Medium- and heavy-duty truck manufacturer Navistar (NYSE: NAV) announced plans to invest $125 million in new and existing facilities in Alabama. NAV plans to make the investments over the next three years.
NAV already manufactures the International brand of diesel engines at its Huntsville plant. The primary engine produced in the Huntsville facility is the A26, Navistar’s 12.4 liter big-bore engine used in its LT- and RH-Series Class 8 heavy-duty trucks as well as some vocational trucks.
“Over the last two decades, the state of Alabama has been a wonderful partner for Navistar as we have developed and produced big-bore engines and other products in the state. Today, we are excited to have the opportunity to expand our presence in Alabama, while adding to our array of next-generation products,” said Navistar’s Executive Vice President and Chief Operating Officer Persio Lisboa.
NAV believes that the new investment will provide 145 new jobs at its Huntsville facility.
Huntsville Mayor Tommy Battle commented, “Navistar has been a long-standing corporate partner in our community and we are glad to see the company continues to see Huntsville as a strategic part of their growth strategy.”
In the press release, NAV said it plans to manufacture next-generation big-bore powertrains that it has developed with its partner, TRATON, Volkswagen AG’s (U.S. OTC: VLKAF) heavy-truck unit which is set to IPO on June 28, 2019.
Volkswagen, through its TRATON subsidiary, owns approximately 16.8 percent of Navistar. The two have aligned to jointly collaborate on engine technology, the sale of engines and contract manufacturing.
On June 13, 2019, Volkswagen announced that TRATON stock will be offered for purchase by the public at a price per share range of 27 to 33 euros. Up to 15 percent of TRATON’s stock will be sold in the offering. The total offering is expected to provide Volkswagen between 1.553 and 1.898 billion euros in new capital, valuing TRATON at 13.5 to 16.5 billion euros in total.
Volkswagen is viewed by many in the industry as a suitor of NAV as it attempts to take on Volvo Group and Daimler AG in North America and China and achieve its goal of becoming “the global champion of the truck and transport services industry.”
On June 4, 2019, NAV reported a significant earnings outperformance compared to consensus estimates for the fiscal second quarter of 2019. Additionally, the company raised its revenue and earnings guidance for fiscal 2019.