A look at Navistar in South Africa

[kscarbel2]

In 1973, an assembly plant was briefly set up in Pietermaritzburg, South Africa. After taking a 33 percent stake in Dutch truckmaker DAF that same year, International Harvester began importing right-hand drive variants of DAF's new FT2800 into South Africa with Cummins E290 and DAF powerplants paired with Fuller and ZF transmissions respectively, and selling them under the International brand.

International Harvester owned a stake in DAF reaching 37.5 percent from 1973 thru 1983, many years before Paccar acquired DAF in 1996.

Ref. http://www.bigmacktrucks.com/index.php?/topic/39077-millionth-daf-truck-manufactured-in-eindhoven/?p=280700

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[kscarbel2]

Navistar (International Harvester) left South Africa in the late 1970s because of then-occurring financial problems.

The Cummins distributor for South Africa, ProPower Diesel, became Navistar’s importing distributor in 1986.

In 1988, Tyco International became Navistar’s importing distributor.

After the U.S. Congress passed the Comprehensive Anti-Apartheid Act in 1986 forcing Navistar, Cummins and other U.S. companies to withdraw from South Africa, spare parts had to be imported from nearby Botswana and elsewhere.

American truckmakers were “officially” allowed to return to South Africa in 1995, and within two years attained a 40 percent market share.

In 1997, South Africa’s vehicle distributor titan Imperial Group bought a stake in Tyco, and took it over in 1997. International Trucks Southern Africa (NITSA) was formed in 2008, talking over the importer/distributor role from Imperial and adding SKD (semi-knocked down) manufacturing at its new $40 million Apex assembly plant in Benoni outside Johannesburg.

In 2013, Navistar subsidiary NC2 South Africa decided to end production at its Apex assembly plant (which was assembling 7600 and 9800 models). Navistar is now only providing parts and service out of its Gaoteng office while it looks for a buyer willing to carry on the South African business at the very least for after-sales support while assuming all financial responsibilities.

As of 2010, around 10,000 Navistar trucks had been sold in South Africa (mostly 9800s). The total population including gray market trucks is around 12,000 units.

Footnote: While an American in South Africa might be pleasantly surprised by the country’s beauty, they will probably be shocked at the sight of seeing the highways highly populated with late model American cab-over-engine (COE) International 9800i and Freightliner Argosy heavy trucks. They typically run 14,000lb to 16,000lb front axles and 46,000lb drive axles, paired with 315/80R22.5 rubber.

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[Red Horse]

Navistar (International Harvester) left South Africa in the late 1970s because of then-occurring financial problems.

The Cummins distributor for South Africa, ProPower Diesel, became Navistar’s importing distributor in 1986.

In 1988, Tyco International became Navistar’s importing distributor.

After the U.S. Congress passed the Comprehensive Anti-Apartheid Act in 1986 forcing Navistar, Cummins and other U.S. companies to withdraw from South Africa, spare parts had to be imported from nearby Botswana and elsewhere.

American truckmakers were “officially” allowed to return to South Africa in 1995, and within two years attained a 40 percent market share.

In 1997, South Africa’s vehicle distributor titan Imperial Group bought a stake in Tyco, and took it over in 1997. International Trucks Southern Africa (NITSA) was formed in 2008, talking over the importer/distributor role from Imperial and adding SKD (semi-knocked down) manufacturing at its new $40 million Apex assembly plant in Benoni outside Johannesburg.

In 2013, Navistar subsidiary NC2 South Africa decided to end production at its Apex assembly plant (which was assembling 7600 and 9800 models). Navistar is now only providing parts and service out of its Gaoteng office while it looks for a buyer willing to carry on the South African business at the very least for after-sales support while assuming all financial responsibilities.

As of 2010, around 10,000 Navistar trucks had been sold in South Africa (mostly 9800s). The total population including gray market trucks is around 12,000 units.

Footnote: While an American in South Africa might be pleasantly surprised by the country’s beauty, they will probably be shocked at the sight of seeing the highways highly populated with late model American cab-over-engine (COE) International 9800i and Freightliner Argosy heavy trucks. They typically run 14,000lb to 16,000lb front axles and 46,000lb drive axles, paired with 315/80R22.5 rubber.

.In any case like that Canadian "B" train set up. Makes a lot more sense to me then a true double with a converter dolly.

[kscarbel2]

Has International Imploded Locally?

Auto Forum / June 4, 2014

It’s still around in the USA trying to make a positive spin on a difficult ‘return’ to profitability and technical acceptability, but has International imploded on the African continent? The current silence and total lack of retail sales would seem to indicate it’s the end of the line for International here. International truck operators feel abandoned and have too many alternatives to turn to – so why worry about Navistar’s commitment to this truck market?

It is all so sad. As a young person growing up in the second half of the last century, I perceived International to be a mighty brand that dominated Southern African roads, agriculture and construction equipment. An International Paystar was a ‘Meneer Lorrie’!

In addition, an International pick-up truck was a hallmark of business success (back then the word bakkie was not even invented). International even stayed for the ADE ‘party’ when – and most have forgotten this – if trucks were retailed in South Africa they carried a 40% duty, if not fitted with a locally manufactured ADE engine. International survived with ADE engines.

Brand confusion

And perhaps that’s part of the problem – Navistar, NC² or International. What has become of the International brand from all the corporate changes and failed mergers? The combination of Navistar and Caterpillar was supposed to make a success of NC². Truck operators also speak fondly of an ‘Eagle’ in their fleet, the shiny emblem of the very old International 9800 cabs still seen on our roads’ – to quote one operator: “Yes, I still have Eagles in my fleet!”

There was also a stage in the seventies when International owned DAF and replaced the DAF badge with that of International. Brand fiddling and badge engineering had started. Compare this with Mercedes-Benz, which has never been anything else but Mercedes-Benz to SA truckers.

The ‘Cummins-Fuller-Rockwell’ legacy

The cab fitted to International 9800’s may be old – more than 30 years – but over the years had undergone many small upgrades, to make it more driver-friendly. This still did not place it on a par with modern European truck cabs that are super-driver-friendly. So what was the appeal of a 30-year old looking truck that is regarded as ‘hard’ on a driver? The secret is in the USA driveline componentry – Cummins engine, Eaton transmission and Meritor axles – that have the latest modern technology and software.

Ask any Freightliner owner; the ‘Cummins-Fuller-Rockwell’ legacy is what makes a USA driveline tick, where engine and transmission are a well-mated pair that ‘talk’ intelligently to each other.

This all now plays straight into the hands of Freightliner, who are currently perceived as the sole provider of a genuinely-sourced USA driveline in an extra-heavy, line-haul truck. A genuine USA driveline is solid comfort to International owners. Internationals will not lose as much value in the local disappearing act as would be the case if the driveline was Navistar’s own internal branded driveline.

Cummins must feel the threat of Freightliner’s dominance in the USA driveline segment. It’s no secret that Daimler Trucks North America want to push vertical integration with their in-house Detroit brand engine, minimising the share that Cummins have in Freightliner sales. On the other hand, this could only be good for truckers wanting Cummins power - as the only survival-lever left to Cummins is outstanding service in every aspect of operating a Cummins engine.

Strategic failure at the top – in Chicago

The current withdrawal from the SA market is a direct result of a strategic about-turn in the USA. Chasing the wrong engine technology to arrive at stringent exhaust emission standards, International got into a penalty situation with the Environmental Protection Agency (EPA). Other major truck manufacturers, notably Mercedes and Volvo, cried foul – how could International be allowed to pay penalties when they, the other OEMs, were complying with the new engine technology demands? The EPA was sued over this issue and lost the case.

In changing course to comply with exhaust emission standards, International’s top management people were ‘relieved’ of their duties. Everything now focused on SCR (selective catalytic reduction) clean exhaust technology in a very expensive turnaround. The company also needed every bit of spare cash to operate – all overseas investments were liquidated and, of course, the globally small operation in South Africa was also drained of any cash and growth opportunity.

All of this has lost International market share in the USA, which they are trying to desperately to regain. International is very oriented towards normal control cab models. This is one of many reasons why International’s forward-control 9800 model has not changed cab design for so many years – no time, money or effort to advance a forward-control model. The concept of a new forward cab shown at the Brazilian truck show, Fenatran, died in the scramble for cash and projects that would ensure survival.

International Paystar and other normal control models may have suited the SA truck market of the sixties, but forward cab trucks rule the day on the African sub-continent today. So International’s attempts to locally entrench normal control models did not succeed.

One USD for the whole outfit?

Companies that endure similar profiles to International’s current situation are usually regarded as being ripe for a takeover – the merger/acquisition climate is improving in the USA. Hidden liabilities are what would scare big investors. An item such as pension liability would be most unattractive to any investor seeking to buy Navistar.

A recent example is the total acquisition of Chrysler by Fiat.

According to a 24 February 2014 Fortune Magazine article: “The new Fiat Chrysler faces a rougher road than most think” Columnist Allan Sloan points out that:

“Because Fiat now owns 100% of Chrysler, there’s no question that all of what will become Fiat Chrysler Automobiles is jointly and severally liable for pension shortfalls if Chrysler’s plan has to be terminated”. The article summarises: “This liability, $5.5 billion by US accounting standards, exceeds the $4.9 billion that Fiat paid for Chrysler”.

Pensioners under company care are a massive lurking responsibility in the USA. General Motors was crippled by medical expenses – every vehicle off their production lines carried a huge medical bill to care for pensioners who had lived beyond their expected time frame, when the Union agreement was signed in the nineties. So what’s the bill for taking on Navistar’s pensioners, as surely there must be many of them?

Furthermore, Navistar’s current staff have been whipped into survival mode where taking leave could be dangerous. That’s another item often overlooked in mergers and acquisitions, the hidden cost of outstanding leave pay.

In all, anyone bidding for Navistar would probably wait for bankruptcy to lay down one Dollar for the business without all the liabilities.

Rumours of a deal linger in the SA truck market for what remains locally. But after so many months of silence and no trucks to sell, will anyone really believe that International wants to stay in Africa? The crisis in Chicago dominates and the small take-off of componentry for around 700 trucks annually into the African sub-continent will not make an important agenda item.

Editor's Note

Following our requests for comment from local distributors, we were informed that the local sales and technical people received their ‘Easter gifts’ from International’s HQ in Chicago – retrenchment notices. Sadly this really does look like the end for International – in SA anyway. Soon after followed a press release by the company, officially explaining the new ‘focus’ on parts and service.

The release quotes SA Operations Managing Director David Loakes as saying: “We remain committed to our customers and dealers in South Africa and we continue to focus on parts and service support for International trucks as well as all-makes in the region. Our parts distribution center and technical service support will remain in full operation. We will also continue to explore other business options as we complete the wind down of truck production.”

“We recognize the impact this may have on our people and we will treat our employees fairly and with respect as we shift toward an all-makes parts and service business.”