Navistar International Corp. appointed Lewis Campbell as its chief executive on an interim basis, replacing Daniel Ustian. The appointment came after Ustian’s diesel engine strategy failed miserably and rocked the Navistar, forcing the truck maker to withdraw its 2012 earnings forecast. According to a source privy to the matter, Navistar’s board lost confidence in Ustian and his diesel engine strategy, signalling his exit from the company.
The source told Reuters that following an independent investigation, Navistar’s board concluded that Ustian bet wrongly on a new generation of diesel engines and his technology solution would not work on trucks. Navistar announced Ustian’s exit Monday morning, but did not specify a reason for his departure. The company also announced the appointment of Campbell as interim CEO and the promotion of Troy Clarke, currently head of its truck and engine operations, as president and COO.
Campbell, who will also sit as Navistar's executive chairman, will be responsible for stabilizing the company, restoring relations with long-time suppliers, and launching the search for a permanent chief executive, the source told Reuters.
In a research note, Robert W. Baird analyst David Leiker said that naming new chairman/interim-CEO and new president removes a key sticking point from the investment decision for many investors. Leiker quipped that the challenges bringing new technology to market proved too great for Ustian. Andrew Casey, an analyst for Wells Fargo Securities, remarked that the exit of Ustian was not a surprise after the failure of the company's engine strategy. Casey said that what surprised them is that it took Navistar some time before it replaced Ustain.
Navistar had been struggling for much of 2011 to gain approval from the U.S. Environmental Protection Agency for a new diesel engine technology designed to reduce emissions of nitrogen oxide without using urea. Urea is a raw material used in the manufacture of many chemical compounds, like those used in vehicle systems.