Reporter: Cat’s Oberhelman: Navistar deal plays to our strengths

In a conference call with construction editors, Caterpillar’s Doug Oberhelman, group president, detailed the company’s recent memorandum of understanding with Navistar to produce a severe-service truck, and what led to its decision to exit the on-highway engine market:

The new severe-service truck: “The Cat truck will be powered by a Cat-branded engine produced by Navistar in an existing Navistar facility. They’re developing a 15-liter engine we’re very interested in for this truck, and of course, our product development people have a lot of expertise in 15-liters. With this truck, we’re aiming at the Kenworth and Mack heavy-duty premium vocational offerings. We intend to go after the Cat customer who knows us well and accepts our business model. We’ve had some concept drawings that look strikingly similar to a wheel loader. I don’t know if it will end up looking like that, but it will have the internal cab look and feel of Cat equipment.”

The why behind the deal: “Vertical integration is where the on-highway truck market is heading. Caterpillar is a perfect example of this vertical intergration: We don’t offer anyone else’s engine in our machines. Truck makers are headed toward the same thing. In five years you’ll see an over-the-road long-haul industry that looks a lot different than today. Our deal with Navistar puts us on a footing that plays to our strengths. Supplying third-party engines at cheap prices in a shrinking market does not play to our strengths.

“It’s our expectation that by getting out of the highly cyclical North American style of on-highway engine production we can divert a lot of resources into our off-highway engines. We’ll still be one of the largest diesel engine producers in the world. And with our Tier 4 off-highway product, we intend to have an engine that hits it out of the ballpark.”

Dealer reaction: “We’ve been talking with our dealers for more than a year about how the on-highway world was changing. The general response was fairly muted. On one hand, they’re delighted to be able to sell a premium vocational truck to a known customer base. But there was disappointment in that we won’t offer a 2010 on-highway engine.”

The Cat/Navistar alliance outside of North America: “We’re going to initially aim these mid-size and heavy-duty trucks at high growth opportunity countries. In these markets, we could offer both brands, or one or the other. Every truck that Navistar offers is within the scope of this offering. And we’ll supply our pre-2010 on-highway engines to those markets as well.”
Will the memorandum of understanding between the two companies become more formal? “There will be series of agreements between us that I anticipate will be wrapped up by the end of the year. This is not one big bang event, but rather a series of things that make sense.”
– Marcia Gruver


Work zone final rule to go into effect this year
Work zone fatalities have increased 45 percent over the last 10 years and more than 40,000 injuries occur each year due to accidents in work zones, according to Chung Eng, Office of Transportation Operations, Federal Highway Administration. To reduce these incidents, the FHWA will implement the Final Rule on Temporary Traffic Control Devices (23 CFR 630 Subpart K) on December 4, 2008.

Key parts of the new rule, which supplements Subpart J of the Work Zone Safety and Mobility Rule in effect since 2007, include:

  • Establishing conditions for the use of positive protection measures between workers and traffic as based on an engineering study
  • The use of uniformed law enforcement officers on Federal Aid projects
  • Installation and maintenance of temporary traffic control devices during construction, utility and maintenance operations.

The rule mandates contracts have separate pay items so that projects will have these safety measures available when necessary. Each agency is to also develop and implement quality guidelines for projects and conduct inspections to ensure compliance.

Eng, who serves as the FHWA’s Work Zone Safety Team Leader, detailed specific components of the rule in a webinar hosted by the National Work Zone Safety Information Clearinghouse, which is available for viewing at www.workzonesafety.org. The FHWA has also established a Work Zone Safety and Mobility Peer-to-Peer Program which provides short-term assistance to state and local transportation agencies interested in the application of methods, tools and strategies to improve work zone safety and mobility by pairing agencies with a peer qualified to answer their questions. Individual contractors can also contact the program with questions. Contact the P2P program by calling (866) P2P-FHWA, faxing (877) 663-2263 or e-mailing workzoneP2P@dot.gov.

Additional work zone safety resources are available at the following websites:
FHWA website on work zone safety – ops.fhwa.dot.gov/wz/resources/policy.htm
Manual on Uniform Traffic Control Devices – mutcd.fhwa.dot.gov/.

Work zone safety grant products are also now available, including the Work Zone Positive Protection Toolbox, designed to provide guidance on usage. To access toolbox materials, visit ops.fhwa.dot.gov/wz/index.asp and click on the link. Other tools currently in development include laminated cards for shadow vehicle placement (available later this month), decision tool for when to use positive protection (available in November) and work zone safety audits.
– Amy Materson


Executive order to mandate E-Verify use
For federal contractors not currently verifying their employees’ eligibility electronically, an Executive Order signed by President Bush will change the way they hire. Objections have been raised about mandating use of the verification process, primarily because of the possibility of errors. “Whenever you’re dealing with millions of people, there’s going to be a lot of errors – let’s be realistic,” says Kelly Knot, director of governmental affairs, Associated General Contractors of America.

The E-Verify system is an online tool operated by the U. S. Citizenship and Immigration Services in cooperation with the Social Security Administration. The system allows employers to electronically determine the employment eligibility of potential hires by cross-checking an individual’s name, social security number and date of birth against Social Security Administration databases. President Bush signed the Executive Order that amended Executive Order 12989 on June 9, 2008, instructing federal agencies to require federal contractors to participate in E-Verify. The amended Executive Order applies only to federal contractors, and must undergo a 60-day comment period before regulations can be imposed.

The proposal outlines that companies must verify the status of their employees dating back to November 6, 1986, regardless if the employees met previous eligibility requirements of the federal government. Following the comment period, contractors and construction subcontractors will be required to enroll in the E-Verify system within 30 days of an awarded contract $3,000 and greater, including subcontracts over $3,000. Additionally, federal contractors enrolled in E-Verify will still be required to verify the employment eligibility of new hires. The employee must be screened for eligibility through E-Verify no more than three days after the employee has completed their I-9 form or potentially face penalties.

Problems with the E-Verify system include false negatives and false positives. A false negative would disallow an American citizen from obtaining livelihood due to an error on the individual’s NumIndent file, or master record within the Social Security Administration. Something as simple as a discrepancy in the name, date of birth or citizenship status could take weeks to correct.

A false positive would allow an individual to fraudulently assume the identity of someone who is eligible, thus defeating the purpose of E-Verify. A major concern of the AGC in determining the citizenship and work eligibility of an individual is that there are more than 20 forms of acceptable identification for individuals seeking to prove their identity to employers, creating opportunities for identity theft, forgery and fraud.

Jonathan Scharfen, acting director of U.S. Citizenship and Immigration Services, says more than 70,000 employers use E-Verify, with an additional 1,000 per week. According to Scharfen, more than 4 million employment eligibility verifications have been processed with 99.5 percent of those applicants being successfully cleared for employment. Potential employees who are rejected by the system can visit a Social Security office to correct the problem.

According to a Congressional Response Report issued by the Social Security Administration’s Office of the Inspector General in December 2006, 4.1 percent of records contain discrepancies that could potentially deny an otherwise eligible employee from employment by a federal contractor. It is estimated that an error of 1 percent within the system would prevent 1 million Americans from being hired.

Knot believes certain benchmarks for accuracy must first be met before the government requires contractors to use the system. AGC feels the system should be thoroughly checked for errors and accuracy before employers are required to use it.

“The system does not really do anything to address identity theft,” says Knot. “Right now when an employee gets hired an employer fills out I-9 documents and there’s a list of 20 acceptable credentials one can provide to their employers to verify their identity. The problem is that the accepted credentials are too broad, and there are a lot of forged identification papers. When the Department of Homeland Security accounts for such a small percentage error, I don’t think that they are taking this into consideration.”

For more information on the program, visit the U.S. Citizenship and Immigration Services website at www.uscis.gov and click on the E-Verify link or call USCIS at (888) 464-4218. To register for the E-Verify program, visit https://www.vis-dhs.com/EmployerRegistration/StartPage.aspx. EW
– Adam Giannini


Web Trends
The most viewed items on EquipmentWorld.com for June 2008:

Top news story viewed – Caterpillar, Navistar plan truck, engine alliance

Top product viewed – crawler excavators


Case expands biodiesel program
Case Construction Equipment has approved the use of B20 biodiesel blends for more than 85 percent of its equipment. B20 fuel is a mixture of 80 percent regular diesel and 20 percent biodiesel derived from vegetable oils, animal fat and other sources. Case is advising equipment owners to discuss the use of biodiesel and related service requirement with their dealers. For a list of B20 approved Case equipment, go to www.casece.com.
– Tom Jackson


CORRECTION:
Page 90 of the July 2008 issue of Equipment World included an incorrect photo in the sectioned titled “Body and crane combination offers high capacity, functionality.” The correct photo is shown.


Industry Briefs
Cat to build compact excavators in China

Caterpillar will build a 365,000-square-foot plant in the Jiangsu province of China to manufacture hydraulic excavators weighing less than 20 metric tons. Construction is scheduled to begin in early 2009.

Navistar raises prices on International trucks
Navistar International will raise prices on International trucks, effective immediately. The increase will vary by model, up to $1,600 per truck.

Genie launches online parts ordering system
Genie Industries’ new online parts ordering system uses a serial number parts lookup system, enabling customers to identify a part, add it to the virtual pick list, then roll the pick list directly into an online order. The system can be accessed at www.genieindustries.com.

Doosan Infracore names new CEO
Scott Nelson has been named chief executive officer of Doosan Infracore International, a U.S.-based subsidiary of Doosan Infracore. Nelson will continue to serve as global president of Bobcat.

Non-residential construction spending hits new high
Private non-residential construction spending hit an all-time high of $405.3 billion in May 2008, a rise of 0.2 percent compared to April 2008, according to the U.S. Department of Commerce.

Terex authorizes increase in share repurchase program
Terex board of directors has authorized an in increase in its share repurchase program; the company may now purchase an additional $500 million of their outstanding common shares. This will bring the total amount that may be repurchased to $1.2 billion. The program is set to expire on June 30, 2009.

Caterpillar and BHP Billiton to build robotic mining trucks
Caterpillar and mining company BHP Billiton will develop autonomous, robotic mining trucks scheduled to be in service at mine sites by 2010. Caterpillar plans to unveil further details at MINExpo 2008, held in September in Las Vegas, Nevada.

Volvo to produce backhoes in Mexico
Volvo CE will move production of the BL 60 and BL 70 center-mount backhoe loaders from Wroclaw, Poland, to Tultitl