Navistar, Ford end bitter conflict

CHICAGO — Ford and Navistar International announced they have reached an agreement to pull the plug on their ongoing engine business relationship and settle all existing litigation between the companies.

As a result of the agreement, the companies will end their current diesel engine supply agreement effective Dec. 31, 2009.

However, the companies will continue to collaborate on a range of initiatives, including their existing Blue Diamond Truck and Parts joint ventures. Navistar will acquire additional equity in the Blue Diamond joint ventures, which will continue to offer dealers and customers F-650 and F-750 medium-duty trucks, as well as parts support for a variety of Ford products, including Ford’s PowerStroke Diesel-equipped trucks.

Ford and Navistar also will continue their diesel engine supply relationship in South America. As a result of the agreement, Ford will make an undisclosed payment to Navistar.

"Navistar and Ford benefited 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."

The relationship between the two companies has been rocky for some time. Navistar had filed a lawsuit against Ford for violating the diesel engine contract in which Ford promised that Navistar would be Ford’s primary manufacturer and supplier of V-6 and V-8 diesel engines in North America, including diesel engines for Ford’s F-150 pickup trucks.

In 2007, Ford counter sued over engine pricing and warranty claims on Power Stroke diesel engines.