Caterpillar will move away from Navistar on truck production

Caterpillar has announced it will wind down its Mexico truck production facility with Navistar and start producing its own line of dump trucks at a plant in Victoria, Texas.

The plant, which opened in 2012, currently produces hydraulic excavators.

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.

“The on-highway vocational truck product family is important to our product line; customers like our trucks and want to include them in their fleets in a variety of heavy duty applications such as dump trucks, mixers, haulers or one of the other configurations we offer,” said Chris Chadwick, Caterpillar’s director of the Global On-Highway Truck Group. “To continue to provide the best solution for our customers, we will bring the design and manufacturing of this product into Caterpillar, and the production specifically to Victoria. Our updated strategy reaffirms our commitment to grow and develop our presence in the vocational truck industry moving forward.”

Caterpillar launched its first vocational truck, the CT660, in the North American market in 2011. Two more models have since been added to the lineup, the CT680 and CT681. To date, Caterpillar has worked with Navistar for the products’ design and build, which are currently manufactured in Escobedo, Mexico.

“We appreciate the collaboration we have had with Navistar,” Chadwick said. “As we look to future launches of new truck models, this updated strategy will better position us to help provide our customers with the best products and services for this market. Caterpillar continues to drive the design phase of all models, both current and planned. Before launching the product, we spent hundreds of hours on the road with customers, asking them to describe the ideal truck. We know what they want and need – from functionality of the truck itself to comfort in the cab. We plan to meet and exceed those expectations as we grow this product offering to fulfill our customers’ needs.”

The transition process will begin immediately, with production expected to begin in the first half of next year. Caterpillar Victoria will continue to produce excavators, and the addition of the vocational truck production is expected to add around 200 new jobs at the facility.

“Caterpillar Victoria is proud to be a part of this opportunity,” commented Ed O’Neil, general manager for operations for the Excavation Division. “The Victoria facility was selected because of our team’s proven record of building high-quality Cat products, our commitment to safety and our successful implementation of the Caterpillar Production System and Lean manufacturing. In addition, support from the community and its excellent skilled workforce, as well as the proximity to suppliers, also contributed to the sourcing decision.”

Cat dealers will continue to sell and support Cat vocational trucks.

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 Chadwick. “The goal is to grow our sales and presence in the market.”

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. 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,” according to Navistar.