Navistar says it will cease all engine production at its plant in Melrose Park, Ill., by the second quarter of next year. The company will continue the facility’s transformation into Navistar’s technical center, including truck and engine testing and validation as well as used truck sales and reconditioning, continuing the process that started in 2010.
The majority of engines produced at Melrose Park are medium-duty engines used in International Class 6 and 7 vehicles, for which alternative engine options are currently offered in all applications. Once completed, the cessation of engine manufacturing at Melrose Park is expected to affect about 170 employees and reduce Navistar’s operating costs by about $12 million annually. The company said it will take an approximate $43 million charge as a result of this action, including about $8 million of cash related charges.
“Ceasing production of engines at Melrose Park is a difficult decision, but represents another important step on our journey to strengthening the company’s competitiveness,’’ said Persio Lisboa, Navistar chief operating officer. “Our N9/10 engine family was updated in 2014 and since then has served as a competitive niche offering for specific medium-duty vehicles. As we approach future regulatory requirements, the low-volume nature of the platform could not justify further product development investments on it.’’
In 2013, Navistar reintroduced the option of a 6.7-liter Cummins engine for its Class 6 and 7 medium-duty vehicles, followed in 2016 by a 9-liter Cummins engine option.
“Ending production anywhere is a difficult decision because it affects employees,’’ Lisboa said. “We continue to be committed to investing in our Melrose Park facility as we complete its transformation into a technical center that is integral to our product design, engineering and sales teams. Given the investments we’ve made, we expect to have a significant presence in Melrose Park for years to come.’’
The transformation of the Melrose Park facility began in 2010, when the company added a truck testing and validation center at the 80-acre campus. Truck and engine testing are now being conducted at Melrose Park, in close proximity to Navistar’s product development teams in Lisle and to the company’s New Carlisle, Ind., proving ground.