EsTruck maker Navistar has faced multiple challenges from COVID-19 including reduced demand for trucks due to reduced trade volumes and supply chain complications. The firm’s CEO, Troy Clarke, has nonetheless noted that as “an essential industry, we had the ability to run our plants during the quarter. We were moderately successful in keeping our plants open and producing“. The firm has been able to maintain the flow of components too as “we developed processes and procedures to track and engage the supply base during industry shortages experienced in 2018”.
Like competitor Paccar, Navistar will also have to navigate the shifts in supply chain planning needed for the forthcoming new U.S.-Mexico-Canada Agreement rules of origin from July 1, as outlined in Panjiva’s research of May 27. Navistar will also be reviewing its supply chain in the event that a takeover by major shareholder and fellow truck-maker Traton – owned by Volkswagen – is completed.
Panjiva’s data for U.S. imports by sea and from Mexico shows that Navistar may have been able to mitigate but not completely remove the downturn in its parts supplies in April and May. Imports by sea fell by 58.2% year over year in May, reflecting a 75.0% slump in shipments from India while shipments from China declined by a more modest 11.1%.
In April imports by sea fell by 18.4% but those from Mexico fell by 54.5%. The latter may reflect a more secular effect given there had been a downturn in the period two quarters too.
Source: Panjiva
Navistar’s cross-border supply chain will also mean that the re-opening of its Mexican operations will depend on the opening of its U.S. suppliers as well as those from overseas. Imports of parts to Mexico linked to Navistar fell by 31.7% year over year in April, accelerating from a 16.1% decline in Q1. Among key components, imports of brakes and suspension systems fell fastest with declines of 45.9% and 59.1% respectively.
Powertrain elements including engines and transmissions dropped by 37.5% and 22.3% each while body components fell by a more modest 14.8% but had been in a downturn since the end of 2018.
Source: Panjiva
