TORONTO, Ont. — Caterpillar and Navistar are splitting up, but both manufacturers say their future in the vocational truck market remains bright.
Cat announced this morning it plans to bring production of its vocational trucks to its own plant in Victoria, Texas. Previously, the truck was built by Navistar at its Escobedo, Mexico truck plant. Navistar responded almost immediately, announcing it will introduce its own severe-service vocational truck in 2016, drawing on “intellectual property and technology” developed during the partnership.
But Caterpillar truck executives, in an interview with Trucknews.com this morning, indicated the split is amicable.
“We’ve been working cooperatively for some period of time to reach this point. We both walk away with good experience from the venture, but we’re heading in slightly different directions now,” said Chris Chadwick, Caterpillar’s director of the global on-highway truck group.
He said he’s not concerned about a new competitive product hitting the market, even if it is built by a potentially jilted-feeling former partner.
“There are plenty of strong competitors out there, but we believe we are well positioned to continue to grow our business, and grow our market share as we add new products and features to the product line,” Chadwick said.
Officials said the company is excited about taking over complete production of its trucks, and managing that process from cradle to grave within the Caterpillar organization.
“From the onset that wasn’t the main goal,” Ron Schultz, sales and product support manager with Caterpillar said of the change. “But as we got further into our development of the truck and with our customers it became evident that for us to take this to the next level, it’s a very positive move for Cat to bring the design and manufacturing in-house. We felt to take it to the next level, bringing it in-house is the right way to go.”
He said there weren’t any production-related issues under the previous arrangement, but added “With the move to Victoria, we have a world-class facility that produces our excavators at the highest quality levels around the world. So we felt this location, from a quality perspective, is the right one to choose. Then we coupled that with the supply base and the logistics and it became evident that this was the right location to choose.”
The fruits of the joint venture will live on, including the bold, stylish design of the truck, which will be retained, as well as the CT13 engine, which was built upon the Navistar N13 platform.
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Cat also is continuing with plans to offer a 15-litre engine later this year. It should be remembered that when Caterpillar joined with Navistar to build this truck, a 15-litre Navistar engine was in development. When Navistar shelved that program, it left Caterpillar without a 15L offering in a market segment that, especially in Canada, really demands a 15-litre option.
Dave Schmitz, product manager for the on-highway truck group, said the plan to introduce a 15L engine later this year remains in place, but he wouldn’t divulge further information.
“We are still on track for that,” he said. “We’re not in a position now to comment on the 15L.”
With the 15-litre in place, Caterpillar feels good about the segment coverage it will achieve with its current line, which consists of the CT660, CT680 and CT681.
“With our set-forward axle and set-back axle complete line with a 13- and a 15-litre product, we feel that will serve the needs of all the vocational truck customers,” said Schultz. Chadwick added Caterpillar will soon be adding a sleeper cab to its lineup as well.
The transition to production at Victoria will begin immediately, with trucks scheduled to roll off the assembly line there in the first half of next year.
“I think the choice of Victoria is very strategic for us,” Chadwick explained. “It’s an excellent plant. It’s a facility that has gone through a start-up very recently and did it in a flawless manner. So it’s got the right infrastructure and the right mentality to give us a really high quality start-up and really to replicate the work they did in excavation. We’re extremely excited about that choice and very positive about what the team down there can bring to us as we enter into the truck business as a full-line OEM.”
Schultz added bringing production in-house also offers Cat the opportunity to better differentiate itself in the market.
“We feel our large differentiating factor is our dealer network that has served these customers so well in the construction industry and bringing a full line to them from an end-to-end Cat product perspective will be our key differentiator,” he said. “From a product perspective, we see initially the product is going to be the same as we’re getting today, just built in a Cat factory. Over time, we’ll start to see our focus is on this transition in the short-term. The next 18 months, beyond that, we will start to update the product with other features and benefits that our customers desire.”
Cat executives wouldn’t reveal how production costs or pricing would be affected by the change.
“The key perspective of the move is (to gain) more control over the manufacturing process,” Schmitz said. “We have what is called Caterpillar Production Systems in the facility and it’s something that Caterpillar has been working on with machinery that has a great reputation for quality throughout the world. We want to leverage that as much as possible. Just gaining control over that whole process – we just see so many benefits to that.”
“There is a capital investment required,” Chadwick added. “So, obviously we have got to make that pay. We’ve got more direct control over the entire end-to-end business, so I think that gives us more ability to directly influence the cost and do so in a higher-velocity manner.”
James Menzies is editor of Truck News magazine. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at firstname.lastname@example.org or follow him on Twitter at @JamesMenzies. All posts by James Menzies