By Bob Tita 

Commercial truck maker Navistar International Corp. will close an engine plant in Alabama this summer as it moves to eliminate excess production capacity and consolidate its engine lineup for medium-size trucks.

The closure of the plant in Huntsville will result in the loss of about 280 jobs and generate savings of about $22 million a year. Production at that plant will be shifted to an engine plant near Chicago, which will add about 75 workers. Navistar will continue to produce large diesel engines for heavy-duty trucks at a second plant in Huntsville.

The move reflects an increasing reliance on engines made by Cummins Inc. Navistar recently began offering Cummins's engines in its medium-size trucks and had earlier decided to buy 15-liter engines from Cummins for heavy-duty trucks.

With the addition of Cummins's popular midrange engine, Navistar Chief Executive Troy Clarke said the company is reviewing its own engine line for medium-size trucks and is likely to discontinue some low-volume models. The Huntsville plant slated for closure produces a variety of diesel engines ranging in size from 6 liters to 9.3 liters.

"We're not going to go out of the engine business," Mr. Clarke said during an interview Thursday with The Wall Street Journal. "We just have too much manufacturing capacity at this point."

Trimming excess production capacity has been a priority for Mr. Clarke as he attempts to restore profits by reducing production expenses.

"This has been a long time in coming," said Walt Liptak, senior analyst for Global Hunter Securities LLC in Chicago, about the plant closing. "It's good to see the company is getting their engine cost-structure reduced."

Navistar, based in Lisle, Ill., has struggled to turn a profit for the past two years in the face of soaring costs for engine warranty claims that stemmed largely from a failed strategy for meeting federal mandates to cut pollution in diesel engine exhaust.

Even though Navistar switched to a widely used exhaust treatment technology in 2012, truckers' concerns about the reliability of Navistar's engines have weighed on truck sales and eroded the company's share of the medium- and heavy-duty truck markets in North American.

Navistar's share of the medium-duty market was 17.3% at the end of January, compared with 25% at the same time a year ago. Its share of the heavy-duty market was 14% in January, about the same as a year earlier, but off its low point in late 2012.

Before the company's engine problems, it was the market leader in medium-duty trucks with a share above 30%. Its share of the heavy-duty market had been about 21%--good enough for third place behind Daimler AG's Freightliner unit and Paccar Inc., maker of Kenworth and Peterbilt trucks.

Write to Bob Tita at robert.tita@wsj.com

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