Navistar Halts Production of Ford Diesel Engines

Navistar International Corp., which supplies Ford Motor Co. with PowerStroke diesels for use in its Super Duty F-Series pickups, is suspending production of the engines, Reuters reports.

Production is being halted because Ford is not honoring terms of the purchase agreement, Warrenville, IL-based Navistar says.

The diesel mills are produced at Navistar plants in Indianapolis and Huntsville, AL. The Huntsville plant will continue to make engines for other customers, Navistar says.

The dispute between Ford and Navistar has been brewing for months.

In early January, Ford filed a lawsuit against Navistar over warranty costs and pricing for the diesel engines.

In the filing, Ford alleged Navistar owes it money under an agreement to share engine warranty costs, which it said Navistar failed to pay.

At the time, Navistar said Ford’s claims were “totally without merit,” and it would “vigorously respond in court.”

The auto maker sought reimbursement equal to what it said it overpaid for the engines and for financial obligations owed by Navistar as a result of warranty claims tied to the previous-generation diesel engine sold to Ford.

The argument escalated when Ford reportedly took the unorthodox move of subtracting the amount of money it said Navistar owed from the agreed-upon price for the diesel mills.

Following the lawsuit, Mark Fields, president-The Americas, told Ward’s he doubted Navistar would stop supplying the engines, but if it did, Ford had a contingency plan.

“I would hope it doesn’t come to that, but clearly we have an ample supply of engines,” Fields said. Even if Navistar should withhold engines, “we have legal means of addressing that and keeping the supply going as we focus on solving the commercial needs.

“But we have to solve (the legal issues),” Fields added. “And we have to solve them in a manner where we have resolution, and not let this thing linger.”

The Navistar 6.4L diesels are used in ’08 Ford Super Duty F-Series pickups.