dpantazis
#12
hmmm, now we know what Navistar is going to do when FMC starts using its own engines.
from - Caterpillar to exit U.S. heavy-duty engine market, partner with Navistar -- chicagotribune.com
"Caterpillar to exit U.S. heavy-duty engine market, partner with Navistar"
By James P. Miller | Tribune staff reporter
7:25 AM CDT, June 12, 2008
Caterpillar Inc. disclosed Thursday that it will stop selling heavy-duty truck engines in the U.S. market in 2010 -- a major break in the company's historic strategy -- and unveiled a "strategic alliance" with truck maker Navistar International Corp. that calls for Navistar to begin producing a Caterpillar-brand heavy truck designed for "severe service" applications.
The Peoria company separately said it intends to spend $1 billion expanding the capacity of five Illinois production facilities, including the Mossville plant where Caterpillar makes the on-highway truck engines it is dropping.
The Mossville plant will lose production of certain engines, but may pick up work being done at other company facilities, the company said.
As part of the changes Caterpillar also said it is considering shifting production of its motor grader machinery, currently made in Decatur, to another location.
Caterpillar has long been a leading maker of the "big bore" engines used in cross-country trucks, and it sells them to U.S. truck makers such as Navistar and Paccar Inc.
But those customers, for reasons of their own, have begun making plans to produce their own versions of the big engines, and it has been obvious for some time that Caterpillar's highway truck operation would face a major drop-off in orders when its current supply contracts expire in 2010.
There has been speculation that the heavy-equipment giant might either remove itself from the truck-engine business, acquire a truck maker outright, most likely Navistar, to serve as a captive buyer of Caterpillar's engines, or forge a partnership of some sort.
To satisfy impending clear-air regulations, truck-engine makers must deliver a new generation of super-low emissions diesels in 2010, and it's not clear whether Caterpillar has decided that its ACERT engine, which has cost the company hundreds of millions of dollars in development cost, wouldn't be competitive in the new regulatory environment. But the company said specifically that it has determined "that it will not supply Environmental Protection Agency 2010 compliant engines" to truck producers in the North American market.
"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"' along with producing diesel engines for Caterpillar's own construction and mining equipment.
In its joint release with Navistar, Caterpillar didn't say whether the moves it is announcing will generate a charge against earnings, or what impact the changes may have on the company's profit forecasts for future years.
Under the memorandum of nderstanding the two companies have signed, Caterpillar and Navistar will "pursue global on-highway truck business opportunities and cooperate on a variety of engine platforms.
Navistar will begin producing, under contract to Caterpillar, an on-highway Caterpillar-branded heavy truck specifically designed for "severe service" applications, such as road construction, large infrastructure projects and oil and petroleum development operations.
For Navistar, the alliance will generate new production volume that promises to create additional manufacturing efficiencies and lower costs per unit. That's in line with the Warrenville company's strategy of leveraging its own assets through production partnerships of one sort or another.
Under that leveraging strategy, for example, Navistar is planning to begin building medium trucks that will carry the General Motors brand and be sold by GM dealers, for example. GM will halt production, but retain a brand presence.
Similarly, the Caterpillar branded truck will be made at Navistar truck plants, provided with heavy engines supplied by Navistar.
A Navistar spokesman confirmed that the company has extended the contract under which Cummins supplies Navistar with heavy engines by three years, until 2013.
In addition to the heavy-truck venture in North America, Caterpillar and Navistar said they will work together to develop and manufacture commercial trucks in certain regions outside North America.
"The combination of Navistar's truck design, development and manufacturing expertise and Caterpillar's unparalleled worldwide distribution creates a significant advantage for global customers," said an official with Navistasr's truck group.
The two companies will cooperate on development of mid-range engines, a segment where Navistar already has a presence.
[email protected]
from - Caterpillar to exit U.S. heavy-duty engine market, partner with Navistar -- chicagotribune.com
"Caterpillar to exit U.S. heavy-duty engine market, partner with Navistar"
By James P. Miller | Tribune staff reporter
7:25 AM CDT, June 12, 2008
Caterpillar Inc. disclosed Thursday that it will stop selling heavy-duty truck engines in the U.S. market in 2010 -- a major break in the company's historic strategy -- and unveiled a "strategic alliance" with truck maker Navistar International Corp. that calls for Navistar to begin producing a Caterpillar-brand heavy truck designed for "severe service" applications.
The Peoria company separately said it intends to spend $1 billion expanding the capacity of five Illinois production facilities, including the Mossville plant where Caterpillar makes the on-highway truck engines it is dropping.
The Mossville plant will lose production of certain engines, but may pick up work being done at other company facilities, the company said.
As part of the changes Caterpillar also said it is considering shifting production of its motor grader machinery, currently made in Decatur, to another location.
Caterpillar has long been a leading maker of the "big bore" engines used in cross-country trucks, and it sells them to U.S. truck makers such as Navistar and Paccar Inc.
But those customers, for reasons of their own, have begun making plans to produce their own versions of the big engines, and it has been obvious for some time that Caterpillar's highway truck operation would face a major drop-off in orders when its current supply contracts expire in 2010.
There has been speculation that the heavy-equipment giant might either remove itself from the truck-engine business, acquire a truck maker outright, most likely Navistar, to serve as a captive buyer of Caterpillar's engines, or forge a partnership of some sort.
To satisfy impending clear-air regulations, truck-engine makers must deliver a new generation of super-low emissions diesels in 2010, and it's not clear whether Caterpillar has decided that its ACERT engine, which has cost the company hundreds of millions of dollars in development cost, wouldn't be competitive in the new regulatory environment. But the company said specifically that it has determined "that it will not supply Environmental Protection Agency 2010 compliant engines" to truck producers in the North American market.
"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"' along with producing diesel engines for Caterpillar's own construction and mining equipment.
In its joint release with Navistar, Caterpillar didn't say whether the moves it is announcing will generate a charge against earnings, or what impact the changes may have on the company's profit forecasts for future years.
Under the memorandum of nderstanding the two companies have signed, Caterpillar and Navistar will "pursue global on-highway truck business opportunities and cooperate on a variety of engine platforms.
Navistar will begin producing, under contract to Caterpillar, an on-highway Caterpillar-branded heavy truck specifically designed for "severe service" applications, such as road construction, large infrastructure projects and oil and petroleum development operations.
For Navistar, the alliance will generate new production volume that promises to create additional manufacturing efficiencies and lower costs per unit. That's in line with the Warrenville company's strategy of leveraging its own assets through production partnerships of one sort or another.
Under that leveraging strategy, for example, Navistar is planning to begin building medium trucks that will carry the General Motors brand and be sold by GM dealers, for example. GM will halt production, but retain a brand presence.
Similarly, the Caterpillar branded truck will be made at Navistar truck plants, provided with heavy engines supplied by Navistar.
A Navistar spokesman confirmed that the company has extended the contract under which Cummins supplies Navistar with heavy engines by three years, until 2013.
In addition to the heavy-truck venture in North America, Caterpillar and Navistar said they will work together to develop and manufacture commercial trucks in certain regions outside North America.
"The combination of Navistar's truck design, development and manufacturing expertise and Caterpillar's unparalleled worldwide distribution creates a significant advantage for global customers," said an official with Navistasr's truck group.
The two companies will cooperate on development of mid-range engines, a segment where Navistar already has a presence.
[email protected]
