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BREAKING NEWS: Caterpillar, Navistar to form strategic alliance; Companies to build Cat-branded truck

PEORIA, Ill. -- Caterpillar and Navistar International Corp. have inked a Memorandum of Understanding to pursue glo...

PEORIA, Ill. — Caterpillar and Navistar International Corp. have inked a Memorandum of Understanding to pursue global on-highway truck business opportunities and to cooperate on a number of engine platforms, the companies announced this morning.

“We are pleased to be matching the formidable talents and technology leadership of two industry leaders to serve an expanding base of engine, truck and equipment customers worldwide,” Jim Owens, Caterpillar chairman and CEO, said in a press release issued this morning. “As the world leader in construction equipment and diesel engines, Caterpillar is now positioning itself for growth in the on-highway truck market. This is an important step for Caterpillar and we look forward to working with Navistar for the continued benefit of our customers.”

“This relationship is a perfect example of Navistar’s strategy of growth through leveraging our own assets and those that others have built,” added Daniel C. Ustian, Navistar chairman, president and CEO. “In partnership with Caterpillar we intend to extend our leading-edge product focus that we have in North America into the rest of the world.”

The alliance plans to build a Cat-branded heavy-duty truck for severe-service applications as part of the deal. The truck’s targeted launch is in 2010. Meanwhile, Cat will not provide EPA2010-compliant engines to any truck OEMs.

“Caterpillar and our dealers will continue to provide product support and service beyond 2010 for all Caterpillar on-highway engines regardless of truck brand,” said Douglas R. Oberhelman, Caterpillar Group president. “This new truck – targeted for 2010 – will incorporate the legendary quality of Caterpillar’s construction and mining machines and provide construction customers a one-stop solution. In addition, with nearly 90% of our engine business being off-highway, we’ll continue to concentrate on our substantial and growing opportunities to supply engines in the petroleum, marine, electric power generation and industrial marketsas well as produce engines for our own construction and mining equipment.”

As part of the alliance, Cat and Navistar will work together to develop mid-range engines for utility trucks and school buses. Those engines will not use SCR to meet 2010 emissions standards, the companies say.

“In the past 15 years, Cat has become significantly less dependent on the sale of on-highway truck engines in the total contribution of our global engine profitability,” said Oberhelman. “Our global power systems business has grown significantly – in fact we supply approximately 400,000 diesel engines annually outside of the on-highway truck market. We intend to remain the world leader in clean diesel engines, and this collaboration is a key enabler.”

More information about the alliance will be revealed at a press briefing later today.

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