January 27, 2009

Navistar to close engine plant and foundry

Navistar International Corp. said Tuesday it would close a near-idle Indianapolis production facility due to the end of a contract with Ford Motor Co.

Navistar has supplied Ford with diesel engines for 30 years but announced earlier the engine supply agreement was coming to an end. The two companies have been bickering in court over engine warranty costs, the Indianapolis Star reported Tuesday.

This is a difficult decision because of the impact it has on our employees and the community where we live and work, Eric Tech, vice president and general manager of Navistar Engine Group said in a statement. But, the significant change in Ford's business plan has forced us to make this decision, he said.

Production at the plant slowed dramatically when the price of gas rose in the summer and demand for trucks fell.

Navistar said it will continue to supply Ford with diesel engines through 2009 and to work with Ford on the Blue Diamond Truck and parts joint ventures. The companies also will continue with a South American partnership, the statement said.