Court Orders Navistar to Resume Ford Diesel Engine Deliveries

Hearing on supply-terms dispute set for March 7

March 2, 2007 — A Michigan court has directed Navistar International Corp. to resume delivery of the Power Stroke diesel engine it builds and supplies to Ford Motor Co. Production of the engines was halted late in February — a result of a simmering dispute between Navistar and Ford over the supply terms for the engines.

“We have a great engine that has been met with very positive initial reviews from customers, Ford dealers, and media, and we are anxious for it to get out into the marketplace,” stated Jack Allen, president of Navistar's International Truck & Engine group.

Production of the Power Stroke 6.4L diesel engines — which Ford installs in its F-250, F-350, and F-450 Super Duty pick-ups, and which meet U.S. EPA's 2007 emissions standards — had been halted at International Truck & Engine plants in Indianapolis and Huntsville, AL.

When it announced the halt in deliveries, Navistar charged that Ford had stopped honoring the terms of their supply agreement. Earlier, Ford had sued Navistar for failing to comply with their agreement on warranty costs, and for increasing engine prices without cause.

On learning Navistar would suspend the deliveries, Ford initially stated it had sufficient inventory of the engines to meet near-term production needs. Soon, however, it was preparing to curtail production of its heavy-duty pick-ups.

Judge John McDonald of Michigan's Oakland County Circuit Court issued a temporary restraining order that requires Navistar to resume the deliveries and Ford to pay in full for all the engines it receives from Navistar, according to the original terms of the supply agreement.

A hearing on the dispute is set for March 7.

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