In surely what must be devastating news to an already beleaguered Ford, Navistar is stopping shipments of the all-new 6.4L PowerStroke diesel to Ford because of a contract dispute. This engine goes in the new '08 Super Duty pickups, which are just hitting dealers now. Ford has in the past had problems with Navistar, in that the previous generation 6.0L PowerStroke was saddled with problems. In fact Ford sued Navistar in January over warranty costs and engine prices...
It appears that Ford is not paying for engines, or has been holding back payments until the lawsuit is resolved, and as a result Navistar has stopped shipment of engines.
Navistar said in a statement that it pays suppliers and employees under contract terms and âexpects Ford to honor the terms of its agreement.â
The automaker had delayed the launch of the Super Duty pickup truck after ongoing problems with Navistar. Bear Stearns analyst Peter Nesvold said Ford and Navistar are "tied at the hip," with Ford relying on the Navistar diesel engine and Navistar on the Ford production. If the disruption extends for more than a month, it could lead to an $11.6 billion in annualized revenue loss for Ford, he said.
Full story here. More on this story here.
Here's AutoObserver's take: Ford: Contract Dispute, Lower Sales
Navistar said in a statement that it pays suppliers and employees under contract terms and âexpects Ford to honor the terms of its agreement.â
The automaker had delayed the launch of the Super Duty pickup truck after ongoing problems with Navistar. Bear Stearns analyst Peter Nesvold said Ford and Navistar are "tied at the hip," with Ford relying on the Navistar diesel engine and Navistar on the Ford production. If the disruption extends for more than a month, it could lead to an $11.6 billion in annualized revenue loss for Ford, he said.
Full story here. More on this story here.
Here's AutoObserver's take: Ford: Contract Dispute, Lower Sales
estreka says:
05:57 PM, 02/26/07
That'll hit Ford where it really hurts.
gmguy111 says:
06:02 PM, 02/26/07
another thing Ford does not need right now and this is going to hurt them big time
estreka says:
10:20 PM, 02/26/07
Something I didn't think of before, with Dodge potentially going away, couldn't Ford start implementing their own Cummins engines?
ateixeira says:
09:27 AM, 02/27/07
I say good for Ford. Navistar has to own up to all the problems the previous generation engine had. Pay up to get their mistakes fixed.
Ford has enough supply of these that they can go on for a while without 'em, so this will hurt Navistar more than it'll hurt Ford. It may actually help Ford reduce excess inventory.
Kudos to Ford for having the guts to force a supplier to fix a defect they created.
firstwagon says:
08:17 PM, 02/27/07
I think there's a better chance of Ford going away then Dodge.
jerrywimer says:
06:04 AM, 02/28/07
If you're right ateixeira, great. But I worry strongly about Ford now. I may be a GM person first (and for fun often argue the GM side in the traditional GM-vs-Ford discussions), but Ford is still an American founded tradition. It'd be sad to see the company go away, or even to go the way Chrysler did and be bought out by a non-American company. Far too many originally-American staples have gone that route (first time I as a teen realized this was when I realized RCA was no longer really an American company).
skierx420 says:
10:25 AM, 02/28/07
I often wonder why people assume that Ford owns Cummins. Ford doesn't own Cummins. Cummins is a public corporation with thousands of investors. I would wager that Ford has some minority holdings with Cummins just like most major corporations have stakes in many hundreds of companies. So Ford just can't dump International and Navstar and order Cummins to give them an engine. They could buy one from Cummins or they could just develop one. They have Volvo who makes fine heavy duty equipment. I think that Cat and other companies make fine engines (Cat is powering a generator to keep the water on in my town right now because of the midwest ice storms) they could negociate a new contract with them. But here is a link to Cummins corporate with it's stock ticker and 10-k forms.
http://www.cummins.com/cmi/content.jsp?siteId=1&langId=1033&menuId=1&overviewId=1&menuIndex=0