OEM ramps up scale strategy

For John Horne, president & CEO of International Truck & Engine Corp., the 21st century may prove to be the best of times where truck sales are concerned once the industry gets through one of the worst truck manufacturing downturns in recent memory. Horne, however, believes International will come out of this downturn not only stronger, but better able to resist future industry downturns. The reason

For John Horne, president & CEO of International Truck & Engine Corp., the 21st century may prove to be the best of times where truck sales are concerned — once the industry gets through one of the worst truck manufacturing downturns in recent memory.

Horne, however, believes International will come out of this downturn not only stronger, but better able to resist future industry downturns. The reason for his confidence lies in the strategic plan he and the company have been crafting ever since he took over the top slot at International in 1991.

“We can't keep doing the things the way we used to,” Horne explained at a recent meeting of International dealers. “To succeed in the truck market of the future means we need to make major product upgrades every five years and bring out brand new products every 10 years. We are now in a position to do that.”

Horne said the key to winning not only market share but better profitability comes down to scale; truck makers must be big enough, with the right mix of people and plant equipment, to support the investments necessary to stay on top.

Another key point, added Horne, is collaboration. That's why International formed its Blue Diamond joint venture with Ford Motor Co. “Without scale, we can't afford the engineering and plant investments we need to grow, survive and thrive. In this market, it is collaborate or die,” he said. “Only through a joint venture can we develop the new products we need at profitable cost points for the both of us. In our best year, 1999, we built and sold 125,000 trucks. Ford, on the other hand, built and sold 7.4-million vehicles in that same year. That's why we're in a joint venture with them — they have scale in certain areas that we lack.”

Horne believes that once International achieves the right scale — by becoming a $10 billion or more company — it will be in position to actually make money during economic downturns like this one. “That's why, in the current down market, it is no time for the timid,” he added. “Our vision has to become reality in order for us to succeed in the future.”

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