Cat And Navistar To Focus On Global Truck
Business And Cooperate On Engine Technologies
Cat is dropping out of the truck market giving Navistar and
Cummins the advantage. GM sold their medium duty truck
business to Navistar. Navistar bought Workhorse RV chassis a few
years back. As fast as Navistar is growing, we know they won’t need Ford
anymore. We also know Ford won’t be using Cat in the future or
Navistar, so they have to build their own diesel engine for Super
Duty. Here is their joint press release: Caterpillar Inc. (NYSE: CAT) and Navistar
International Corporation (Other OTC: NAVZ) have signed a Memorandum of
Understanding (MOU) to pursue global on-highway truck business
opportunities and cooperate on a variety of engine platforms. The two
companies intend to focus on global truck opportunities, including North
American severe service construction trucks, as well as technology
development for engines worldwide.
“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.” “This relationship is a perfect example
of Navistar’s strategy of growth through leveraging our own assets and
those that others have built,” said Daniel C. Ustian, Navistar Chairman,
President and CEO. “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.” Through this alliance, Caterpillar plans
to target a 2010 introduction of a North American Cat 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). “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. “This new trucktargeted for
2010will incorporate the legendary quality of Caterpillar’s
construction and mining machines and provide construction customers a
one-stop solution. 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 marketsas
well as produce engines for our own construction and mining equipment.”
The companies have commissioned teams to
focus on the truck and engine opportunities. The initiatives
contemplated by the MOU are subject to completion of due diligence,
execution of definitive agreements and regulatory approvals. Global Truck Collaboration 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.” “This is a natural extension of
Caterpillar’s more than 40 years serving on-highway customers with
proven, award winning technologycombined with unsurpassed global
distribution and product support,” said George Taylor, Director of
Caterpillar On-Highway Engines. In addition to the United States and
Canada, Navistar has a substantial distribution network in Mexico and
Latin America. Caterpillar currently 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.
Engine Technology 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, such as school buses and utility trucks. This engine
development would support each company’s stated path not to utilize
urea-based Selective Catalytic Reduction (SCR) technology. “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. “Our global power systems business has grown
significantlyin fact we supply approximately 400,000 diesel engines
annually outside of the on-highway truck market. We intend to remain the
world leader in clean diesel engines, and this collaboration is a key
enabler.” Remanufacturing Growth and Additional
Synergies Through the alliance, the companies also
intend to expand their existing remanufacturing relationship to include
Navistar’s recently introduced MaxxForce on-highway engines. The
companies expect to pursue additional remanufacturing opportunities as
new vehicles and engines are developed. Caterpillar and Navistar plan to explore
opportunities to leverage their scale. Combining raw material and other
commodity purchases is just one example of how the two companies can
work together to reduce costs. About Caterpillar For more than 80 years, Caterpillar
Inc. has been making progress possible and driving positive and
sustainable change on every continent. With 2007 sales and revenues of
$44.958 billion, Caterpillar is the world’s leading manufacturer of
construction and mining equipment, diesel and natural gas engines and
industrial gas turbines. The company also is a leading services provider
through Caterpillar Financial Services, Caterpillar Remanufacturing
Services, Caterpillar Logistics Services and Progress Rail Services.
More information is available at
http://www.cat.com/.
About Navistar Navistar International Corporation
traces its roots to 1831 and the former McCormick and International
Harvester companies. Today Navistar is the largest North American
producer of mid-range diesel engines and Class 6-8 commercial trucks and
buses. Navistar Defense is a leading producer of advanced armored
vehicles and trucks for the U.S. Armed Forces and its allies. Navistar
produces International® brand commercial trucks, MaxxForce brand diesel
engines, IC brand school and commercial buses, and Workhorse brand
chassis for motor homes and step vans, and is a private label designer
and manufacturer of diesel engines for the pickup truck, van and SUV
markets. Navistar is also a provider of truck and diesel engine parts. A
wholly owned subsidiary offers financing services. Additional
information is available at:
http://www.navistar.com/.
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