By Bob Tita
Caterpillar Inc. said Tuesday that it plans to build 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.
The plan was previously reported by The Wall Street Journal.
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 the first half of next year, Caterpillar
expects to begin assembling the trucks at its plant in Victoria,
Texas. The plant opened in 2012 to assemble excavators that had
been built in Japan and imported to North America.
Caterpillar expected to add about 200 jobs at the Texas plant,
which also will continue produce hydraulic excavators. The trucks
also would add production work for the plant at a time of falling
demand for the construction excavators has left excess capacity at
the plant.
The Navistar-built, Caterpillar-branded trucks haven't been a
big hit with truck buyers. Sales have averaged about 1,000 trucks
annually for the past three years. Caterpillar is counting on being
able to expand sales in the coming years by building the trucks at
its own plant. The company expects it will be able to more
effectively convert Caterpillar construction equipment customers
into truck buyers with better customer service and faster
production of the trucks.
"By striking out independently, we can better-serve those
customers," said Chris Chadwick, director of Caterpillar's
on-highway truck group. "The goal is to grow our sales and presence
in the market."
Caterpillar currently offers three truck models. Although the
vehicles are mostly used as dump trucks at construction sites, Mr.
Chadwick said Caterpillar intends to ramp up marketing of the
trucks for other duties, including for refuse collection and for
hauling logs from timber harvesting operations. He said Caterpillar
has no plans to market the trucks for long-distance delivery
service.
Caterpillar will continue to power its trucks with 13-liter
engines supplied by Navistar. The company also plans to offer a
15-liter engine as well. Mr. Chadwick said that engine, however,
will not be built by Caterpillar, which was once a major supplier
of 15-liter engines to the North American commercial truck
industry. Caterpillar abandoned the market in 2010 when faced with
a costly upgrade of its exhaust-treatment system to comply with
stricter federal standards on emissions.
"We do not have plans to re-enter the engine market for
on-highway trucks," he said.
Separately, Navistar said it would launch a new line of its own
dump trucks starting early next year, leveraging shared technology
and intellectual property from the venture with Caterpillar.
Both companies "will have the opportunity to leverage certain
joint intellectual property, collaborate with suppliers and utilize
licensing agreements moving forward," Navistar said in a news
release.
The Caterpillar-Navistar partnership was devised in 2009 with
ambitious goals to market Caterpillar-branded trucks built by
Navistar in several overseas markets through Caterpillar dealers.
Those plans were mostly scaled back when sales of the trucks were
anemic in North America.
Tess Stynes contributed to this article.
Write to Bob Tita at robert.tita@wsj.com
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