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Navistar seeks $2 billion from Ford as engine battle escalates

Navistar seeks $2 billion from Ford as engine battle escalates

Reuters / May 2, 2007 - 3:00 pm / UPDATED: 5/2/07 4:10 P.M.

CHICAGO (Reuters) -- Truck and engine maker Navistar International Corp. said today it had filed an amended counter-complaint in its legal fight with Ford Motor Co. that seeks damages of more than $2 billion from the automaker.

Navistar, the exclusive supplier of diesel engines to Ford's Super Duty pickups since 1979, said the amended complaint was prompted by indications that Ford was planning to develop diesel engines of its own for introduction prior to 2012.

The counter-claim is the latest twist in contract dispute that begin in January, when Ford sued Navistar over warranty costs and engine prices related to the contract for the F series, the most popular vehicles in their class.

That prompted Navistar to briefly cut off diesel engine shipments to Ford -- though a judge later ordered the company to resume those shipments while the case proceeds.

Reply to
C. E. White
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Help me to understand this. Navistar cut its supplies of engines to Ford, then sued Ford when Ford turned around and began developing engines to replace those that Navistar wants to stop supplying?

I hope the judge slaps Navistar with a frivolous lawsuit fine, or whatever a judge does when stupid people hire an attorney.

Reply to
Jeff Strickland

It is probably a lot more complicated than that. This all got started when Ford claimed Navistar owed Ford money because the warranty costs of the prior 6L PowerStroke were way over the contract value. Navistar said they didn't owe the money. Ford started withholding payment for new engines to recover the money they claimed Navistar owed. Navistar stopped shipping engines because they said Ford wasn't paying for them. Lawsuits all around A Judge ordered Navistar to resume shipping engines and ordered Ford to resume sending money to Navistar while the suits and counter-suits work through the system. Apparently the Ford/Navistar contract has some sort of non-compete clause (i.e., Ford can't develop it's own light truck diesel to be marketed before 2012). I can't imagine there is a contract that says Ford can't develop an engine for use after the current contract expires, so unless Navistar can prove Ford is actually going to start selling its own SuperDuty engine before 2012, I can't see how the suit has any merit, but then I am not a lawyer. I suppose Navistar may have a psychic on the payroll. Seems like the two of them are on the road to mutual destruction.

Ed

Reply to
C. E. White

Your summary is as I understand the situation as well. Here's a kicker though. The 6.0L diesel that has been so problematic in the Ford SuperDuty Powerstrokes has been used very successfully and reliably by Navistar themselves in their medium duty truck series. Ford contracted to use the same engine supplied by Navistar but modified the upper end, using a variable vane turbo and some other components in order to compete horsepower-wise with diesel pickup offerings from Dodge and GM. These components are what have caused the 6.0 to develop a bad reputation.

When my '05 Ford F-350 died the second time with a turbo failure, I rode along in the flatbed tow truck as the driver delivered my truck to the dealership. The flatbed was a Navistar, powered by their version of the

6.0. According to the driver/diesel mechanic, the version of the engine used in the Navistar trucks is a reliable workhorse with none of the problems that the Ford version has had.

RCE

Reply to
RCE

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