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Ford Engines Subject to Potential Class-Action Suits

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On: Mon, Dec 27, 2010 at 3:00PM | By: Sherry Christiansen

Ford Engines Subject to Potential Class-Action Suits

Just because you are buying an American-made truck from Ford Motor Company, doesn’t always mean that everything in that truck was made directly by Ford. Many parts in the average truck or car are manufactured by outside companies. These parts are then shipped to the Ford assembly plants for the construction of your car. Take, for instance, some of the truck engines found in Ford vehicles. These engines were actually built by the Navistar International Corporation, and are now the subject of a potential class action lawsuit citing “design and manufacturing defects.”

Because Navistar is a publically traded company, it has to disclose all sorts of information in quarterly filing reports. The last such report stated that Brandon Burns sued the engine manufacturer last month in California. Four other similar lawsuits were generated in Utah, Arkansas, Tennessee, and Mississippi. The suits are singling out the Navistar 6-liter power stroke engines for the 2003 through 2007 models. If these five lawsuits are granted class action status then this will enable several hundred plaintiffs to join in on the action.

Whether it is related or not, Navistar also reported in the same filing that their profits for the quarter dipped to $39 million, which translates to .54 cents a share dividend. This is a drop from last year’s earnings which yielded $1.19 per share. On the upside, sales for Navistar ticked up 2.6% to a total of $3.37 billion. How do you explain the discrepancy between profits going down, but sales going up?

“The stock’s had a great run so it’s not unusual to see a little profit taking,” said Stephan Volkmann, who crunches numbers for Jefferies & Co. in New York.

Navistar should not be confused with OnStar: these are two completely separate entities. Navistar describes their company like this: “Navistar International Corp. is a holding company whose individual units provide integrated and best-in-class transportation solutions. Based in Warrenville, Ill., the company produces International brand commercial trucks, mid-range diesel engines, and IC brand school buses, and Workhorse brand chassis for motor homes and step vans. It is a private-label designer and manufacturer of diesel engines for the pickup truck, van, and SUV markets. The company also provides truck and diesel engine parts and service. A wholly owned subsidiary offers financing services.”

Navistar has been in business for over 175 years. They started out as the International Harvester company founded by Cyrus McCormick, inventor of the first mechanical reaper. This single invention is credited with “liberating the American farmer.” Today Navistar sells its parts and engines all around the world.


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