Navistar International, the second largest producer of diesel engines in North America, has saved a financially vital V6 and V8 diesel engine supply pact with Ford, its major customer, according to a news bulletin issued by the business publication Stark’s Component Ledger.
Stark’s reported that Navistar agreed to abandon a less complex powerplant design that currently uses unit injectors and adopt a more complex common rail design for the diesel engines.
The business journal said the stunning development was seen as representing death for the much-ballyhooed, futuristic ‘camless engine,’ whose primary design elements are spin-offs of diesel engines with unit injectors.
Common rail fuel injection systems are widely used by other major industry makers of diesel engines in plans to meet the next stringent level of federal engine emissions standards to be implemented by the US Environmental Protection Agency on January 1, 2007.
Stark’s reported that sources familiar with the agreement made during Navistar’s fiscal 2003 second quarter indicated Ford would absorb the entire $90 million loss of business late last year linked with its inability to build and sell trucks with diesel engines featuring the new unit injection design.
Navistar agreed to change the design of all V6 and V8-shaped diesel engines to common rail from unit injectors for engines supplied directly to Ford, it added.
As a result of the compromise in bargaining between the firms, Stark’s disclosed that Ford agreed to end a financial dispute over Navistar’s $300 million investment, which involved the construction of a new engine manufacturing facility at Huntsville, AL.
Ford gave Navistar a green light to sell the V6 and V8 diesel engines to vehicle assemblers, in addition to Ford, the business publication stated.
Navistar reportedly sought to recover nearly 70% of the $300 million investment at Huntsville from Ford, after Ford threatened to terminate the program late last year.
Navistar already has generated active interest from Toyota and Nissan which might source V6 and V8 diesel engines from Navistar for use in future US production of heavy-duty pick-up trucks, Stark’s added.