Navistar goes virtual for Texas plant groundbreaking

NAvistar plant 3D rendering

With Texas under a renewed shelter-in-place order because of a surge in coronavirus infections, Navistar International Corp. (NYSE: NAV) broke ground virtually for a $250 million assembly plant in San Antonio.

The expected 600 new jobs “fuel Texas’ COVID-19 recovery by providing great job opportunities to our diverse and highly skilled manufacturing workforce,” said Gov. Greg Abbott, who on Thursday halted business reopenings in Texas.

The Manufacturing 4.0 plant draws lessons from TRATON Group, Volkswagen’s trucking holding company, which may be Navistar’s parent by the time the plant begins operations in early 2022.

Navistar continues evaluating TRATON’s unsolicited $2.9 billion all-cash offer made on Jan. 30. TRATON, formerly Volkswagen’s Truck & Bus Group, purchased 16.6% of Navistar’s shares for $256 million in September 2016. TRATON’s offer of $35 a share is about $9 a share higher than Navistar’s closing price Thursday.

Most observers expect TRATON to eventually acquire the remaining Navistar shares to give it a foothold in North America, where its major competitors, Daimler Trucks and Volvo Group, are well established. Navistar cracked open the door for TRATON’s Scania unit in October 2019.

A changed world

Since the plant was announced in September 2019, Navistar’s world, and that of other manufacturers, has changed dramatically. An expected slowdown in new truck orders led to Navistar’s laying off 10% of its global workforce in December. The coronavirus pandemic worsened the situation, shuttering production for April and much of May.

After initially indicating the groundbreaking would occur late in 2019, Navistar finally made it official with the taped ceremony released Thursday.

“We’re putting our resources behind what we said we were going to do, no matter what,” said Persio Lisboa, who was named Friday as Navistar president and CEO effective July 1.

The 900,000-square-foot plant, which will join Navistar assembly facilities in Springfield, Ohio, and Escobedo, Mexico, incorporates the latest in digital factory, connected machinery, robust lean manufacturing processes and cloud analytics, enabling predictive analytics and real-time, data-driven decisions on the shop floor. 

The Texas site is located along Interstate 35, which links Navistar’s Southern U.S. and Mexico supply bases. Navistar expects a 15% inbound logistics cost reduction because suppliers will locate within the plant’s geographic footprint. Engineering and research and development will see a 25% productivity gain, Lisboa said.

Lean manufacturing practices, including some from Navistar’s powertrain and purchasing alliances with TRATON, will “cascade” to other Navistar plants over time, with San Antonio as the “operating backbone,” Lisboa said.

Navistar will operate the new plant by combining pre-engineered modules with each on a single architecture, reducing by 40% the number of parts in the engineering system. 

“The platform strategy will be hard for others to duplicate,” Lisboa said.

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