- Navistar International Corp. has jettisoned Chairman and CEO Daniel Ustian, whose strategy to meet EPA engine-emissions regulations failed miserably.
- Navistar on Monday said Ustian will retire, "effective immediately," after 37 years with the company.
- Navistar appointed former Textron Inc. chief Lewis Campbell as interim CEO, and promoted Navistar Truck and Engine executive Troy Clark to president and COO.
Still Not Compliant
Under Ustian's strategy, Navistar boasted that it was developing an engine that would meet emissions regulations without relying on SCR technology, which requires the use of an additional operating fluid -- urea -- as well as after-treatment equipment.
SCR technology, Navistar said in 2009, would "add hundreds of pounds of bulky, complex componentry to each vehicle."
But Navistar failed to obtain EPA approval for its engine that relied exclusively on EGR, and in July announced that it was shifting to an approach that will incorporate urea-based after-treatment into its engines.
"On Jan. 1, 2010, everybody was supposed to be compliant with the new nitrogen-oxide standards," Rayle said. "Navistar, even now, is still not compliant."
In early August, the company abandoned its full-year financial outlook and said it might incur a third-quarter loss of up to $15 million, when factoring in EPA penalties.
Adding to Navistar's woes, the company missed out on a $4 billion contract to build the next generation of Humvees for the U.S. Army.
The Defense Department on Aug. 24 announced that AM General LLC, Lockheed Martin Corp. (IW 500/30) and Oshkosh Corp. (IW 500/137) all have received contracts to develop prototypes of what the Army is calling the joint light tactical vehicle.
"You didn't get the defense business. Your engine strategy was flawed. And even if you strip some of that out, [Navistar] still wasn't a profitable company anyway," Rayle said.
By contrast, Paccar reported second-quarter earnings of $297.2 million, or 83 cents per diluted share, up 24% year-over-year. Navistar reported a second-quarter loss of $2.50 per diluted share.
"This is when [Navistar] should be making decent money," said Rayle, who forecasts a full-year loss of $8 per share for the company. "The truck cycle is getting better."
