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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