22 November 2000

Caterpillar Inc. and the commercial vehicle division of DaimlerChrysler AG have signed an agreement to form a 50/50 global alliance to develop, manufacture, market and distribute medium-duty engines, fuel systems and other powertrain components to serve the needs of third-party customers and for use in their own products. The agreement provides the framework for a number of joint ventures, supply agreements and cooperative projects, subject to the consent of US and European regulators.

According to the framework agreement, upon regulatory approval the alliance will create:

  • A medium-duty engine joint venture that will develop, manufacture and market current and future medium-duty engines and parts for sale to third-party customers and to DaimlerChrysler and Caterpillar for use in their own products. The sales volume of this joint venture is expected to grow significantly by mid-decade from a level of about US$2 billion for the combined parent companies in 2000.
  • A fuel systems joint venture that will develop, manufacture and market current and advanced technology fuel systems to third-party customers and for use by the parent companies. The sales volume of this joint venture is expected to nearly triple by mid-decade from a level of about US$600 million for the combined parent companies in 2000.
  • Research and engineering cooperation in such key areas as combustion technology, electronics, air handling systems, exhaust aftertreatment and materials technology. The goal of the two companies is to enable their engines to meet increasingly demanding customer and regulatory requirements for noise and emissions control. These leading technology engines will be sold to third parties and incorporated into Caterpillar’s and DaimlerChrysler’s (Freightliner and its subsidiaries) own products.
  • Combined purchasing volumes that will focus on delivering the procurement cost synergies created by the various elements of the alliance.

The medium-duty engine joint venture will include Caterpillar’s US facilities in Greenville, South Carolina, and its operations in Peterborough, UK. DaimlerChrysler will contribute its Sao Paulo, Brazil, facility. DaimlerChrysler’s Mannheim, Germany, facility, both parents’ engine remanufacturing facilities, and certain operations in Caterpillar’s Mossville, Illinois, facility and in its Gosselies, Belgium, facility, will serve as contract manufacturers to the joint venture. Both companies’ medium-duty engineering/development resources and related intellectual property also will become part of the venture.

The fuel systems joint venture will include Caterpillar’s US facilities in Pontiac, Illinois, and in Jefferson and Thomasville, Georgia, as well as its remanufacturing facility in Nuevo Laredo, Mexico. DaimlerChrysler’s Glatten, Wolfratshausen, and Rellingen facilities in Germany, and its US remanufacturing facility in Grand Rapids, Michigan, will participate in the venture.

In addition, the two partners reached agreement for Caterpillar to continue to supply heavy-duty 10 - 16 liter engines for use in Freightliner companies’ trucks. This volume, added to the volume of engines sold to other valued Caterpillar customers and used to power Caterpillar equipment, provides the worldwide scale to enable a new standard of customer value. A founding principle of the alliance is that it broadens the companies’ ability to serve the worldwide engine market. Both DaimlerChrysler and Caterpillar emphasized that they also will remain independent global suppliers of heavy-duty diesel engines, which are excluded from the alliance.

Caterpillar & DaimlerChrysler Company Profiles

Caterpillar Inc., Worldwide Presence

  • 90 manufacturing facilities
  • 67,500 employees
  • Distribution in 200 countries
  • 1999 Sales & Revenues of US$19.7 billion

DaimlerChrysler AG, Commercial Vehicle Division, Worldwide Presence

  • 53 manufacturing facilities
  • 90,100 employees
  • Distribution in 200 countries
  • 1999 Sales & Revenues of US$26.9 billion

Source: Caterpillar Inc.