Caterpillar And Navistar Form Strategic Alliance

Caterpillar and Navistar International Corporation have formed an alliance to build severe service construction trucks and technology development for engines worldwide.

Through this alliance, Caterpillar plans to target a 2010 introduction of a North American Caterpillar branded heavy-duty truck for severe service applications, such as road construction, large infrastructure projects and oil and petroleum development. Concurrent with this new strategic direction, Caterpillar has determined independently that it will not supply EPA 2010 compliant engines to truck and other on-highway original equipment manufacturers (OEMs), including fire truck manufacturers.

 “We are pleased to be matching the formidable talents and technology leadership of two industry leaders to serve an expanding base of engine, truck and equipment customers worldwide,” said Jim Owens, Caterpillar chairman and chief executive officer. “As the world leader in construction equipment and diesel engines, Caterpillar is now positioning itself for growth in the on-highway truck market. This is an important step for Caterpillar, and we look forward to working with Navistar for the continued benefit of our customers.”

Daniel C. Ustian, Navistar chairman, president and CEO said; “This relationship is a perfect example of Navistar’s strategy of growth through leveraging our own assets and those that others have built. In partnership with Caterpillar, we intend to extend our leading-edge product focus that we have in North America into the rest of the world.”

Product Support

Douglas R. Oberhelman, Caterpillar Group president, said the company will continue to provide product support and service beyond 2010 for all Caterpillar on-highway engines regardless of truck brand.

“This new truck – targeted for 2010 – will incorporate the legendary quality of Caterpillar construction and mining machines and provide construction customers a one-stop solution,” said Oberhelman. “In addition, with nearly 90 percent of our engine business being off-highway, we’ll continue to concentrate on our substantial and growing opportunities to supply engines in the petroleum, marine, electric power generation and industrial markets.”

Working Together

The companies intend to work together to develop, manufacture and distribute commercial trucks in select regions outside of North America. The product offering would include a full line of medium and heavy-duty trucks in both conventional and cab over designs.

“The combination of Navistar’s truck design, development and manufacturing expertise and Caterpillar’s unparalleled worldwide distribution creates a significant advantage for global customers through the ability to offer the right vehicle for the right application through more than 4,700 points of distribution around the world,” said Dee Kapur, president, Navistar Truck Group. “The North American Caterpillar distribution system provides expanded reach for severe service trucks with big bore power, a segment where Navistar has traditionally not been as focused.”

In addition to the U.S. and Canada, Navistar has a substantial distribution network in Mexico and Latin America. Caterpillar sells on-highway truck engines in Australia and New Zealand, Mexico and throughout Latin America, as well as in the United Kingdom, Belgium, Russia, China and South Africa.

Under the alliance, Caterpillar and Navistar plan to cooperate on engine development, incorporating “best in class” technologies from both companies. Caterpillar and Navistar intend to work together on development of mid-range engines for diesel applications. This engine development would support each company’s stated path not to use urea-based Selective Catalytic Reduction (SCR) technology.

Many Opportunities

“There are many opportunities for technology sharing and development that would result in the ability to better meet the worldwide demand for diesel engines in both on and off-highway applications,” said Jack Allen, president, Navistar Engine Group.

“In the past 15 years, Cat has become significantly less dependent on the sale of on-highway truck engines in the total contribution of our global engine profitability,” said Oberhelman. “We intend to remain the world leader in clean diesel engines, and this collaboration is a key enabler.”

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