Caterpillar projects Tier 4 Interim price hikes

“The most aggressive and expensive product development initiative in Caterpillar history,” the equipment manufacturing giant’s Tier 4 Interim engine technology will utilize a “state-of-the-art integrated system” built upon the success of ACERT technology.

To complement the new Clean Emissions Module (CEM), features such as new powertrain technologies and aftertreatment devices will be specifically tailored to products to provide value to customers while meeting the incoming stringent emissions requirements, Caterpillar announced at a Feb. 11 strategy update in Peoria, Ill. All new and additional equipment will be housed within the structure of the enhanced machines.

For customers, this Herculean campaign by Caterpillar will translate into an overall price increase currently estimated at 12 percent over the three-year Tier 4 Interim introduction time frame for machines ranging 130 to 560 kilowatts, including about one-third effective the Jan. 1, 2011 start date, said Stu Levenick, Caterpillar Group President. Actual machine costs will vary depending on equipment type and size.

“Our Tier 4 Interim/Stage IIIB products will be delivered on time, on cost, and with the quality, durability and reliability our customers expect and deserve,” said Levenick. “Our pricing strategy will focus on providing customers with the best value proposition in the market, a broad-based deployment process that minimizes disruption while at the same time allows the company to recover significant multi-year costs necessary to meet the new regulations.”

And the costs will be spread around. “We plan to initiate broad-based emissions-related price actions also starting Jan. 1, 2011 for all products, including those utilizing transitional provisions,” said Levenick

The costs of the Caterpillar program to accommodate power and product enhancement for the about 300 different machines affected haven’t been finalized, said Tana Utley, Chief Technology Officer and Vice President of the Product Development Center of Excellence, “but it’s going to be easy to surpass the ACERT investment” of $1 billion. Tier 4 standards require emissions of particulate matter and nitrogen oxides to be reduced by more than 90 percent.

It is projected that Caterpillar will accumulate nearly one million hours of testing on Tier 4 Interim engines by the end of 2010. Those gathered at the Edwards Learning and Demonstration facility were shown a field-follow 336E crawler excavator featuring the new CEM technology. “Of course, it is Tier 4 compliant. What you have here is a higher-value machine,” Utley told a press conference. Other preview machines include the 140M motor grader, 980H wheel loader and 775 off-highway truck.

 “It’s not just about clean air – we’ll meet those requirements,” said Rod Beeler, Vice President of the Marketing & Product Support Center of Excellence. “We’re going to bring more value.”