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Navistar Sniffing Out Buyer for RV Operations

February 14, 2013 by · Comments Off on Navistar Sniffing Out Buyer for RV Operations 

Navistar International Corp. officials said Wednesday (Feb. 14) they are looking into selling the company’s Navistar RV unit based in Wakarusa, Ind.

According to a report by WSBT-TV, South Bend, Navistar is in the preliminary stages of its effort to possibly sell the company. In a statement, Navistar representative Steve Schrier said:

“Navistar is conducting a comprehensive review of all of our non-core businesses — including our Navistar RV business — to evaluate their potential to drive long-term profitability and significantly improve our return on invested capital (ROIC).

“As a result of our ROIC analysis, Navistar is listening to offers for the sale of its RV business and the sale of the business is a possibility. However, we are still early on in that process and not accepted any offers at this time.”

Schrier added that Navistar is not in a position where it has to sell the RV portion of the company.

“We have a credible turnaround plan for the RV business under way and sufficient cash to continue funding operations, so we have the option to reject any offers that don’t have value,” Schrier told WSBT, emphasizing the company was not cash-strapped.

The company laid off 29 temporary workers in September. At that time, Schrier said that there were no plans to lay off any of the 500 permanent employees who work at the Wakarusa motorized manufacturing facility.

In 2008, Monaco Coach Corp. laid off nearly 1,500 people and filed for bankruptcy. Then Navistar bought Monaco Coach in 2009. When Navistar acquired Monaco, there were only 20 employees left.

In August 2011, Monaco decided to consolidate its Oregon factory with the factory in Wakarusa. That brought about 400 new jobs to Elkhart County. There are currently about 600 workers between the Elkhart and Wakarusa plants.

Navistar: Selling RV Unit a ‘Realistic Outcome’

November 1, 2012 by · Comments Off on Navistar: Selling RV Unit a ‘Realistic Outcome’ 

To address a number of topics prior to the Recreation Vehicle Industry Association’s (RVIA) 50th Annual National RV Trade Show, Nov. 27-29 in Louisville, Ky., Navistar International Corp. President & COO Troy Clarke agreed this week to field an array of questions on behalf of the Lisle, Ill.-based company, a global truck builder and parent company of Navistar RV. Clarke, a former GM executive like Navistar’s new chairman Lewis Campbell, joined Navistar in 2010 and assumed the reins of the company’s top day-to-day job in late August during rather turbulent times for the legendary Chicago-based firm. Here’s the highlights of that RVBUSINESS.com conversation:

RVBUSINESS.com: There have been quite a few changes for Navistar over the past several months and plenty of news reports in recent weeks about the company. What, in your view, is going on at Navistar these days?

Clarke: Yes, you’re right, we’ve had a good amount of change these past several months. One of the major announcements was the change in our engine strategy. For our commercial trucks and engines, we’ll begin to use the same emissions technology, a system called Selective Catalytic Reduction, or SCR, the same one used by our competitors. With this change in strategy, we’ve made several other important changes and announcements, including bringing on our new CEO, my boss, Lewis Campbell.

Together, Lewis and I have been working with the Navistar leadership team on a plan we call “Drive to Deliver,” which provides a renewed emphasis on our company’s North American truck and engine business and doing the things that need to be done to quickly turn the company’s performance around and drive shareholder value.

RVB: So, what are some of these things you’re doing to improve the performance of the overall company?

Clarke: Well, as we move to our new emissions technology, we’ve really tried to take some noise out of the system, address some of the criticism head-on and make some decisions that will help make this a smooth, swift and high-quality transition. We’re bringing back the Cummins ISX15 in our trucks and will use the Cummins SCR aftertreatment system for our heavy-duty engines.

We believe we have sufficient liquidity to make this transition, and we expect to end our 2012 fiscal year at the high end of our guidance of $875 million to $1.25 billion in operating cash. And, just last week we announced a public offering of stock that generated upwards of an additional $200 million to enhance our balance sheet. We did this to put to rest yet another uncertainty — the question of whether Navistar will have enough available liquidity to manage through the current industry downturn and bridge us through our new product launches throughout the year.

RVB: And how about your Navistar RV business? How will it be impacted by these developments?

Clarke: We are currently evaluating all parts of our non-core business, which we define as businesses outside our core North American truck, engine and parts businesses. We are making an assessment as to both their strategic fit and their current and anticipated return on invested capital – ROIC — using a disciplined process. We are moving quickly, and we will communicate those decisions when appropriate.

RVB: So, for the benefit of all those who regularly visit RVBUSINESS.com and generally follow the industry, the question looms: Do you consider Monaco, Holiday Rambler and R-Vision brands part of Navistar’s “core business?”

Clarke: Our focus is on restoring our North American truck, engine and parts businesses to their market leading positions. While we view our RV business as an important part of our what we do, we do not consider Navistar RV and our Monaco, Holiday Rambler and R-Vision brands to be a part of our “core” North American commercial truck, engine and parts business. So, RV is under review.

RVB: So, if Navistar RV is under review, what does that mean for the Navistar RV business moving forward?

Clarke: It’s important to note that Navistar RV is not being singled out; all aspects of our business are on the table for review. As you know, there’s been some steady growth over the past few years in the RV industry, and we’re committed to the long-term viability of the RV business.

Navistar RV President Bill Osborne and the entire Navistar RV team are excited about the great new products we’re introducing at next month’s Louisville RVIA show and we are well positioned to take advantage of the growing RV industry.

RVB: What, specifically, are some of the things the company is looking to improve on the RV side of the business?

Clarke: When Navistar acquired Monaco out of bankruptcy a little more than three years ago, we implemented many changes to enhance the business. We recently completed a number of actions to improve our quality, increase efficiencies, reduce costs and better leverage the significant RV supplier base in northwest Indiana. So, many improvements have already been made.

RVB: And you closed down your Coburg, Ore., operations.

Clarke: Yes, in August of 2011, we announced the consolidation of our manufacturing operations from Coburg, Ore., to Wakarusa, Ind. and those actions are complete. Since January of this year, we have added more than 500 manufacturing employees to ramp up production in our Elkhart and Wakarusa facilities. In fact, our 2014 model year lineup and the RVs we’ll be showing next month at the Louisville Show represent the first RVs produced through our streamlined manufacturing processes. As a result, we’ll be able to provide our customers with the best combination of quality, comfort and affordability in the industry.

We’ve done some other things as well to improve the business. We’ve leveraged the sourcing and engineering strengths of Navistar to achieve improved scale, higher quality standards and improved costs. And, we also closed our Union City, Ind., RV chassis operations and have idled production of our Workhorse RV and step van chassis operations.

RVB: So, realizing that your evaluation is currently underway and looking in your crystal ball, what, realistically, does the future hold for Navistar RV? Is there a chance Navistar could sell or close its RV business?

Clarke: We are committed to the long-term viability of our RV business. With that said, there are really three potential outcomes for our RV business — close the business, sell the business or continue to invest in and grow the business.

Well, I can tell you, we have no plans to close the business and have not studied a closure scenario. It is not our plan to do so. In the last three years, we’ve made significant investments and have taken actions that have delivered improvements in the performance of the business. Right now, we are simply evaluating all of our businesses to ensure they are delivering the appropriate “Return on Invested Capital” and have the right strategic fits.

Selling the business is a realistic potential outcome and would support our efforts to maintain the future viability of the business. If a sale were to occur, Navistar would be looking to sell to a buyer who can create more value in the RV business than we can.

If someone else can maximize its value, that is ultimately best for all stakeholders. That’s another option and one that we are closely evaluating. Now, this would not be a distressed sale. We don’t have that need. As I said, we have the cash necessary to manage our emission transition plan. And, we have already made investments in the business and have taken actions that are driving improvements in the business.

RVB: Any other closing comments, Troy, or anything else you’d like our readers to know?

Clarke: Let me end with where I began. When evaluating our businesses, and in this case, Navistar RV, we are using a disciplined process to assess both return-on-invested capital and strategic fit and the close/sell/grow options. We want to make these decisions in a timely manner to address the uncertainties for our employees, customers and dealers, but we won’t sacrifice performing the due diligence that’s required. My commitment is that when we have made a decision and are ready to announce that decision, these key stakeholders will hear about it first from us.

 

Rep. Donnelly Sees RV Recovery on Horizon

May 6, 2009 by · Comments Off on Rep. Donnelly Sees RV Recovery on Horizon 

 U.S. Rep. Joe Donnelly, D-Ind., whose district includes northern Indiana’s RV manufacturing area, expects that  Navistar International Corp. will begin building recreational vehicles again in factories closed by Monaco Coach  Corp. 

Speaking to the National Association of RV Parks and Campgrounds’ (ARVC) 2009 National Issues Conference April 28-29 at the newly opened National Visitor Center on Capitol Hill in Washington, D.C., Donnelly added that he’s confident that RV sales will pick up when credit markets stabilize and the U.S. economy recover. 

“We were encouraged by the fact that Navistar is going to be picking up Monaco Coach,” Donnelly told state campground association leaders. “It’s not all official yet, but it looks like they will be manufacturing again in Elkhart County (Ind.) 

Monaco filed Chapter 11 bankruptcy in March, and Navistar, which had partnered with Monaco manufacturing chassis in Elkhart, Ind., has offered $52 million to purchase most of Monaco’s RV manufacturing assets, including factories in Indiana and Oregon. In addition, if the deal is finalized by June 1, Navistar will acquire all brands, intellectual property, inventories and equipment relating to Monaco’s product lines. 

Donnelly told the campground association leaders that when the RV industries turns around, there will be more demand than ever for places to take RVs. 

“There is going to be demand for these products and they have to go someplace,” the Democrat told the RV park and campground operators. “Where they go in so many places is your businesses. You are the heart and soul of the American dream.” 

Donnelly, who serves on the Capital Markets Subcommittee of the House Financial Services Committee, said Congress is doing its best to stabilized the American economy. 

“We are getting closer on the credit market,” Donnelly said. “With home mortgages, the ‘liar loans’ are gone and the crazy adjustable rates that changed every three months, they’re going too. We’re back to basics, but we’re a lot better off for it. We will be a lot more solid because of it.” 

Donnelly said he is co-sponsor of legislation that attempts to deal with the speculative run-up of crude oil prices that sent gasoline prices over $4 a gallon last summer. 

“I’m no clairvoyant, but much of what happened to prices was done on speculation,” he said. “We sat there day after day watching demand continue to go down as prices continued to go up. 

“And what we saw was that (investment banker) Morgan Stanley was one of the world’s largest owners of petroleum. What was clearly going on was price manipulation.” 

Donnelly said that legislation pending the House Agriculture Committee would require that buyers of petroleum futures contracts have the facilities to store the oil they buy. 

“(That means) if someone has a million-gallon contract, they have to be able to store a million gallons,” Donnelly said. “That’s how it was until 1999. That’s what we are trying to get back to now. That would make it a fair market and an appropriate market.”

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