By Kathleen McLaughlin, The IBJ
kmclaughlin@ibj.com
Navistar International Corp.'s decision to close its east-side manufacturing campus on July 31 will end a 70-year tradition of Indianapolis-made engines that began when the plant opened in 1938 as International Harvester.
As many as 700 people will be out of work because Navistar lost its contract with Ford Motor Co. to produce diesel engines for the F-series pickup truck, a relationship that goes back to 1979.
United Auto Workers officials representing roughly 500 foundry workers, a bare-bones assembly line, plus clerical and technical staff, spent the morning in meetings and were unavailable to comment on today's announcement.
As recently as 2005, the 1.1 million square-foot Brookville Road plant seemed poised for long-term growth after weathering a major downsizing in the 1980s, when International Harvester got out of the agricultural business.
Illinois-based Navistar, which called itself International Truck and Engine Corp. until last year, had invested $300 million to comply with federal environmental standards for diesel engines.
With the Ford contract - and increasing demand for diesel-powered pickup trucks - Navistar's operations were going strong. In 2005, the company had 1,100 union workers on its assembly line and another 550 at its adjacent foundry, Indianapolis Casting Corp.
The outlook changed in January 2007, when Ford sued Navistar, complaining that its supplier wasn't sharing in warranty costs on its engines and had raised prices "without adequate explanation or support for its actions."
The dispute was finally resolved this month, but the result did not bode well for Indianapolis. Ford and Navistar said the supply contract would end Dec. 31.
UAW leaders immediately began to doubt the future of the plants. "We're just concerned," Region 3 Director Maurice "Mo" Davison said then. "That's their only customer. You kind of put two and two together here."
While executives were wrangling in court, demand for pickup trucks plummeted. In May 2008, Navistar laid off about 500 local assembly workers because of low demand. Spokesman Roy Wiley said layoffs in Indianapolis totaled about 1,000 for the year.
While the assembly line still employs about 100 people, Wiley said it has not produced a single engine since May.
The foundry unit, Indianapolis Casting Corp., has been somewhat insulated by the ups and downs because it had work for customers other than Ford. The bulk of the 700 people whose work will end on July 31 are from the foundry.
Wiley said the company would provide severance packages, based on seniority, but he could not provide details.