The big news story last week was, of course, Cat and Navistar breaking up. At first brush, given Navistar’s fresh troubles with a brand-new EPA lawsuit, you’d be forgiven for thinking Cat’s move was a sign of more trouble in Lisle, IL.
I don’t think that’s the case. Though I focus more on the trucking industry these days, I “grew up” here working on Equipment World and came to know the folks at Caterpillar, and their culture, well during those formative years.
Cat is an uber-competitor in global engine and machinery markets. The company consistently ranks in the top tier of U.S. exporters, right up there with Boeing, year in and year out.
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Cat will do whatever it must to attain and hold leadership status in any market niche it enters. That includes outsourcing components and production when necessary. But at the end of the day, Cat is most comfortable when it can bring design and manufacturing in-house and have complete control over those processes.
So more than anything else, I see this move as simply Caterpillar being Caterpillar.
According to the Wall Street Journal, Cat is selling around 1,000 C-Series trucks a year right now. That’s not enough volume loss to hurt Navistar significantly, particularly with several impressive sales orders on the books now and rumors swirling that the company may soon ink a medium duty deal with Chevrolet.
The EPA and Cat aside, Navistar is faithfully holding to its turn-around course and appears to be gaining ground on that front. I’ve been impressed with the new attitude and leadership at International. Sometimes it must feel like they take one step forward and two back in Lisle, but I believe International’s on the right track and their efforts will eventually pay off.
Reading between the lines, it appears that this Cat-Navistar breakout isn’t a full-blown divorce, however. There’s a lot of shared DNA between Cat and International and no reason to believe that will change significantly going forward.
For starters, International announced that it would soon be launching a new, premium, dump truck model. I’m just speculating, but I can’t help but wonder if this new truck will feature the outstanding new cab Caterpillar designed for its C-Series trucks?
That would make a lot of sense: During my C-Series test drives, the Cat cab stood out as an excellent design with cutting edge noise dampening and world class driver ergonomics. Leveraging some, or all, of that cab on a new, premium-level, International truck makes a whole lot of sense from a business angle.
Finally, while I’m busy speculating, let’s look at Cat’s on-highway engine situation at the moment. Chris Chadwick, director of Cat’s global on-highway truck group admitted to me that the current lack of a 15 liter engine was a “big hole” for the company right now. But he also told me Cat would make an announcement regarding a 15-liter solution before year’s end.
When I asked, Cat told me they were not currently planning a full-blown press launch for the new engine—which tells me they’re looking at an engine platform that already exists. Furthermore, Chadwick stressed that Caterpillar was not getting back into the on-highway engine business.
So. Given all that, what are the possible options on the table for a Cat 15 liter engine?
And the most logical one, in my opinion—is a completely revamped Navistar MaxxForce 15.
Of course, Navistar quietly pulled that engine off the market when it finally switched to SCR emissions technology back in 2012. The company has a lot of money tied up in the development of that engine, and it would make sense to fix its problems and get it back out in the marketplace as the Cat-branded CT15.
Another would be to breathe life back into one of Cat’s proven, yet dormant, on-highway engine design and license Navistar to build those engines.
I’ve had a few Cat 3406 fans reach out this week and hopefully speculate that this will be the case. I’d say it’s is a long shot, but who knows? It would depend on how salvageable the MaxxForce15/CT15 design is at this point.
And it’s worth noting that a lot has changed in terms of emissions and fuel economy expectations since the Cat 3406 was on the market. It’s not at all clear that engine could be upgraded to compete with post-2010 engines on the market today.
A final solution
Cat could also simply put red lipstick on the problem and head on down the road.
Would Cat consider putting Cat-branded Cummins power under the hoods of their trucks? I’d be mildly shocked if they did. But, as I noted at the beginning of this piece, Cat has proven time and time again it will do whatever it has to in order to be a leader in the market niches it competes in.
And Cat takes its customers’ desires very seriously. If Cat truck buyers are clamoring for a 15-liter, Cat will give them one.
We won’t know the answer to this puzzle until later in the year. But for now, both Cat and Navistar are forging ahead on divergent paths. And it will be interesting to see where those paths take them.