Friday, 24 February 2017

Troy Clarke now in a position to wield power

Troy Clarke has his firmly under the table at Navistar International Corporation where he now becomes chairman of the board of directors as well as chief executive officer.
As well as possibly saving a salary, the move effectively gives Clarke more power ahead of two key executives arriving from Germany in the near term following the decision by Volkswagen AG to take a 16 per cent stake in the original equipment manufacturer.
For a short time, the two German newcomers will be ‘new boys’, unfamiliar with North American corporate routines, however much ‘reading up’ they might have done or spent hours poring over columns of figures, and ever mindful that last November VW announced a     programme to shed 7,000 jobs in Latin America. So, in this respect, Clarke will have the ‘whip hand’ until the newcomers feel their way around the North American truck corporation. It will be up to Clarke to take advantage of this lull before the serious work begins. Certainly, having seen VW Group's latest bunch of financial figues. Clarke will know that he has hooked onto a financial sound company. He knows he can't do better than that. Hooking onto a 'dud' company would be the death knell for Navistar.
Clarke succeeds James Keyes as chairman. Keyes previously announced his plans to retire and stepped down On Valentine's Day, 14 February 2017 at Navistar's annual shareholders’ meeting.
Clarke had been a member of the board and chief executive officer since 2013. Director Stanley McChrystal, a retired Army general, also was promoted to lead the position of independent director of the 10-member board.
Composition of the board will change further when Volkswagen AG formerly completes the acquisition of its large minority share of Navistar. A company spokeswoman said VW will secure two seats, making it a 12-member board. The VW deal was announced in September and is expected to be closed in days or weeks.
Of course, all eyes will be on what moves are made by the 'new' board in 2017 and 2018, especially in the context of Volkswagen do Brasil, which makes VW heavy-duty trucks. The board members could signal a new direction for the one-time ailing company. The main question will be the part, if any, that Volkswagen plays in revitalising the North American engine and truck and bus maker and the interaction, if any, between Navistar's South American operations and those of Volkswagen in the same region.
Long term, it is hard to see Volkswagen NOT increasing its stake in Navistar from a lowly 16 per cent; why otherwise bother with the investment in the first place (with all the attendant paper-work) and the deployment of two senior executives stateside?
Whether Volkswagen has revealed its hand beforehand to Navistar's board of directors, or instead adopted a poker-faced stance with the aim of playing the 'long game' remains to be seen. Despite a serious glitch over its attitude towards US passenger car diesel emissions regulations, the German car, van and truck maker is a shrewd operator and possibly more worldly-wise than Navistar which, to all. Intents and purposes, has operated only in North and South America.
Added to which, Navistar's diesel technology power base cannot be put on the same footing as that of the Wolfsburg-based company, otherwise why would the North American company make the serious mistake that it did in respect of the adoption of EGR-only for heavy commercial vehicle diesel engines. Clarke has had to go cap-in-hand to Cummins Inc. to recue his truck business. Volkswagen will not be too happy that the Columbus, Indiana company has such a pivotal position in a business it now part owns. The sooner that Volkswagen executives can muscle Cummins out of the back door and substitute its own engines the happier it will be, no doubt.
For his part, the next couple of years will be interesting for Clarke. By now, during his tenure he will probably have gotten a real handle of Navistar's operations, understanding its weak points and its strengths, if any. He will, no doubt, be wily enough to single out what he needs most from the German company without getting too drawn into being overly dictated by it.

His vision may be of a jointly-owned (50-50) business as a means of avoiding the pitfalls that brought Navistar International nearly to its knees. Clarke too will need to take on the role of a poker player, keeping his cards close to his chest. For it may be that Volkswagen (with MAN and Scania in its stable) has its eyes on joining Daimler (Freightliner), Paccar (Daf) and Volvo (Mack) at the top table of North American heavy-duty truck makers, using Navistar as its footstool. In which case, there is a price to be paid for that!

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