’s optimistic the company will do so because of its bodybuilder-friendly Diamond Logic multiplex wiring system and the stronger relationships it is forming with leading equipment manufacturers such as McNeilus, having divested itself of competitor Continental Mixer. Navistar has also re-established training for its salespeople with various body-builders so they can better sell and integrate with their products, Gilligan said.

Finally, Navistar now has full SCR engine coverage for its severe-service line, including the Cummins ISB and International nine- through 13-litre engines.

Medium-duty optimism

Navistar may be most bullish on the potential for growth in the medium-duty segment, where its DuraStar was traditionally a dominant player. The company is expecting to obtain 25-27% of the medium-duty market in 2015, which would represent an increase in sales of 5,000 units – or 35%.

The company says its DuraStar production quality is currently the best on record.