Caterpillar to Build Its Own Dump Trucks -- 2nd Update

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 [e-mail]

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