Navistar to close foundry that supplies engine blocks and heads

Navistar International Corp. has announced that it will close its Indianapolis, IN, foundry, by summer 2015. The foundry produces engine blocks and heads for the OEM's proprietary engines. Navistar said it will now source those components from suppliers.

“Over the last two years, we’ve taken a number of steps to strengthen our business and position the company for a return to profitability and long-term success,” said Persio Lisboa, Navistar’s president of operations. “We’ve determined that leveraging our suppliers for these components will reduce our engine costs, improve our overall manufacturing capacity utilization, and free up additional resources to invest in our core North America truck and parts business.”

As Navistar noted in its Q4 earnings report, once the foundry is closed it expects a $13 million annual savings and the elimination of about 180 jobs. The company took an $11 million charge in the fourth quarter of this year that includes employee separation benefits, pension and other postretirement contractual termination benefits, inventory reserves and other related costs. In addition, the company anticipates up to $40 million in additional charges for accelerated depreciation from the closure of the Indianapolis foundry and related impacts during the first half of 2015.

“Closing a facility is a difficult decision because of its impact on the many great people who've been part of our company,” Lisboa added. “We will treat people with dignity and respect throughout this process.”

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