LISLE, Ill. — Navistar, a maker of commercial trucks and buses, said Thursday it will be making a capital investment of more than $250 million to build a new manufacturing facility in Texas.
The investment, which is contingent on finalization of various incentive packages, will bring approximately 600 jobs to the San Antonio area.
“Over the last five years, Navistar has made significant investments to improve our position in the market,” said Troy Clarke, Navistar chairman, president and chief executive officer. “This investment will create a benchmark assembly facility to improve quality, lower costs and provide capacity to support anticipated industry growth, as well as market share gains.”
The new manufacturing plant will have the flexibility to build Class 6-8 vehicles, complementing Navistar’s existing assembly manufacturing footprint, which includes truck assembly plants in Springfield, Ohio, and Escobedo, Mexico.
Navistar’s trucks are manufactured under the brand name International.
The announcement of the new Texas plant was part of Navistar’s Investor Day, where company executives presented their 2020-24 strategy “Navistar 4.0” that includes a plan to increase its EBITA margins to 12%.
Clarke said “Navistar 4.0” includes the following elements:
- Improve EBITDA margins to 10% by 2022 and 12% by 2024.
- Grow market share and become the number one choice of the customer through new product offerings and customer segmentation.
- Implement a single platform strategy to optimize use of R&D resources and commonization of parts and tooling.
- Increase modular design resulting in customer benefits, speed to market and lower product costs.
- Build a new truck assembly facility in San Antonio, Texas, reducing logistics and manufacturing costs.
- Use the TRATON alliance to provide significant procurement savings, more efficient research and development spend and new integrated power train offerings for customers.
- Grow aftersales revenues with an expanding distribution network, growing private label sales and e-commerce initiatives.
- Improve financial results allowing the company to invest in growth initiatives, de-lever the balance sheet and fully fund its defined benefit pension plans by 2025.
Building on the major advances achieved in the last five years, including gains from an alliance with TRATON Group, Navistar 4.0 lays out a clear path for the company’s ongoing transformation, Clarke said.
“Navistar is committed to building on the gains of the past five years to improve financial returns to shareholders,” he said. “Navistar 4.0 establishes a clear road map to grow EBITDA margins to 12%, while also winning in the marketplace.”
The new Texas investment builds on Navistar’s recently announced plans to invest $125 million in the Huntsville, Alabama, engine plant to produce next-generation, big-bore powertrains developed as part of the alliance with TRATON, a subsidiary of Volkswagen AG and a global commercial vehicle manufacturer worldwide.
The Texas site is located on a critical corridor along Interstate 35, which links Navistar’s southern United States and Mexico supply bases, allowing for significant logistic improvements, resulting in lower cost and enhanced profitability.
“This investment by Navistar is paramount to Texas’ success in growing our diverse and highly skilled manufacturing workforce,” said Texas Gov. Greg Abbott. “The Lone Star State is the new frontier in innovation, and I am confident that this partnership will usher in even greater economic prosperity for our state.”
“We are so proud to have a company like Navistar, a leader in vehicle innovation, in San Antonio,” said San Antonio Mayor Ron Nirenberg. “It shows that our strategy to grow our advanced manufacturing sector is working.”
“The county has, for many years, been touting the strength of our Texas-Mexico region as a platform for vehicle production,” said Judge Nelson Wolff. “Navistar’s decision to locate their newest facility here is just the latest affirmation that our community is uniquely situated to host world-class companies in advanced manufacturing industries. We are thrilled to have them in Bexar County.”
Navistar plans to break ground on the property later this year and anticipates production to begin approximately 24 months later.
In its presentation Thursday, Navistar also provided industry and company financial guidance for 2020, including:
- Industry retail deliveries of Class 6-8 trucks and buses in the United States and Canada are forecast to be between 335,000 and 365,000 units.
- Revenues are expected to be between $10.0 billion and $10.5 billion.
- Adjusted EBITDA is expected to be $775 million to $825 million.
- Manufacturing free cash flow is expected to be break-even excluding changes in working capital.
For more information, visit www.navistar.com.
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