We made the tough decisions, put restructuring costs behind us, and we are embarking on a new way of doing business – one that will enable us to win in the future.
Our engine group has grown from a captive internal supplier to our truck group into a major supplier to Ford and the leader in clean, quiet and odorless diesel technology for a wide range of trucks, vans and SUVs. This year, we delivered a business solution for our customers, International’s Green Diesel Technology
™, that provides the benefits of diesel’s power, torque and durability while it also helps solve the emissions issues surrounding global warming.
We have implemented this technology for select truck customers, and will launch a Green Diesel Technology bus in mid-2001 for customers who are able to take advantage of ultra-low-sulfur diesel fuel.
We demonstrated our revolutionary camless engine technology, which uses electronics to offer infinite possibilities for variable valve timing. It delivers greater durability, improved driveability, reduced weight for greater payload, and lower emissions.
Popular Science magazine confirmed these benefits when it recognized our camless technology with its “Best of What’s New” award in the automotive sector.
We also showed our leadership in manufacturing technology when we designed new flexible truck manufacturing facilities so that in the future, we can replace all the tooling and cab assembly equipment without having to build additional plants.
We made great progress on our assembly and cab fabrication plant in Springfield and started work on our new integrated conventional school bus facility in Tulsa, Oklahoma. These and our engine plants support a focused manufacturing approach that zeroes in on customer needs. Our fuel-injection joint venture with Siemens dedicated its new facility in Richland County, South Carolina, and we worked toward completion of our new V-6 engine plant in Huntsville, Alabama. All these investments will pay off in improved productivity, enhanced scale, and new products that we expect will capture increased market share.
We are also on track to unveil the industry’s first High Performance truck in February 2001. It’s the biggest newproduct introduction in our last 25 years, and radically different from anything else on the market.
This medium truck, and the other new models that follow it, will deliver value because they are designed and built to support specific needs of the customer’s business. Customers can bank on the highest uptime, the lowest operating and maintenance costs, and the highest resale value. Dealers who have driven the High Performance truck give it rave reviews.
The High Performance truck also represents a new way to develop and manufacture products, now and going forward. We have cast off the “menu” approach in favor of International vehicles that are engineered to achieve a superb balance of power, ride and comfort.
As we roll out new products across all of our vehicle series in an aggressive timeframe, we will lead the industry and set the stage for continuous innovation. We have left behind the era of incremental change. Our products’ life cycles will be measured in years, not decades, and will derive directly from our laserlike focus on customer needs.
We also have revolutionized our bus business based on this customer focus. A year ago, International was the leading school bus chassis manufacturer. In 2000, we stepped beyond that. We used the input of more than 1,500 bus drivers, mechanics, fleet supervisors and school administrators to create the International integrated conventional bus. This premium conventional product integrates the chassis and bus body; makes the manufacturing process more efficient; and provides greater uptime, ease of serviceability and affordability for our customers. With our new integrated conventional bus, which will be in full production in Tulsa in August, we will be leading the industry in a new way of doing business in a new plant with new processes.
Our truck and engine parts business, including sales of other OEM engine parts, grew to more than $1 billion in 2000, and set the stage for even greater growth. This business has grown by more than 30 percent over the past four years. We signed our first new supplier partnership in a decade when we added Eaton Corporation to a circle of partners that includes Goodyear, Akzo and Modine. These trusted partnerships create a strong competitive advantage for our products because we can bring them to our customers more efficiently and effectively.
Our financial services business took steps that position us well for the future. In the face of volatile financial markets, our finance services group secured new funding mechanisms that ensure our ability to support customer purchases for the next several years. We can now assure that financing will be available all the way from manufacturing, through the dealership, until the truck reaches the customer’s hands.
We collaborated with our dealer network, the best and largest in the industry, to create new dealerships that have a bold new look and that make it easy for customers to get the right truck for their business. As we finish the year, inventory levels are starting to decline. Our dealers are financially strong and in a good position to carry out their mission.
The greatest opportunities come at times of challenge. During the good times of the past few years, we have challenged our people to succeed and to invest for the future. Our people have risen to that challenge. They’ve listened to straight talk; they’ve understood our customers’ needs; and they’ve delivered the best products, the best technology and the best manufacturing to meet those needs.
As we take on the challenges of 2001, our people have shown themselves to be disciplined leaders who set aggressive goals and deliver on them. We have instituted a new way of doing business that creates more value for customers, employees and shareowners alike. And we are building a great company in the process.
John R. Horne
Chairman, President and Chief Executive Officer
December 17, 2000
