If it weren't for bad luck, Ford would have no luck at all. The single largest profit-source for Ford Motor Company would be the F-Series Pickup and the Power Sroke diesel Super Duty is a huge chunk of that revenue. Navistar International Engines has powered the Super Duty since 1979, which makes them a large component of Ford's success in the market. The good Karma between Ford and International started to go sour with the quality issues surrounding the 6.0L Power Stroke diesel in the last generation of Super Duty trucks. Relations got worse when Ford recently sued International, saying it was not complying with warranty cost-sharing agreements. Ford also contended that International unjustifiably raised prices on its engines. Now International has decided to stop supplying the all-new 6.4L engine that powers the 2008 Super Duty, claiming that Ford is not honoring the contract terms under which the engines are built.
Navistar has given no indication how long this impasse could last, but every second a Super Duty isn't being assembled by Ford workers is money down the drain. With the cash problems Ford already has, this could get ugly quick. We're guessing Ford doesn't have much choice but to kiss and make up with International in order to keep these too-important Power Stroke Super Duty trucks rolling off the assembly line.
[Source: Yahoo]
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Reader Comments (Page 1 of 2)
akintz @ Feb 26th 2007 2:28PM
Maybe International sees the power they have over Ford in this and Ford's dependence on them and might be intentionally twisting that knife a little bit?
fordman @ Feb 26th 2007 2:32PM
Im sorry but there is no reason why Ford should be getting Diesel engines from Navistar. They have had 26 years to make an inhouse one. Just because RAM does it (Cummings) doesn't mean Ford should. It costs roughly 100,000,000 max to desing an engine and manuafacture it. With revenues of 175 billion times 25 years, they should have had two diesels by now. A 4.0 liter and a 6.0 liter.
KT @ Feb 26th 2007 2:41PM
Wow...kick'em while their down Navistar. They know how important this is to Ford and they decide to take the UAW route to getting their way. This is basically blackmail.
That One Person @ Feb 26th 2007 2:44PM
#2...Wait, so it's OK for Dodge and GM to get diesels from outside sources but bad for Ford? Also, Ford had it's hand in the designing of the engine. They just get someone else to build it. It's not any different than Chevy buying Allison transmissions. And what about Dodge's and GM's heavy duty vehicles? They get diesels from International, Cat and Cummins. Did you know Ford uses Cummins' diesels?? Dodge and GM had a few decades to design and build their own diesels...so why arent they doing that???
Ford has some time to fix this problem. They have a stockpile of 6.4s so it shouldnt hurt production...at the moment.
C. McFeeny @ Feb 26th 2007 3:01PM
5 - The hybrid technology Ford uses is obtained via a licensing agreement with Toyota.
shawn @ Feb 26th 2007 3:06PM
How friggin' out of touch do you have to be to think Ford's hybrid technology is from Toyota? It's been discussed to death not just here but everywhere. It is a myth. Ford & Toyota traded patents for a couple of things, but Ford's system is developed by Ford.
There's also the rumored hydraulic hybrid system used for heavy trucks, but I believe it has been abandoned.
Hamud @ Feb 26th 2007 3:17PM
You can never rely on one supplier only, that's pretty dangerous. Guess they learned it by the worst possible way...
Nellydesign @ Feb 26th 2007 3:54PM
This is standard practice 8. Car companies (and most others I would bet) don't get multiple suppliers to supply the same exact part, especially not in the case of things like entire engines. The companies bid for the contract to build said part and then they have exclusive rights to doing so. The suppliers won't just share production with someone else because its "safer".
icetraxx @ Feb 26th 2007 4:25PM
#4 Your argument is highly flawed as GM uses Allison transmissions because GM owns Allison. GM also uses the Duramax diesel engine, which was developed by a joint venture between GM and Isuzu and manufactured by GM (in North America) and Isuzu (in Japan).
Robert @ Feb 26th 2007 4:35PM
Many manufacturers rely on a single supplier for even critical parts.
Ford's hybrid technology was not bought from Toyota.
The engine being used is a Navistar block, but the piezo-electric injectors, the upgraded heads, the new emissions system - most of the real technology is Ford developed.
There are huge benefits to spreading the risk of developing expensive engine technologies (and other technologies, even Toyota does this).
Navistar has as much, or more, to loose from this than Ford. Ford could lose $11.6 billion in revenue and probably $2-3 billion in profit - ie, $2-3 billion in cash. Granted, Ford cannot take too much downtime, but with $34 billion in cash on hand, they can absorb some impact assuming their other product lines continue to get better. Navistar, however, has been in their own downward spiral and were in danger of defaulting on debt. Navistar is also being threatened with delisting for failing to file financial statements. Ford represents a massive part of their revenue (like 30% or more, I thought - 30% of Ford is $53 billion, not $11.6 billion). Things are not right over there. This move, if it were permanent would endanger Ford but would destroy Navistar.
I think this whole thing is pandering, but, ultimately, if Navistar agreed to help with warranty claims, then they need to pay. If Ford has violated terms of the current agreement, then Navistar was right to cut them off. That's why contracts are written. However, contrary to popular belief, I feel Ford actually has more leverage here than Navistar.
Anthony @ Feb 26th 2007 4:36PM
HAHA
Motor Trend (with the most pro-domestic bias of the main 4 magazines) just rated the Ford Edge last place! A freaking Nissan Murano dating to 2003 did better along with the outgoing Highlander. Car and Driver called the Edge overweight as well. Automobile Magazine called it an unfinished design.
HAHA, Ford Edge what a joke.
http://www.motortrend.com/roadtests/suvs/112_0703_crossover_suv_comparison/performance.html
MikeW @ Feb 26th 2007 5:19PM
Maybe Ford will find something better than the serial turbocharger arrangement.
There isn't anything sequential about it, all the exhaust flows through the small 'variable geometry' turbo first then the larger turbo second.
All the air flows from the filter to the large turbo, then to the small turbo, then to the aftercooler, then to the engine.
Lithous @ Feb 26th 2007 5:21PM
"It's been discussed to death not just here but everywhere. It is a myth. Ford & Toyota traded patents for a couple of things, but Ford's system is developed by Ford."
shawn, I had heard Ford is using Toyota's system because as Ford started developing their system they kept running into Toyota patents. Maybe everyone is a bit right. You claim they "traded" patents and Toyota seems to claim that Ford is using Toyota technology but not the other way around: Toyota and Ford have entered into a licensing agreement allowing Ford to use technology that had been patented by Toyota. (source http://www.toyota.com/about/environment/technology/2004/hybrid.html)
Also, Aisin AW actually builds the system for Ford in Japan and Aisin AW is 51.9% owned by Toyota so it could easily bee seen how the Ford (Volvo more specifically) may add to the system Ford usees but there is a heavy Toyota influence (licensing and production) in their hybrid design and production.
Aisin conveniently had problems keeping up with Ford's demand for hybrids at one point. Could the parent company have been playing games? Anyway, Toyota still has some controll there over Ford's hybrid system it looks like. Though GM did put some of its hybrid destiny in DCX and BMW hands because I'm sure they share patents in their joint development. Maybe GM and Ford should have gotten together when or before they started to collaberate on 6-speeds.
Bob R. @ Feb 26th 2007 5:42PM
Anthony, what the hell was the point of that? That did absolutely nothing and does not relate to this topic. Besides, who really cares if the Edge came last. The Toyota Camry NEVER wins any comparison tests, yet it is the best selling car. Let the consumers decide which cars, and I bet that the Edge will out sell the Santa Fe and (maybe) Murano.
Anyways, I heard that Ford is designing the small diesel that will go into the F-150 and Expedition in house. Maybe the 6.4 will be now manufactured by Ford after this incident??
Bob R. @ Feb 26th 2007 5:47PM
I forgot, the Camry SE V-6 won a MT comparison against a Nissan Altima and 2 others. I forget the other two cars though. No Accord was there.
BTW, I would say C&D is the most "pro-domestic" car magazine.
The Dearborn Observer @ Feb 26th 2007 5:56PM
I didn't work on the program, but in the 2002-04 timeframe, Ford engine engineering studied the idea of doing a new HD Diesel engine in-house in response to issues that had already surfaced internally with Navastar. As mentioned by fordman in post #2 above Ford already had the technical capabilitiy (there was a point in time where there was a product plan that if fully executed would make Ford the worlds largest Diesel manufacturer), and the investment monies were available though the initial estimates were above the targets that were set by Ford finance (who had never D&R'd a component in their lives). Ford Senior Management decided to stick with Navistar. The rest is history as described in the main article. Consistant with past management pratice, the decision makers will not be held accountable other than you might see a slew of retirements with fat severence packages.
The principal of warranty sharing is something that the Japaniese manufacturers have been using with their suppliers for 30+ years, but had never been pushed hard by American manufacturers until the past few years.
And people wonder why Ford under the leadership of J Nassar/B Ford/M Fields is on the American road to bankrupcy?
J @ Feb 26th 2007 7:13PM
Maybe Ford will stop messing around with Navistar and start building there own CGI diesel.
http://rovering.squarespace.com/journal/2006/1/26/ford-casting-first-cgi-parts-in-house.html
Barney @ Feb 26th 2007 7:29PM
I was actualy surprised when (International) Navistar began making engines for non commercial vehicles. Their expertise was medium & heavy duty applications. Cummins & Cat had made engines for Ford but at Ford's own specifications. Pethaps Navistar will stray away from these type of engines again.
AARON @ Feb 26th 2007 7:35PM
all i know is that we are never buying another ford diesel again, we constantly have our 6.0's in for injectors/head gasket problems. At one point half our fleet was at the dealer getting 60.0 hr head gasket jobs done under warranty. absolute garbage.
FordMatt21 @ Feb 26th 2007 7:38PM
anthony-
althought your comments about the edge were completely off topic i would like to respond to your charges against the edge. if you had actually read the article you would have seen that the highlander has the worst in test handling along with "rubber-band-like steering." and although it is overweight it still was in the top 2 for just about every acceleration test. also the highlander and sante fe are smaller than the edge giving it a disadvantage. i'm not saying its perfect, just that there are some things the MT liked about it.
i'm done now. as for the engine problem this is the last thing ford needs.