Ford and Navistar to End Diesel Engine Supply Deal

Ford and Navistar today announced a new partnership between the two companies that will restructure their ongoing business relationship, meaning that both manufacturers will concentrate on their joint ventures and the products they have to offer. Ford and Navistar formed the Blue Diamond Truck Co. LLC in 2001 when the they formed an alliance to build medium-trucks and parts including diesel engines.

As part of the agreement, Navistar will purchase additional stakes in Blue Diamond and will continue to produce F-650 and F-750 medium duty trucks plus a series of separate parts for Ford models. Even though Ford said the diesel engine supply agreement will be terminated on December 31, 2009, the partnership will continue in South America, the American automaker said in a press statement. Ford will also pay an undisclosed sum to Navistar, it was mentioned in the press release.

“Navistar and Ford benefitted from a successful partnership that provided value to both companies for nearly three decades. However, it’s in our best interests to resolve our conflict and continue our relationship with each other in other areas,” said Dan Ustian, Navistar chairman, president and chief executive officer. “The next phase of our relationship is consistent with Navistar’s strategy to diversify our customer base, while continuing to provide value to both companies through our existing joint ventures and our supply agreement in South America.”

"We are pleased to have reached an agreement with Navistar that we believe is in the best interest of both companies," said Mark Fields, Ford's president of The Americas. "This agreement comprehensively addresses our business relationship with Navistar and will help both companies focus on meeting the needs of our current and future truck customers.”

As mentioned, Ford and Navistar first signed an agreement in 2001, with the Blue Diamond Truck joint venture operating in Navistar's production facility in Escobedo, Mexico. The first products of the alliance were the 2004 Ford Super Duty F-650 and the F-750.