Navistar CEO sees modest 08 rebound

By James B. Kelleher

DETROIT (Reuters) - The top executive at Navistar International Corp NAVZ.PK said on Monday that he expects industry production and sales of big trucks to rebound only modestly in 2008 after plummeting this year as a result of new U.S. environmental rules.

Dan Ustian, Navistar's chairman and chief executive, told the Reuters Auto Summit in Detroit that he sees industry production of so-called Class 8 trucks rising as much as 15 percent next year after falling about 40 percent this year when the rules -- requiring trucks to be equipped with cleaner but more expensive engines -- took effect.

Navistar shares fell 8.3 percent to $45.50 on Monday in over-the-counter Pink Sheets trading.

He said he expects industrywide sales of Class 8 trucks, meanwhile, to only rise 5 percent next year after tumbling about 35 percent in 2007.

Ustian also said that his company's legal fight with Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) over warranty costs and the price of the engines it supplies for the F-Series pickup truck wasn't likely to be resolved quickly, and said the two parties had to "find another answer outside the courtroom."

"Ford's been a partner to us for 30 years now," Ustian said. "It's been a good relationship that's a little ragged right now."

Ustian said he was confident that Navistar's negotiations to buy General Motors Corp's (GM.N: Quote, Profile, Research, Stock Buzz) medium truck business, which generates about $1.5 billion in annual sales, would likely result in a deal.

"We'd like to get that business because it is very complementary to the business we already have," he said.

But Ustian said production of those trucks would be moved out from GM's plant in Flint, Michigan and into one of Navistar's facilities, including possibly its Springfield, Ohio, plant.

Members of the United Auto Workers at three Navistar plants, including Springfield, Ohio, as well as three distribution centers and one tech center are currently on strike.

But he seemed to suggest that the production would only be moved to Springfield if negotiations with workers there led to changes that improved the plant's productivity. If the GM truck business wound up elsewhere, Ustian said, the fate of the Springfield plant was in question.

"If we don't get this," he said, "there is a risk that that facility can't be competitive."

(For summit blog: summitnotebook.reuters.com/)

(Reporting by James B. Kelleher; Editing by Jeffrey Benkoe)