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Navistar Will Sell Illinois Facility, Lay Off 250 Workers

Navistar International Corp. (NYSE: NAV) said Wednesday it will lay off 250 employees as part of a plan to close and sell its Melrose Park, Illinois, facility to an industrial park developer. Another 250 workers will transfer to other facilities.

Navistar laid off 170 employees in 2018 in Melrose Park when it stopped making engines there. The company’s need for engine testing declined as it has reduced engine manufacturing amid the trucking industry’s transition to alternative fuel drivetrains.

Under a long-term supply agreement reached in August, Cummins Inc. (NYSE: CMI) will supply medium- and heavy-duty truck and bus engines to Navistar through the next two emission cycles, or 2026.

Navistar will soon become part of TRATON Group, the commercial truck holding company of Germany’s Volkswagen AG. TRATON and Navistar reached a definitive $3.7 billion deal in November.

No longer needed

“Given changes at Navistar and in the industry, it no longer makes sense to maintain a facility of that size,” Phil Christman, Navistar president of operations, said in a press release after markets closed Wednesday. Navistar shares were unchanged at $43.97.

“Further investment in the Melrose Park property would divert substantial resources away from investments in new technologies and products,” Christman said. “While this decision is difficult, it is necessary to best position Navistar for the future and to unlock economic growth for the Melrose Park community.”

The Melrose Park campus is located about 16 miles from company headquarters in the Chicago suburb of Lisle. It is expected to be vacated by November. Navistar expects the sale and divestiture of the property to be completed by the end of 2021.

$85 million pretax charge

The company will take a pretax charge of approximately $85 million with $75 million booked in 2021. Approximately  $22 million would be for employee separation and other pension and post-retirement contractual termination benefits, with approximately $31 million for other related charges, Navistar said in a Securities and Exchange Commission filing.

“The hardest decision we can make is to part with dedicated colleagues at a property that has been integral to our company’s history,” said Persio Lisboa, Navistar president and CEO. “We’re confident the sale of the Melrose Park property will spur a sizable reinvestment in the community, resulting in new jobs and economic opportunity.”

Cummins gets long-term engine supply deal with Navistar

TRATON and Navistar reach definitive $3.7 billion merger deal

Click for more FreightWaves articles by Alan Adler.

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