NAVISTAR FIRES BACK
A few points need clarification in your otherwise excellent profile of Navistar's turnaround ("Navistar: Gunning the engines," The Corporation, Feb. 2).
First, while our partnership with Ford Motor Co. has helped make Navistar the worldwide leader in midrange diesel engines, we do not now have an agreement to supply engines for the company's Expedition model sport-utility vehicle, as the article said.
Second, in our groundbreaking agreement with the United Auto Workers, it is unfair to say that "workers folded their cards." We worked hard with the union to put together a creative deal that addresses our challenge, and more than two-thirds of voting UAW members agreed it was the right thing to do.
Finally, the article omitted information about our executive stock-purchase plan, designed to align management and shareholder interests more closely. We asked our top 30 executives to buy Navistar stock, out of their own pockets, in amounts as high as three times their salary. This represented a big personal sacrifice and risk, given the stock's history of poor performance.
The article stated that management said no to the plan. The fact is, all 30 executives did indeed step up and purchase the stock in the required amounts. This was a dramatic vote of confidence in the company's direction and is indicative of the personal stake our executive team has taken in Navistar's future. The many successes you highlighted came about because of the strength of our management team and all our employees, who rightly share in both the risks and rewards of Navistar's turnaround.
John R. Horne, CEO
Navistar International Corp.
Editor's note: The incorrect information on the Ford Expedition was provided by a top Navistar executive. The stock purchases described in this letter took place in July, three months after Navistar's executive team unanimously refused to buy shares voluntarily, as described in the story.Return to top
LET ASIAN BANKS TOPPLE--INTO THE HANDS OF THE STATE
I fear that your prescription for the Asian crisis might take too long to implement ("What to do about Asia," Cover Story, Jan. 26). I would like to suggest a different tack, in the belief that we are not facing a global crisis but a number of national emergencies.
For one, governments should let nonperforming banks and industrial companies go bankrupt, according to the laws of each country. Foreign banks should take their losses in full. Governments in each state should then take over the bankrupt companies at market prices, hire the best managers they can get, local or foreign, to run and restructure them and sell them to private investors once the emergency is over. Otherwise, they will rot again. Then governments should not create recession, unemployment, and panic; they should show the people that the country is in firm hands.
I would not bother to discuss whether this recipe is socialism or market capitalism. To me, it seems neutral, with the added advantage that it will not use my [tax] money to bail out reckless people.
Trieste, ItalyReturn to top
MONEY SPENT IS MONEY INVESTED
I found my head nodding in agreement with Peter Coy's article, "Spend and grow rich--it's the American Way" (News: Analysis & Commentary, Jan. 26). Another problem I see with the classic consumption-vs.-savings argument is that it assumes that dollars spent on consumption go down some bottomless hole, disappearing forever. On the contrary, consumption spending is a very direct and efficient means of investment.
When consumers buy a product, they provide the company with net profits (presumably), which the company may use for financing projects via internally generated equity capital. The company has already proved it provides a valuable (or at least desirable) product or service. Therefore, risks associated with deploying the capital are lower than when the company is trying to persuade a bank that its product or service will be desirable in the future. Recall, it is into the bank's lending capital where the consumers would be placing their "savings" in the traditional scenario.
Bottom line: If consumers are also rational investors through their mini-investments in the producing companies, capital is being efficiently deployed.
Littleton, Colo.Return to top