A senior Caterpillar official said on Thursday that financing was being put together for the U.S. diesel-engine maker's new Novodiesel joint venture with ZiL, agreed June 24, and its Diesel System joint venture signed earlier this year.
Novodiesel will produce Caterpillar truck engines in the 150 to 500 horsepower range, starting in 1995. Diesel System will produce Caterpillar fuel systems for ZiL's new line of mid-range diesel engines manufactured near Smolensk.
The Caterpillar official did not give the size of the financing package or likely investments in ZiL ventures. He also declined to say how the ownership would be split.
But Russian media reports have said that ZiL will own 51 percent of Novodiesel and that Caterpillar plans to invest $100 million in this joint venture.
Novodiesel will also produce Caterpillar truck engines which will be used by ZiL's new joint venture with U.S. truck manufacturer Paccar Inc., which makes Peterbilt and Kenworth heavy-duty trucks, the Caterpillar official said.
"So we can talk of a strategic alliance between Caterpillar, Paccar and ZiL," the Caterpillar official said.
The Caterpillar and Paccar ventures with ZiL completed a plan developed over two years for the former Soviet Union. In June 1993, the three companies formed Novotruck, a joint venture to develop a sales network of dealers and support organizations.
Separately, ZiL's chairman Alexander Vladislavlev recently met U.S. General Motors and French Renault officials in Geneva to discuss producing buses and trucks in Russia, Interfax said. The news agency gave no details on the talks.
The Moscow-based ZiL, the producer of the sleek black limousines for top Communist Party officials throughout the Soviet era, is in deep financial crisis and has cut some of its workforce of 85,000, industry sources say.
ZiL's attractions or Western investors include cheap labor, modern equipment and low energy costs. But raw material costs are rising, as reflected in the price of Russian-made cars.
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