Navistar International Corp. has nearly 25 percent of the heavy-truck market. And with a year like 1999, when sales records look ready to topple, that translates into profits.
But many analysts predict a slowdown over the next 12 to 24 months. So Navistar International is retooling its product line, signing new deals with automakers, and changing its name. The truck brand is now known simply as International. John Horne, International's CEO, says trading on the International name will give his company a boost.
Horne, who was in Detroit last month to sign an engine contract with Ford Motor Co., talked with Staff Reporter Michael Woodyard about International's brand-building exercise, the future of light-duty diesel engines and the truck market. Edited excerpts of the conversation follow.
The heavy-truck market was very strong this year. What product initiatives is International pursuing to stay ahead?
In July and August, we introduced an all-new 466 engine. The 466 has become kind of a brand logo in the business. If you go out and talk to truck guys about the 466, they know what it means. That engine was started back in the 1960s, and in 1994 we totally upgraded it. In 1999 we did it again, and in 2004 we're going to do it again. It's going to be camless in 2004. We introduced the new 9000 and the 5000I, and we're getting a good reception on that. And we've got our next-generation vehicle program coming along real well. We're in the throes of big investment because in April of 2001 that will go into production. Our new V-6 plant in Huntsville, Ala., is going up.
When you talk about a camless engine, what exactly do you mean?
It will all be hydraulic. Our fuel system is hydraulically powered, electronically controlled. So you've got the computer on the engine and the power supply for the hydraulics, and it uses the crankcase oil so you don't have separate lines running around there. We're using that same valve to replace the camshafts and control the valves. We've got a truck running around with that system in it now.
Rumors about a deal to provide Ford with V-6 diesel engines surfaced nearly a year ago. What's the status of it now?
It's signed. The deal is done. They've got engines in trucks running around; we're building the plant. There was never any problem with the understanding. It was just working out some of the fine details to make sure we're comfortable with it. For instance, there's a program that goes out through the year 2012. So you get into questions like: What do you do when the emissions levels change? How do you handle pricing? We spent some time talking about whether the engine gets a second balancer on it, and we decided together that it gets a second balancer.
What do you do when emissions levels change? Will you still sell diesel engines after ultra-low vehicle emission regulations go into effect?
There are a lot of people out there saying that we've got to get rid of diesels because of health effects. But there are no data to support that. But there's a big emotional thing out there that can be very powerful politically. We have diesels running with continuous regenerative tracks and with low-sulfur fuel, at five parts per million, which is feasible. Companies like Arco and some of the other oil companies are very supportive of it. Nobody's made decisions yet, but there could be a groundswell to do it. The green diesel that we have emits 0.005 grams of particulate per mile. You cannnot measure the hydrocarbons. You can stick your nose up the exhaust pipe and you don't know if the engine's running. They are that clean.
Why would I want to buy a Lincoln Navigator with a diesel engine, especially since there will be a premium of up to $3,000?
We are saying the performance will be equal or better. The noise is not going to be a disadvantage. So the real advantage is going to be the fuel economy. You've got the environmentalists who are worried about using too much fuel. My wife's got a Navigator, and she fills the thing awful frequently. We've got the most cost-effective diesels out there.