Alliance Between DaimlerChrysler and Caterpillar Delayed

DaimlerChrysler AG today said a deal it made with Caterpillar Inc. in November 2000 to develop and make diesel engines for commercial vehicles will be delayed by at least two months because of ongoing negotiations. Negotiators assigned to form a series of ventures won't complete work until at least August, said DaimlerChrysler spokesman Karlheinz Knoess. They had expected to set up the alliance by

DaimlerChrysler AG today said a deal it made with Caterpillar Inc. in November 2000 to develop and make diesel engines for commercial vehicles will be delayed by at least two months because of ongoing negotiations.

Negotiators assigned to form a series of ventures won't complete work until at least August, said DaimlerChrysler spokesman Karlheinz Knoess. They had expected to set up the alliance by June.

The alliance, which involves 14 factories, mostly in the U.S., must receive approval from U.S. and European regulatory agencies. But regulators can't start looking at the project until the companies form the joint ventures, Knoess said.

The agreement was intended to reduce costs by combining parts purchasing, manufacturing and research for diesel engines and fuel systems for buses, medium-duty trucks and power generation, the companies said last year.

The companies also said last year that about half the engines would be sold to competitors and the other half used in DaimlerChrysler's Freightliner and Sterling trucks and Thomas Built buses as well as Caterpillar off-road equipment. The two firms estimated that combined engine sales could rise to $3 billion in five years from $2 billion currently, while fuel-system sales could triple to $1.8 billion.

Knoess denied a report in German newspaper Handelsblatt Monday that the venture might collapse because DaimlerChrysler is concerned it will have to disclose too much information and technology to Caterpillar. Handelsblatt didn't cite the sources of its information.

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