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Caterpillar, Navistar form strategic alliance

Caterpillar Inc. and Navistar International Corporation 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.

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.

The companies have commissioned teams to focus on the truck and engine opportunities. Initiatives contemplated by the MOU are subject to completion of due diligence, execution of definitive agreements, and regulatory approvals.

The firms 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 cabover designs.

Besides the United States and Canada, Navistar has a 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, such as utility trucks and school buses. This engine development would support each company’s stated path not to use urea-based Selective Catalytic Reduction (SCR) technology.

Through the alliance, the firms also intend to expand their existing remanufacturing relationship to include Navistar’s recently introduced MaxxForce on-highway engines.

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