On February 11th, 2020, Navistar officially started progress on spending $125 million to expand its engine manufacturing plant in Huntsville, Alabama. They also hinted that they will use the new space, to build their own powertrains, cooperating with Traton Group to make this a reality.
Plant Expansion
Navistar Big Bore Diesel is the formal name of the facility in Huntsville, Alabama. It is currently the only site for the manufacturing of A26 engines. Rather than open a new plant elsewhere, Navistar International has elected to instead expand their currently existing plant.
The $125 million they have said to invest is believed to go to the following projects in regards to expansion:
- Purchase 50 acres of land adjacent to Navistar Big Bore Diesel, increasing the total size of the plant to 80 acres.
- Build a new facility on the property that covers 400,000 square feet, equal to approximately 9 acres.
- Purchase and bring in the machinery that will help in the production of the new powertrains.
- Provide the initial payroll for the estimated 145 jobs that will be created, more than doubling the size of the total Big Bore Diesel workforce.
The plan for investing $125 million was formally announced in a press release via Navistar’s website in 2019. Navistar has only recently started to make that vision a reality. The company hopes to finish its expansion of the North Alabama plant and get to work on making powertrains by the year 2023.
New Powertrain
Currently Navistar International is the only major truck builder in North America that does not use its own powertrains in its heavy-duty trucks. They may come with Navistar International engines, but the engine comes paired with Eaton transmissions. In some cases, the trucks come with Cummins engines and Eaton transmissions.
The company plans to change direction in 2023. The new plant expansion when finished will be where they will start manufacturing their own powertrains. Specific details about the powertrain model(s) are currently held as classified information. What is known is that Navistar International is working with Traton Group to enter the market as a partnership.
Making the powertrains on the same lot as the engines sounds reasonable. The two components will need to be tested in tandem to make sure they interact properly in making a truck move. “It makes sense, with the people we have here, the dedicated workers, to bring this powertrain here,” Mark Hernandez, senior vice president of the global manufacturing wing of Navistar International, said in regards to the decision to expand the Huntsville plant over building a new plant elsewhere in the United States or overseas.
Conclusion
The expansion of the Alabama plant rides on the coattails of the building of a new plant for heavy-duty vehicles in San Antonio, Texas. Between the two facilities, Navistar International has a lot going for it in terms of expansion.
The corporation is expanding in hopes of reaching its “Navistar 4.0” strategy. This involves both growing the company and increasing margins to 12% by 2024. At the same time, Navistar may have a hard time reaching this goal due to the increased supply of used big rigs on the market, which will result in unprecedented competition for selling in the trucking industry.
Whether or not Navistar International fulfills its strategy is yet to be seen, but Traton Group has faith in them. So much so, that it is willing to purchase Navistar for a whopping $2.9 billion in cash, which was fifty percent more than the stock market valuation at the time of the offer.
Whether you believe Navistar has the means to expand its product line into powertrains or not, you can count on TopMark Funding to get you the financing you need on a new or new-to-you truck. Whether the transmission is Navistar International, Cummins, or an entirely different one altogether, we work with over two dozen brokers to get you the best deal possible.
