CHICAGO -- In a Memorandum of Understanding (MOU) signed today, Caterpillar Inc. and Navistar International say they intend to pursue global on-highway truck business opportunities and cooperate on a variety of engine platforms.

The two companies say they will focus on global truck opportunities, including North American severe service
construction trucks, as well as technology development for engines worldwide.

Through this alliance, Caterpillar says it will target a 2010 introduction of a North American Cat branded heavy-duty truck for severe service applications, such as road construction, large infrastructure projects, and oil and petroleum development.

Ending months of intense speculation, Caterpillar says it will not supply EPA 2010 compliant engines to truck and other on-highway original equipment manufacturers (OEMs).

"We are pleased to be matching the formidable talents and technology leadership of two industry leaders to serve an expanding base of engine, truck and equipment customers worldwide," said Jim Owens, Caterpillar Chairman and CEO. "As the world leader in construction equipment and diesel engines, Caterpillar is now positioning itself for growth in the on-highway truck market.

This is an important step for Caterpillar and we look forward to working with Navistar for the continued benefit of our customers."

Adds Daniel C. Ustian, Navistar Chairman, President and CEO: "This relationship is a perfect example of Navistar's strategy of growth through leveraging our own assets and those that others have built."

It appears Cat is exiting
the big-block market.

The companies plan to develop a product "global" offering that would include a full line of medium and heavy-duty trucks in both conventional and cab over designs, for select markets outside of North America.

While few details were released in the joint announcement that was circulated this morning, it appears Caterpillar is exiting the big-block heavy-duty diesel engine market.

The two companies, the press release said, intend to work together on development of mid-range engines for diesel applications, such as school buses and utility trucks.

This engine development would support each company's stated path not to use urea-based Selective Catalytic Reduction (SCR) technology to meet EPA 2010 emissions reduction mandates.

Caterpillar and Navistar have scheduled a joint teleconference this afternoon. We'll more details as soon as they become available.