Diesel Dispute

Ford Motor Co. and International Truck and Engine Corp. — partners in a successful supply arrangement for Ford's Power Stroke turbodiesel engines — speak cautiously of a reported dispute over costs associated with a new International plant and a discontinued engine program.

International builds the new 6L Power Stroke V-8 at its plant in Indianapolis for Ford medium-duty pickups. Ford and International had been developing a V-6 version of the Power Stroke, earmarked for possible future use in Ford light-duty pickups and SUVs and to which Ford reportedly was to have exclusive access.

But last October, according to International's report to the Securities and Exchange Commission, Ford “advised the company (International) that their current business case for a V-6 diesel engine in the specified vehicles is not viable and it has discontinued its program for the use of those engines.”

Meanwhile, International already had nearly completed a new plant in Huntsville, AL, to build the V-6 and V-8 Power Stroke for Ford Excursion and International's Navistar and Blue Diamond (joint-venture with Ford) commercial trucks.

International says it took a non-recurring $167 million pretax charge against costs associated with the program and the Huntsville construction, but International wants reimbursement from Ford for the portion of the International “investment” in the V-6 diesel program not covered by the $167 million write-down.

An International spokesperson says negotiations continue with regard to ongoing costs at the Huntsville plant, which, according to a source, “is a big plant running way under capacity.”

Sources say International management was angry with Ford's scuttling the V-6 program — particularly since International last fall dedicated the entire 250,000-unit capacity of its Indianapolis engine plant to the new 6L Power Stroke.

Plus, Stark's Business Ledger, a trade publication, reported Ford and International wrangled more than a year over the fueling system for the current V-8 Power Stroke and the still-in-development V-6 variant.

Ford wanted International to scrap its hydraulically assisted fuel-injection system in favor of a common-rail system now popular for diesel engines.