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Cat to exit NA truck engine business,partner with Navistar

Caterpillar Inc announced June 12 it will exit the North American heavy-duty diesel truck engine market by 2010. The company also revealed it had signed a memorandum of understanding (MOU) with Navistar International to jointly focus on global truck opportunities, as well as technology development for engines worldwide.

Cat officials said the decision regarding the North American heavy-duty truck engine market was prompted by several factors. Topping the list was overcapacity. They pointed out that total heavy-duty on-highway diesel engine capacity currently stands at around 500,000 units a year, while annual demand is in the 250,000-unit range. They also said Cat decided not to use selective catalytic reduction as part of the emission controls in its engines.

“Caterpillar and our dealers will continue to provide product support and service beyond 2010 for all Caterpillar on-highway engines regardless of truck brand,” said Douglas R Oberhelman, Caterpillar group president. “In addition, we’ll continue to sell 2007-level engines in a large part of the world for many years to come.

“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—as well as produce engines for our own construction and mining equipment. In fact, we supply approximately 400,000 diesel engines annually outside of the on-highway truck market. We intend to remain a world leader in clean diesel engines.”

Turning to the MOU between Cat and Navistar, the two companies plan to partner on several projects. This will start with Cat’s plan to introduce in 2010 a North American Cat-branded heavy-duty vocational truck for severe-service applications such as road construction, large infrastructure projects, and oil exploration and production. The truck will be powered by a 15-liter engine developed and manufactured by Navistar.

“We are pleased to be matching the formidable talents and technology 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. “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 chief executive officer, added: “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 in North America to the rest of the world.”

The two companies have commissioned teams to focus on truck and engine opportunities. They 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 range of medium- and heavy-duty trucks in both conventional and cabover designs.

Under the alliance, Navistar and Cat plan to cooperate on engine development, incorporating “best-in-class” technologies from both companies. They intend to work together on development of mid-range diesel engines. The companies also intend to expand their existing remanufacturing relationship to include Navistar’s recently introduced MaxxForce on-highway engines.

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