Navistar to Close Indianapolis Engine-Component Plant

The Lisle, Ill., heavy truck and engine maker now builds engine blocks and cylinder heads at the plant and will outsource its production once the facility closes. The company said on Monday that it expects to cease all operations by summer, resulting in the loss of 180 jobs and a $13 million reduction in its annual operating expenses. “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,”Persio Lisboa, the company’s president of operations, said in a statement.

Navistar International Corp. next year intends to close an Indianapolis foundry that makes engine components as the truck maker continues to shed operations from an ill-fated move to build all its own truck engines.

The Indianapolis foundry for decades produced engine castings for Navistar-built engines supplied to Ford Motor Co. The company idled the foundry in 2009 when Ford opted to build its own diesel engines for its heavy-duty F-series trucks.

The company further reduced its need for engine castings last year by offering Cummins’ engines on Navistar’s medium-duty trucks and school buses. Navistar closed an engine plant in Huntsville, Ala., earlier this year as part of the consolidation of its smaller engine lineup.

After closing the Indianapolis foundry, Navistar said it would rely on outside suppliers to provide engine blocks and heads. Navistar continues to operate a foundry near Milwaukee for other truck components. Navistar restarted production at the foundry in 2011 on the assumption that it would need more casting capacity for its 13-liter and 15-liter engines. But when Navistar was unable to comply with tougher federal standards for engine exhaust, the company shelved plans for the 15-liter engine. Moreover, its 13-liter engine was beset by a host of reliability problems, causing the company to offer 15-liter engines manufactured byCummins Inc. Navistar continues to build 13-liter engines, albeit at lower volumes than originally anticipated.

Navistar is expected to release its fiscal fourth-quarter results on Tuesday before the market opens. The company said it recorded an $11 million charge during the quarter for severance, benefits, inventory reserves and other costs from the foundry. It expects to report $40 million in additional charges related to the closure during the first half of next year.

Navistar fell 2% to $35.05 in 4 p.m. trading on Monday.

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