The joint venture announced this week by Navistar International Corp. and Ford Motor Company to produce and market medium-duty trucks couldn’t come at a better time, according to a leading industry analyst.
“They are taking an excellent opportunity while there is a lull in the [economic] action to prepare themselves for what will be a dramatic increase in truck traffic going into next year,” said Peter Toja, president of New York-based Economic Planning Associates.
“The [overall] economy is too dynamic to stay with the malaise we have felt in the last six to nine months,” he stated. “Starting at the tail end of this year and going into 2002 things will begin picking up,” Toja said. “From the second half of ’02 through ’06, there will be a steady upward trend in both TL and LTL freight.”
And that, according to Toja, means equipment demand will rise. “Navistar and Ford will have to iron out what they will produce,” he said. “But this economy will beg for more equipment to move goods—and move them efficiently.”
Once the economy does shake its doldrums, Toja expects demand to specifically pick up for heavier vehicles to move intermodal freight as well as for smaller trucks to handle intercity and home deliveries. “LTL and package-delivery companies will do extremely well,” he noted. “They will need more equipment over the next five to ten years.”
According to a statement released by the OEMs, Ford and Navistar have officially formed a 50-50 joint venture—dubbed Blue Diamond Truck Co. LLC—to build commercial trucks for both companies to market. The new operation will also provide truck and diesel engine service parts to Ford and International as well as “explore other advanced diesel engine opportunities.”
The OEMs said the venture will first build Class 6 and 7 medium trucks at a Navistar plant in Escobedo, Mexico. The trucks will be marketed separately under the Ford name and Navistar's International nameplate. The truck builders said that in the future Blue Diamond will expand its range to include Class 3-5 trucks. No mention was made of Class 8 trucks—now or in the future.