.. is considered an innovator in its field. It has the leading edge on new product development in an ever-changing transportation industry. It has set standards for alternative fuels, next generation transportation power, new alloys, new product safety design, and other emerging technology. Job opportunities were listed on Blue Bird’s web site.
A Senior Planner and a Programmer/Analyst are two that were mentioned. They work a four-day workweek, forty hours Monday through Thursday. Experience in material requirement planning, E-business application, inventory reduction, vendor delivery, lean manufacturing experience and Just in Time (JIT), as well as supervisory experience are among the requirements for the Senior Planner job. The jobs offered have competitive salaries commensurate with experience and excellent fringe benefits. Navistar International is very concerned about the health and safety of its employees. They have opened clinics in several of their plants. In an engine plant in Melrose Park, Illinois, the clinic gives free prostate exams.
Three cases of prostate cancer were found in 1999 early enough to start immediate treatment. In their largest assembly plant in Springfield, Ohio, they have made successful progress in managing long term disability cases. The medical staff through physical therapy, weight training, diet, and behavior modification helped one individual who had been out of work for ten years, to return to work. There were a total of eleven that went back to work with this program. Navistar helps the National PTA with a safety campaign.
It is called “Be Cool. Follow the Rules.” These life-saving materials are distributed to students and parents. Their main focus seems to be on their suppliers. They are involved with COMPASS. This is the COst Management PArtners Sharing Savings program. This program is used to reduce cost and improve relations between International Truck and Engine Company and its suppliers through mutual trust. Some of the rules and guidelines are shared savings (default 50/50), $5,000 credit for elimination of part numbers, focus on “bottom line” savings, etc. International expects suppliers to continue to improve their product, processes, service, and on-time delivery with zero defects.
Their customers can expect quality products and services at the lowest total cost, new programs to exceed their expectations, and improvement in their supply base capability and performance. They provide their employees with an environment in which they can do well. By meeting or exceeding International’s expectations, a company can become a potential diversified supplier. They try to reach a minimum of five percent spending goal with minority businesses, women-owned businesses, and small businesses. International feels that since population demographics are gradually changing they need to work with minority and women-owned companies. This offers more earning power for diverse consumers and increased sales for corporations.
Financial Resources and Markets The bus industry requires substantial set-up and entry costs. Due to these high costs the general entry strategy is through acquisition. All three of the highlighted companies have gained entry into this market with this strategy. Current trends indicated that this market has growth potential. This is due to several factors: 1.
Environmental concerns 2. Guaranteed funding through Federal/State and local governments 3. New technology developments 4. New laws pertaining to safety Those firms already established will have a leading edge in this market. There is intense competition for the contracts to supply buses across the country. The need to replace older models will ensure continued growth.
As mentioned earlier, Henlys is a newcomer to the North American bus market. Their acquisition of Blue Bird gave them a lion’s share of the current market. It has also been the company’s saving grace. Blue Birds profits have given Henlys a substantial advantage over Navistar and Collins. Navistar’s engine division accounts for over 32% of total revenue, up 8% from last year.
The engine division is becoming a major core competency for Navistar and may eventually support the truck division. This emphasis on the engine division is part of a current strategy to dominate the diesel engine sector, which has a major impact on the bus industry. Collins current sales have decreased by 15%. This is mainly due to decreases in the bus and ambulance divisions. The main factor contributing to this decline was a decrease in winter orders and chassis shortages due to plant shutdowns at both Ford and GM.
This also led to an increase in cost of sales of 89% versus 85% for the same period in 2000. The following chart shows current industry standards for various ratios: FINANCIAL STRENGTH PROFITABILITY RATIOS (%) Quick Ratio 1.16 Net profit margin 2.59 Current Ratio 1.58 Gross Margin 19.12 Total Debt to Equity 4.37 Operating Margin 4.21 MANAGEMENT EFFECTIVENESS (%) EFFICIENCY Return on Assets 1.93 Asset Turnover 0.75 Return on Investment 3.9 Inventory Turnover 12.6 Return on Equity 13.61 Receivable Turnover 2.38 Both Navistar and Collins currently fall below the industry averages. Henlys is doing well in the Financial Strength and Profitability ratios, however, due to a poor showing in their other divisions they do not quite meet the other industry standards. Technology and Scientific Developments In the bus industry, technology plays a major role in helping companies compete with one another to develop new products for an ever-changing market. Today we rely on buses to transport children back and forth to school and to provide mass transit in metropolitan areas.
Diesel Technology is what makes this all possible. Over ninety-five percent of our nation’s full-sized transit buses are powered by diesel fuel. Approximately sixty percent of the students in the U. S. travel to and from school on diesel powered buses.
Buses account for only six percent of passenger miles but are a service to twenty-seven percent of our nations total passengers. In this industry, technology is one of the three major core competencies with the other two being price and quality. The development of a bus with new features that make it more efficient while at the same time being more environmentally friendly will be the ideal product for this market and will have a strategic competitive advantage in this industry. Recently in the state of California there have been growing concerns of how diesel fuel is effecting the environment. This concern has led to state legislation to either heavily restrict or ban the use of diesel fuel completely. They believe that diesel use pollutes the air and destroys the environment.
Only through the use of technology can a company develop a more environmentally sound product, that will ease concerns and at the same time maintain a high quality and efficient product. The first company to develop this product will have a clear advantage over the rest of the industry. Navistar International has developed Green Diesel Technology as a new way to be more efficient while reducing harmful emissions that pollute the environment. Green Diesel Technology utilizes the benefits of a catalyzed particulate filter and low-sulfur fuel in combination with an exclusive International engine performance design that significantly lowers the emission output and odor of diesel-powered buses. It virtually eliminates gaseous hydrocarbons and reduces particulates fifty percent below levels achieved by natural gas engines at a cost far below that of a natural gas vehicle.
Navistar International announced in May 2000 that they expect it to be available by the middle of 2001 to customers in California and in any other locations where diesel fuel with sufficiently reduced sulfur content is available. The Henly’s Corporation makes its buses through their Nova Bus subsidiary. Nova is currently trying to develop new technology called the Hybrid-Electric Drive Transit Bus. This bus will have two rotary CNG engines as an auxiliary pipe fiber-optic vehicle management system, and an independent semi-suspension. This bus will be energy efficient as well as environmentally safe. Nova has also developed the world’s first commercial hythane-fuelled prototype. Two are currently being tested on regular routes to determine what maintenance problems exist, how efficient is the fuel, and whether or not this type of fuel pollutes the air.
Due to the different combustion characteristics of hydrogen, the use of hythane results in a forty-three percent reduction in nitrogen oxide emissions compared to natural gas emissions. Hythane fuelled engines are four times cleaner than standard clean diesel engines. With new technological developments like these, the bus industry will be changing at a rapid pace and only those companies who can adjust quickly to change will survive. Current and future technological breakthroughs will create a bus that is cleaner, more efficient, and safer for the environment and its passengers. Strategic Option Due to the current environmental climate, Navistar International is best situated to make an effective strategic move. Navistar uses the SBU form of the Multidivisional corporate structure by dividing operations within three industry segments: truck, engine and financial. By operating separate divisions they are able to concentrate more effectively within the unit itself.
The development of their diesel engine division through joint ventures with Ford, Siemens Diesel Systems Technology LLC and the acquisition of Maxion International Motors in South America, Navistar is positioned to take a strategic lead in the development and implementation of clean air technology for diesel engines. Navistar made the following moves in order to gain this strategic advantage over Henlys and Collins Industries. In March 1999, Navistar finalized a joint venture with Brazil’s largest diesel engine producer and a joint venture with Siemens Automotive was also finalized. This venture will launch the development of “next generation” diesel engines. In April of the same year, they started construction on a new facility in Alabama that will produce these new engines. June 1999, Navistar demonstrated its Green Diesel Technology in response to the EPA’s new proposed emissions standards.
In December 1999, Navistar announced the expansion of its school bus operations, which includes the production of a new integrated bus model and the opening of a new facility in Oklahoma. April 2000, Navistar introduced its new camless diesel engine which analysts see as the answer to the change in emissions standards while still improving performance. In May 2000, The Green Diesel Technology demonstrated in 1999 is now available on current bus models. This engine technology provides power and economic value while providing clean air benefits once thought possible only with alternative fuels. July 2000, Navistar Internationals operating company, International Truck and Engine Corporation, announced that it is placing its engine group into its own subsidiary. This will allow the Engine section of Navistar to develop its growing role in overall operations. Three months later International Engine Corporation initiated a joint venture with Siemens Automotive Corp, called Siemens Diesel Systems Technology LLC.
In January 2001, Navistar completed the acquisition of their former joint venture partner, Maxion International Motors. And most recently, Navistar announced a joint venture with Ford Motor Company to build commercial trucks. This venture is also expected to lead to further applications to the small truck market, diesel engine production. Over the past year and a half Navistar has made its engine division a core product that will support and move its truck/bus division into the future. The current emphasis on environmentally friendly products has made it important for companies to develop the technology that will meet this need.
Navistar has been the leader in developing engines and clean air technology that will still meet the needs of all its customers. Although Henlys currently has a large part of the bus market, the environmental and safety issues will play a significant role in whether or not they will maintain their 47% share of the market. Navistar is well positioned to meet these strategic challenges and if they continue on their current path they will make major gains within the market. Business Reports.