Ford/Navistar Diesel Engine Dispute

[ChiefJohn]

Appears Ford is between the proverbial "rock and a hard place" since they depend on Navistar for their diesel engines--this will get interesting.

AP
Ford Sues Navistar Over Prices, Contract
Friday January 12, 6:04 pm ET
By John D. Stoll and Terry Kosdrosky
Ford Sues Supplier Navistar Over Engine Prices and Warranty Dispute
DETROIT (AP) -- Ford Motor Co. has filed suit against U.S. diesel engine supplier Navistar International Corp. regarding pricing and a contract dispute, a move that could trigger hiccups for the supply of high-profit Super Duty pickup trucks down the road.
Dearborn-based Ford filed the lawsuit in a Michigan court against Warrenville, Ill.-based Navistar on Thursday, accusing it of not complying with a warranty cost-sharing agreement and "unjustifiably" raising prices on a diesel engine used in the F-series pickup truck line.
The lawsuit states that Navistar has threatened to cut off shipments if Ford does not pay a price Navistar is demanding, a move Ford says would breach a contract. Also, Ford accuses Navistar of not complying with warranty-contract obligations related to the cost of fixing quality glitches that consumers encounter.
Ford started debiting Navistar's invoices to recover what it feels the supplier owes related to warranties, according to the lawsuit.
The lawsuit comes at a vulnerable point for Ford and Navistar, which are counting on a successful partnership to make money in a tough U.S. market where high costs and falling domestic-vehicle market share have forced job cuts at both companies.
Though Ford's actions could hurt the auto maker and the supplier, Ford is banking on the success of large pickups -- many of which use Navistar engines -- to help the auto maker regain profitability. Because engines are such high-cost components, it is seen as essential for Ford to pay competitive prices for the part.
Both Ford and Navistar confirmed the lawsuit, which was reported Friday by the Chicago Tribune, though Navistar spokesman Roy Wiley said the company had not yet been officially served.
"This is totally without merit and we are going to vigorously respond in court," Wiley said.
Ford is in the midst of launching its critical F-Series Super Duty vehicles in the United States. The truck has traditionally represented more than 300,000 vehicles worth of annual volume, and 70 percent of Super Duty trucks carry diesel engines. The vehicle was redesigned for 2007, but its sales launch was delayed by nearly six months due to problems in diesel engine development -- the launch is now planned early this year.
Ford and Navistar have a long-time partnership for the development and supply of diesel engines, but various quality issues and a delay on the development of a recent product have shaken the relationship somewhat.

[ChiefJohn]

Appears Ford is between the proverbial "rock and a hard place" since they depend on Navistar for their diesel engines--this will get interesting.

AP
Ford Sues Navistar Over Prices, Contract
Friday January 12, 6:04 pm ET
By John D. Stoll and Terry Kosdrosky
Ford Sues Supplier Navistar Over Engine Prices and Warranty Dispute
DETROIT (AP) -- Ford Motor Co. has filed suit against U.S. diesel engine supplier Navistar International Corp. regarding pricing and a contract dispute, a move that could trigger hiccups for the supply of high-profit Super Duty pickup trucks down the road.
Dearborn-based Ford filed the lawsuit in a Michigan court against Warrenville, Ill.-based Navistar on Thursday, accusing it of not complying with a warranty cost-sharing agreement and "unjustifiably" raising prices on a diesel engine used in the F-series pickup truck line.
The lawsuit states that Navistar has threatened to cut off shipments if Ford does not pay a price Navistar is demanding, a move Ford says would breach a contract. Also, Ford accuses Navistar of not complying with warranty-contract obligations related to the cost of fixing quality glitches that consumers encounter.
Ford started debiting Navistar's invoices to recover what it feels the supplier owes related to warranties, according to the lawsuit.
The lawsuit comes at a vulnerable point for Ford and Navistar, which are counting on a successful partnership to make money in a tough U.S. market where high costs and falling domestic-vehicle market share have forced job cuts at both companies.
Though Ford's actions could hurt the auto maker and the supplier, Ford is banking on the success of large pickups -- many of which use Navistar engines -- to help the auto maker regain profitability. Because engines are such high-cost components, it is seen as essential for Ford to pay competitive prices for the part.
Both Ford and Navistar confirmed the lawsuit, which was reported Friday by the Chicago Tribune, though Navistar spokesman Roy Wiley said the company had not yet been officially served.
"This is totally without merit and we are going to vigorously respond in court," Wiley said.
Ford is in the midst of launching its critical F-Series Super Duty vehicles in the United States. The truck has traditionally represented more than 300,000 vehicles worth of annual volume, and 70 percent of Super Duty trucks carry diesel engines. The vehicle was redesigned for 2007, but its sales launch was delayed by nearly six months due to problems in diesel engine development -- the launch is now planned early this year.
Ford and Navistar have a long-time partnership for the development and supply of diesel engines, but various quality issues and a delay on the development of a recent product have shaken the relationship somewhat.

[Cookieman]

I have heard that Dodge was going to Mercedes diesels, and Ford was going to switch to Cummins. Any truth, beyond rumors.

[RustyJC]

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by Cookieman:
I have heard that Dodge was going to Mercedes diesels, and Ford was going to switch to Cummins. Any truth, beyond rumors. </div></BLOCKQUOTE>
Nope - long term supply contracts are in place between Dodge and Cummins.

Rusty

[W4RLR]

Dodge and Cummins contract runs through 2008.
Ford will use International Truck and Engine products for the forseeable future. They invested a lot of time and research on the 6.4 that is coming out in the new 2008 trucks to drop them. Ford's beef with International is due to the problems they had with the 03 and 04 6.0 engines. International's contention is that some of those problems were of Ford's own making. It's merely a dustup of legal complications and nothing about the quality of the engines currently produced.

I own a 2005 Ford F-250 diesel and love mine.

[RustyJC]

Although terms of the last contract extension between Dodge and Cummins were not officially made public, the following would indicate that they're looking beyond 2010:

<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">January 24, 2007


Dodge Ram is first with cleaner diesel

Pickups with new Cummins engine meet strict 2010 emissions rules

By Ken Thomas
Associated Press

WASHINGTON -- DaimlerChrysler says it will be the first to market with a heavy-duty pickup truck -- a Dodge Ram powered by a new Cummins diesel engine -- capable of meeting strict 2010 emissions standards in all 50 states.

The automaker presented the Ram 2500 and 3500 heavy-duty trucks, with a 6.7-liter turbodiesel engine from Cummins, at the Washington Auto Show on Tuesday.

The Dodge Ram will be the first Chrysler Group vehicle with the clean-burning technology called Bluetec, using an engine developed by Cummins. Diesel engines provide about a 30 percent improvement in fuel economy compared with conventional gasoline engines.

Cummins, which assembles diesels for the Ram pickup at a 1,000-employee plant near Columbus, Ind., developed the diesel with an array of new technologies expected to provide the same fuel economy as its current diesels while cutting emissions.

Cummins said the engine will be significantly cleaner than its competitors, using traps and filters to nearly eliminate emissions from particulate matter and slash nitrogen oxides.

"When you think of the Dodge Ram heavy-duty pickup truck, you usually think of power, lots of torque and the ability to carry a big payload," said Tom LaSorda, chief executive of DaimlerChrysler's Chrysler Group.

He said the vehicle will be "the cleanest pickup truck in the marketplace."

DaimlerChrysler has outlined plans during the next four years to bring at least four vehicles to market with its Bluetec technology.

The government has been instituting tighter emissions standards for diesel engines and has required new ultra-low sulfur diesel fuel in the marketplace.

In 2010, diesel engines will be required to emit about 90 percent less nitrogen oxide, building upon upgraded standards in recent years.

LaSorda also introduced a clean diesel engine for Dodge Ram 1500 pickup trucks after 2009. He said the engine, also developed by Cummins, will provide a 30 percent boost in fuel economy and a 20 percent cut in carbon-dioxide emissions.

Chrysler currently offers diesels in its Jeep Liberty and Grand Cherokee models, along with the Dodge Ram pickup and Sprinter van. Mercedes-Benz started selling an E-320 Bluetec sedan in the U.S. and Canada last fall. </div></BLOCKQUOTE>

Rusty