Caterpillar Inc. and Navistar International Corp. agreed to align their marketing and product development efforts in the global on-highway truck business. The decision is spurred by the onset of U.S. Environmental Protection Agency standards for cleaner diesel engines in domestic highway vehicles, set to begin in 2010.
Caterpillar announced plans for a 2010 introduction of a Navistar-built, Cat-branded heavy-duty truck for “severe service” applications (e.g., road construction, large infrastructure projects, oil and petroleum development), but that it will not supply EPA 2010-compliant engines to truck and other on-highway OEMs.
Chairman and CEO Jim Owens stated: "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," added Navistar chairman, president, and CEO Daniel C. Ustian. "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."
Separately, Caterpillar outlined a $1-billion capital investment plan for its manufacturing plants in Illionois, including various tractor and off-highway truck models.
In the global market, the companies plan to pool development, manufacturing, and distribution of medium- and heavy-duty trucks commercial trucks.
Also in their agreement, Caterpillar and Navistar plan to cooperate on engine development, incorporating "best in class" technologies — which will continue each firm’s decision to avoid 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," stated Jack Allen, president of Navistar Engine Group.
Finally, the alliance anticipates expanding an existing remanufacturing relationship the two firms have, to include Navistar's new MaxxForce on-highway engines. Additional remanufacturing opportunities may develop as new vehicles and engines are commercialized.