End of an Era
Faced with tough emission standards, Caterpillar decides to pull out of the North American truck engine market in 2010. It will make trucks instead.
by James Menzies
Caterpillar has ended months of speculation about its future in trucking by announcing it will withdraw from the North American truck engine market in 2010. The company will continue selling engines right up until the end of 2009, and will service all engines currently in use for the rest of their life spans, the company announced during a press conference. It will also continue selling engines beyond 2010 into global markets with less restrictive emissions regimes.
However, Cat will not offer an EPA2010-compliant engine. During the press briefing, Caterpillar executives attributed their withdrawal from the North American truck engine market to the trend towards vertical integration. Much of Cat's truck engine sales were linked to Kenworth and Peterbilt, but those companies' parent company Paccar will introduce its own heavy-duty truck engine in 2010.
"The writing's on the wall for independent engine suppliers," said George Taylor, director, global on-highway with Caterpillar. "When you look at an industry that year in, year out, runs 240,000-250,000 units (in North America), and capacity is up to 500,000 units, it's going to be increasingly difficult to participate in the industry as an independent engine supplier. We wanted to proactively take action before getting backed into a corner."
He added: "Nothing changes through 2009. Caterpillar engines can be purchased and operated in confidence."
There are currently about 1.6 million Cat engines still on the road. While Caterpillar will no longer offer heavy-duty truck engines to the North American market in 2010, it will still be a player - as a truck maker. At the same time the company announced it is pulling out of the industry as an independent engine supplier, it also announced a new alliance with Navistar, parent company of International Truck and Engine.
Cat Log Hauler
The companies will work together to develop a Cat-branded truck for severe-service applications, including logging. A Cat-branded engine built by Navistar will likely be under the hood, officials said.
"This will be a purpose-built truck, leveraging Caterpillar technology wherever possible," said Taylor, although officials admitted some Navistar parts will likely be incorporated into the design. The Cat truck will be used in logging, oilfield, heavy construction and other rigorous applications. It will round out the company's current line of off-road equipment.
It's a bittersweet development for Cat customers, who are among the most brand loyal truckers in the industry. Caterpillar has been a player in the North American engine market for nearly 40 years, but the truck engine market still represents a relatively small piece of its overall business.
In addition to building a Cat truck with Navistar, the company will assist its new partner with its own future engine developments, which they reaffirmed will not involve Selective Catalytic Reduction (SCR). The deal also allows Navistar to go global, as the North American-based company will be able to tap into Cat's extensive worldwide dealer network to get its trucks into nations where it currently doesn't have a presence.
Now customers looking for big power will likely look to Cummins, which has already seized the opportunity to fill the void left by Cat. Freightliner recently signed a deal to offer Cummins power after 2010, which means customers will have both an SCR (Detroit Diesel) and an EGR (Cummins) option. Cummins also extended its deal with International shortly after the Caterpillar announcement, so truckers wanting big power in an International truck will still be able to get it through Cummins.
Volvo trucks will also carry Cummins engines post-2010, so there are plenty of signs that truckers will still have lots of choices when it comes down to choosing a tractor/engine combination that fits their power and technology needs. You're not likely going to get pigeon-holed into a particular type of engine or be faced with limited choices when it comes to torque and horsepower ratings, despite all the talk of vertical integration.
You may be wondering what the Caterpillar/Navistar agreement will do to Navistar's relationship with the European engine company MAN, which helped Navistar build the International MaxxForce engine? Not much, according to officials.
"This will not impact our relationship with MAN in any fashion," said Eric Tech, vice-president and general manager, Navistar Engine Group. "We've been working with MAN as part of big bore program (and we) will continue to have relationship with MAN as we develop next generation products and do not see this as impacting that relationship."
James Menzies is executive editor with Trucks West and writes this column exclusively for Canadian Forest Industries Magazine.
