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Cat to exit highway engines, build truck with Navistar

Caterpillar will not produce an engine for North American on-highway truck makers that will meet stricter 2010 emissions standards, said George Taylor, company director for global on-highway products.

Caterpillar also announced June 12, with Navistar, that the companies will produce a Caterpillar-branded severe-service vocational truck.

Those moves are the leading edge of a strategic partnership between the companies on global initiatives in diesel engine technology, Taylor and others said in a conference call with the news media.

“The writing’s on the wall for independent engine suppliers,” Taylor said, citing current on-highway engine market over-saturation amid tightening demand. “It will be increasingly difficult to participate in the North American market as an independent engine supplier.”

The new Cat-branded truck will be designed for construction, logging and other applications, Taylor said. It will be introduced in the “2010 timeframe” and feature “a Caterpillar-branded engine produced by Navistar.”

The partnership, established through a non-binding “memorandum of understanding,” represents a “cooperation on developing technology,” said Mark Stasell, Navistar vice president and general manager for diversified operations.

Caterpillar will move forward with Navistar to “capitalize on the global market” in medium- and heavy-duty trucks, leveraging its global distribution network for construction vehicles and Navistar’s sophisticated truck manufacturing capabilities to send both brands far into the global truck market, Taylor said.

Lack of a Cat-branded on-highway engine compliant with the U.S. Environmental Protection Agency’s 2010 emissions standards would be no hindrance to this strategy, said Greg Gauger, Caterpillar’s global on-highway product manager. “The ability to build and distribute trucks globally with EPA ‘07 and earlier engines ... can go on for quite some time” in countries not subject to U.S. and European emissions standards, he said.

Navistar plans to meet the 2010 standards with its new MaxxForce engine line. A new plant in Huntsville, Ala., will produce the on-highway big-bore variants of the MaxxForce line of heavy- and medium-duty engines. Further expansion of capabilities elsewhere could be expected for both companies, representatives said.

In the long term, both companies remained committed to meeting emissions regulations by utilizing technologies other than selective catalytic reduction, which involves the introduction of urea.

Caterpillar officials said dealerships will service for the life of the equipment Cat on-highway engines, which in recent years have been incorporated proprietary ACERT emissions control technology.

Caterpillar’s on-highway business has not kept up with its expanding overall engine market.

“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 Douglas Oberhelman, Caterpillar group president. “Our global power systems business has grown significantly. In 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.”

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