Navistar lost $184 million this year, but company leaders said Thursday they have seen improvement in the bottom line and expect that trend to continue as it looks to add hundreds of jobs in Springfield.
The lost is significantly less than last year, when it reported a net loss of $619 million.
Navistar is a significant employer in Clark County, with approximately 1,500 workers at its Springfield manufacturing plant, including management and contractors. And thousands of the company’s retirees live in the region.
The truckmaker cut costs this year, which accounted for much of the improvement, said Troy Clarke, Navistar’s president and CEO. The manufacturer’s goal is to become profitable again next year.
“We are building the best products we have ever built and we are winning back customers,” Clarke said during a conference call Thursday morning.
The truckmaker slashed its operational costs by more than $300 million this year. That includes spending less on materials and logistics, as well as lower manufacturing costs. Navistar also exited the foundry side of its business this year.
Earlier in the quarter, Navistar announced a joint agreement with GM to build medium-duty trucks at the Springfield site. That agreement is expected to bring at least 300 new jobs to Clark County, and about $12 million in investment at the plant. The new trucks are scheduled to go into production in 2018.
The company also reached a four-year agreement with members of the UAW Local 402 this year, which represents the majority of workers at the site.
Navistar plans to continue reducing costs as part of its effort to become profitable again next year, said Walter Borst, executive vice president and CFO for the company.
“We expect to take more than $200 million in additional costs out of our operations,” Borst said of 2016.
Those reductions will come from slashing material costs, improving manufacturing efficiency, structural cost improvements and restructuring the company’s Brazilian operations, Borst said. Navistar saw sales improve for medium-duty trucks and buses this year, but saw less demand for heavy trucks.
“Encouragingly, we are off to a good start on orders to be delivered in 2016,” Clarke said.
Despite many financial struggles related to an engine technology that failed to meet emissions standards, Navistar is in the best financial position its faced in years, said Vicki Bryan a senior high yield analyst for Gimme Credit.
The company has begun to recover sales from former customers, she said, and it has seen an increase in new contracts for products for the military, which should help stabilize revenue.
“Navistar has come a long way since its collapse in 2012 when it finally abandoned its colossally failed proprietary emissions system in all its legacy engines and trucks,” Bryan said. “Full recovery still is probably years away, and we doubt Navistar will re-emerge as a strong market leader, but it’s finally gaining traction with its new products and restoring profitability with drastically downsized operations.”
The company has shed its weakest assets and reinvented its product line with competitive products, she said.
“Navistar while not yet healthy is certainly transformed after three substantial management shakeups and three years of necessarily aggressive downsizing to slash costs and permanently reduce break even,” Bryan said.
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