Navistar CEO Ousted As Board Hires Former Textron Boss

On August 28 Navistar International’s Board of Directors named Lewis B. Campbell, the former Chief Executive of Textron, to replace CEO Daniel C. Ustian, who retired abruptly after a failed strategy left the company fighting for survival. The board also promoted Troy A. Clarke, President of Truck and Engine Operations at Navistar, to President and Chief Operating Officer.

In a press release, the company said Ustian had informed the board that he is retiring as Chairman, President, and CEO, effective immediately. Ustian also stepped down from the Board of Directors. A search for a long-term CEO will come "at the appropriate time," said Navistar’s Independent Lead Director, Michael N. Hammes.

Campbell is stepping into a difficult rescue mission. Navistar got into severe financial distress earlier this year after Ustian’s decision to break with the rest of the industry to pursue a diesel emissions technology that ultimately failed. Now Navistar must retool its entire product lineup to accept the more conventional technology used by its competitors, a challenge that is both costly and time-consuming.

Navistar’s pretax loss in the first half of 2012 was $516 million on revenues of $6.4 billion as new truck sales stalled out and quality problems on its earlier engines required Navistar to boost its warranty reserves by $227 million. Navistar shares have been punished, down more than fifty percent in the last twelve months, and it faces an investigation by the Securities & Exchange Commission.

Earlier this month, the company secured $1 billion in new financing to help it through the transition. But Navistar suffered another blow when it learned it had been shut out of a lucrative contract to develop the next-generation Humvee combat vehicle.

Campbell, 66, led Textron Inc., an industrial company about the same size as Navistar, from 1994 until 2009. He stayed on as Chairman for another year. Under his leadership, Textron underwent a significant transformation to boost efficiency, consolidate factories, sell non-core operations, and increase new product development. Campbell initially joined Textron as Chief Operating Officer in 1992. Prior to joining Textron, Campbell spent twenty-four years at General Motors Co., where Clarke was also a longtime executive. Campbell holds a B.S. in mechanical engineering from Duke University.

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