Navistar struggles to continue manufacturing in Brazil

[kscarbel2]

Automotive Business / August 5, 2015

Navistar’s Canoas plant may soon be producing Chinese trucks.

With the drastic slow down in production at Navistar’s Brazilan Canoas plant, rumors have been circulating that the facility could close as early as the beginning of 2016 if new business is not acquired.

Currently, the 700 employee plant is assembling 4400i (Durastar) medium and medium-heavy trucks, and 9800i 6x4 heavy tractors, as well as assembling General Motors 2.8 liter Duramax diesel engines under contract.

Last week, metalworkers union president Paul Chintolina informed workers that the GM engine contract would end two years early, in February 2016.

Chintolina also announced that Navistar plans to relocate Canoas’ function as Navistar’s Brazilian spare parts distribution center (PDC) for truck and engine parts to the MWM International engine plant in São Paulo.

He said, with that change, there was little chance of truck production surviving at Canoas with just two products being produced in extremely low volumes.

Navistar officials have refused to comment.

Navistar has spoken with China’s JAC on assembling their light commercial trucks under contract at Canoas. Navistar and JAC have been discussing many forms of possible cooperation in China since 2011. Talks finally came to a head this May, and JAC decided to pass owing to Brazil's imploding truck market.

In Brazil, foreign truckmakers must realistically assemble trucks from CKD (completely knocked down) kits in order to avoid high import tariffs on SKD (semi-knocked down) kits and CBUs (completely built units).

JAC entered the Brazilian market in 2011 selling cars and light commercial trucks, and established a local car plant in 2014.

Navistar has also held talks with Chinese heavy truck maker Sinotruk, but discussions ended with the Brazilian market downturn.

Navistar, trying to promote its Canoas plant as a low cost manufacturing option, has also been talking with Beijing-based light, medium and heavy truckmaker Foton. The Chinese truckmaker had announced plans in 2013 to build a truck plant in Rio Grande do Sul, beginning production in 2016. However, the deal has been held up due to problems with land donation and funding of the US$70.7 million project.

In an interview last week, Foton Brazil director Luiz Carlos Paraguassu acknowledged the projects long running delay and said truck production would finally start in the beginning of 2016, even if in a temporary facility, because the company must commence production by that time or lose its tax-exempt status.

Navistar’s Canoas plant would provide Foton with an inexpensive, if not temporary, solution.

Cooperation with Foton may be the only viable way for Navistar to keep its Brazilian truck production line open in Canoas. About 150 of the facilities 700 employees work on the truck assembly line..

During the first half of 2015, only 50 new International trucks were sold and registered in Brazil.

Related reading - http://www.bigmacktrucks.com/index.php?/topic/38944-is-the-end-near-again-for-navistar-in-brazil/?hl=canoas

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[kscarbel2]

FYI: Brazilian market (left-hand drive) International 9800i Pro Sleeper review

[Outbehindthebarn]

Why haven't North American truck builders had any measurable success in South America? There are minuscule numbers of 9800's there compared to European trucks.

[kscarbel2]

The number one selling heavy truck in Brazil is the Volkswagen Constellation, and it's not a European truck.

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