Truck and engine maker Navistar plans to cease all engine production at its factory in Melrose Park, IL, by the second quarter of its fiscal 2018 year, meaning it will no longer build proprietary nine and 10-liter medium-duty engines for its International-branded Class 6 and 7 trucks.
The OEM added that it will “continue” Melrose Park facility’s transformation into Navistar technical center, which will include truck and engine testing and validation as well as used truck sales and reconditioning – a process that started in 2010.
Once this transition is completed, the cessation of engine manufacturing at Melrose Park is expected to affect about 170 employees and reduce Navistar’s operating costs by approximately $12 million annually. The company will take an approximate $43 million charge as a result of this action, including approximately $8 million of cash related charges.
“Ceasing production of engines at Melrose Park is a difficult decision, but represents another important step on our journey to strengthening the company’s competitiveness,” noted Persio Lisboa, Navistar’s newly-installed chief operating officer, in a statement
“Our N9 and N10 engine family was updated in 2014 and since then has served as a competitive niche offering for specific medium-duty vehicles,” he added. “As we approach future regulatory requirements, the low volume nature of the platform could not justify further product development investments on it.”
In 2013, Navistar reintroduced the option of a 6.7 liter Cummins engine for its Class 6 and 7 medium-duty trucks, followed in 2016 by a 9-liter Cummins engine option, both of which Lisboa said have been “well received” by customers.
He pointed out that a significant portion of the hourly employees at Melrose Park are retirement-eligible and that assistance and opportunities for retraining will be offered.
“Ending production anywhere is a difficult decision because it affects employees,” Lisboa said. “We continue to be committed to investing in our Melrose Park facility as we complete its transformation into a technical center that is integral to our product design, engineering and sales teams. Given the investments we’ve made, we expect to have a significant presence in Melrose Park for years to come.”