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. Last Updated: 07/27/2016

ZiL Signs Deals With Caterpillar, Paccar

AMO-ZiL, Russia's giant truckmaker, signed related contracts Friday with two large U.S. companies to produce American-designed trucks and diesel engines in Russia. ZiL executives signed one contract with Caterpillar to assemble the U.S. company's diesel engines here, while it signed a separate deal with Paccar to manufacture the American company's heavy trucks, said Alexei Cherepkov, general director of Novotruck, an existing joint venture formed last year by Caterpillar, Paccar, and ZiL in order to jointly market and support the companies' products. Paccar is the manufacturer of Peterbilt and Kenworth heavy-duty trucks. The ZiL-produced Caterpillar diesel engines will be installed in both Kenworth and ZiL trucks, said Cherepkov. He declined to disclose the amount of the investments but indicated that existing ZiL production lines would be used in the manufacturing. In the Paccar-ZiL joint venture, ZiL will produce Kenworth heavy trucks of 40 tons and more to sell throughout the former Soviet Union. Cherepkov said the Paccar-ZiL joint venture will start operating by the end of 1994 using ZiL's factory in southern Moscow. He said the venture has a projected capacity of 2,500 Kenworth trucks a year. The joint venture between ZiL and Caterpillar, Novodiesel, is the third joint venture between the two companies. Novodiesel will supply Russian-made Kenworth and ZiL trucks with diesel engines. The engines will be assembled at ZiL from parts produced in the United States, Cherepkov said, and they will assembled, tested and painted by the Novodiesel joint venture. Cherepkov said the number of engines produced will depend on "how much the market will demand." He said the existent venture, Novotruck, will collect orders and sell the new trucks and engines to customers. Production of component parts for the engines will gradually be transferred to ZiL factories over Russia and within three years 60 percent of the parts could be made in Russia, Cherepkov said. A previous Caterpillar-ZiL joint venture, Diesel Systems, was set up in December to produce fuel systems for a new line of ZiL medium-range trucks. ZiL currently produces trucks with Caterpillar engines imported from the United States, but the Caterpillar-ZiL trucks sell for between $23,000 and $30,000 and have proven too expensive for many Russian purchasers, Cherepkov said. He said the engines account for up to 70 percent of the price. Cherepkov said the new trucks will be cheaper. ZiL is weathering a financial crisis caused by mounting unpaid debts between companies and an economic slowdown that has left its traditional customers unable to pay for its products. The company announced plans earlier this year to lay off up to 20,000 workers by year's end. Arkady Volsky, president of the Russian Union of Industrialists and Entrepreneurs, said Friday that Ukraine bought only 20 ZiL trucks this year compared to its usual annual purchase of 19,000. He said ZiL suffered a 140-billion-ruble ($70 million) loss as a result of the downturn in the Ukrainian market.