Cat truck engine future uncertain

| 3/20/2008

Can you imagine a world without Caterpillar truck engines? It could happen according to Cat’s chief executive Jim Owens.

Reuters quotes Owens as saying the company has an important choice to make by 2010 when its current on-highway truck engine contracts run out. Owens says Cat could get out of the on-highway business entirely, could partner with another manufacturer, or could acquire another operation.

The company has plenty of options, especially in light of the Federal Reserve Board’s rate cut Tuesday. The Fed’s action makes U.S. goods more competitive and can further trim the nation’s enormous trade deficit.

The Washington Post says that’s good for companies such as Caterpillar, maker of engines, turbines and construction and mining equipment. Last year, Caterpillar’s exports from the United States jumped 20 percent to $12.7 billion, or 28 percent of the company’s $45 billion in revenue.

Owens said he hopes Cat stays in the on-highway business.

The Reuters report notes that the truck engine business has changed dramatically in recent years with companies such as Volvo, Mack and International all building their own engines instead of turning to engine manufacturers like CAT or Cummins.