Caterpillar to end outsourcing deal with Navistar and build own dump trucks

Caterpillar 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 to build the trucks, a person familiar with the matter said, th Wall Street Journal reports.

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.

Source

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