Caterpillar Inc. plans to begin building its own line of dump
trucks at a plant in Texas and wind down an existing arrangement it
has with Navistar International Corp. to build the trucks, a person
familiar with the matter said.
Caterpillar, the world's sales leader in off-road construction
machinery, has been selling the on-road trucks built by Navistar
since 2011. Beginning in 2016, Caterpillar will start assembling
the trucks at its plant in Victoria, Texas, the person said. The
plant opened in 2012 to assemble excavators that had been built in
Japan and imported to North America.
The Navistar-built, Caterpillar-branded trucks haven't been a
big hit with truck buyers. Sales of the three truck models have
averaged about 1,000 total annually for the past three years. The
move could help Caterpillar more effectively leverage its
reputation with the construction industry for high-quality
machinery, because customers will know it is making the trucks.
Building the trucks also would add work for the Texas plant at a
time of falling demand for the construction excavators it was built
to manufacture.
Caterpillar will sell the trucks with its own engines, the
person said. Caterpillar was a major supplier of diesel engines to
the North American commercial truck industry, but abandoned the
market in 2010 when faced with a costly upgrade of its
exhaust-treatment system to comply with stricter federal standards
on emissions. Since then, those regulations also have been applied
to off-road equipment, so Caterpillar has had to adapt its engines
and could resume making them for highway trucks again with minimal
new cost.
Navistar has been building the Caterpillar trucks at plant in
Mexico. The Lisle, Ill.-based company intends to introduce a
premium-level model of its PayStar dump truck next year as it tries
to revive its slumping market share in heavy-duty trucks by
emphasizing vehicles for specialized work like hauling dirt or
cement mixers.
The Caterpillar-Navistar partnership was devised in 2009 with
ambitious goals to market Caterpillar-branded trucks in several
overseas markets through Caterpillar dealers. Those plans were
mostly scaled back when sales of the trucks were anemic in North
America.
Write to Bob Tita at robert.tita@wsj.com
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