International suspends truck production in Brazil

[kscarbel2]

Automotive Business / November 6, 2015

Rumors that Navistar intends to close its truck and engine assembly plant in Canoas, Brazil by early 2016 received a further boost this week.

Metalworkers union president Paul Chintolina has told the media that 600 employees are being dismissed.

In a statement, Navistar confirms they have "temporarily suspended production of International trucks as a way of adjusting the high inventories," but it hopes to continue engine production. Navistar said its MWM engine subsidiary has a supply contract for GM until February 2016.

The contract for the production of 2.8 turbodiesel GM engine produced by MWM was signed in July 2008, with initial deliveries starting in November 2011. The engine is offered in the Brazilian market S10 pickup (new U.S. market Colorado/Canyon) and S-10 based Trailblazer SUV.

Last August, GM stated it would terminate this agreement at the beginning of 2016 and intended to switch production to one of its own Brazilian plants. However, GM so far has shown no sign of making an investment to produce the engines. If the decision is back on the table, the decision by GM and Navistar to jointly produce medium truck may have some bearing.

With the end of engine production scheduled for February 2016, the Canoas plant will depend exclusively on truck assembly to survive, because all other lines of engine assembly plus the parts distribution center function have already been transferred to the MWM plant in São Paulo.

Given Brazil’s severely depressed truck market, it will be difficult for Navistar to continue producing just two models, the 9800i heavy COE tractor and Durastar medium truck, at a time when demand is at record lows.

From January to October, only 58 new International trucks were registered in Brazil, down 93.8% from the same period last year when Navistar’s Canoas plant was being sustained by a large 2013 year Durastar order from the Ministry of Agrarian Development (MDA) for 898 trucks.

Since production for the contract concluded in June last year, production at Canoas has come to a near standstill and Navistar has now decided to suspend operations indefinitely. Accordingly, truck assembly employees are being let go.

Navistar says truck assembly will resume if there is demand.

Over the last five years, Navistar has tried to forge a partnership with incoming Chinese truckmakers who needed a production facility in Brazil, including Foton, JAC and Sinotruk, Foton and JAC. All had plans to build truck plants in Brazil until the countries economic slow down.

Navistar acquired the Canoas plant from engine maker Maxion in the early 2000s.

Navistar acquired Brazilian engine maker MWM in 2005.

Navistar has produced International trucks in Brazil since 1998, initially in a rented plant belonging to Agrale in Caxias do Sul.

In 2002, Navistar terminated Brazilian production and began building global market 9800i heavy COE tractors in Minnesota, only for export.

In 2010, the International brand returned to Brazil, and added the Durastar medium truck series to its small portfolio.

Related reading:

http://brazil.internationaltrucks.com/trucks/9800i.html

http://www.bigmacktrucks.com/index.php?/topic/38944-is-the-end-near-again-for-navistar-in-brazil/?hl=9800i

http://www.bigmacktrucks.com/index.php?/topic/41271-navistar-struggles-to-continue-manufacturing-in-brazil/?hl=9800i

http://www.bigmacktrucks.com/index.php?/topic/41822-road-test-international-9800i-the-cabover-in-brazil/?hl=9800i

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[Red Horse]

When you read all the economic news in South America it is a wonder anyone attempts to compete. It is one thing to deal with economic cycles- then add the corruption factor and I say if I were a CEO, would I want to make any kind of significant investment? In particular when you know the Chinese will do anything to gain a foothold.

[Outbehindthebarn]

Remember all the buzz surrounding the BRIC currency? Where are they now? All in the toilet other than India.