Caterpillar Inc. and DaimlerChrysler AG said today they have put off talks about a joint venture to make medium-duty diesel engines and will instead focus on long-term agreements to supply DaimlerChrysler's Freightliner commercial-truck unit. The companies first announced a framework agreement last November to focus on fuel systems, medium-duty engines and engine technology.

“The agreement has been very complex, however we've made solid progress during our discussions,” said Caterpillar group president Richard L. Thompson, “I'm pleased to report that we've decided to focus on fuel systems and will continue to work together on other engine-related technology projects."

Teams of employees from both companies are continuing to work on various engine technology and fuel systems projects.

“We intend to continue our positive discussions with Caterpillar,” said Eckhard Cordes, head of DaimlerChrysler's commercial vehicle division. “We want to give this relationship the necessary time to evolve in a sensible way that will benefit both companies. For that reason, it's essential for us to now focus more intently on the fuel systems side of the business.”

According to Bloomberg, DaimlerChrysler this fall plans to unveil a “radical” reorganization plan for its Freightliner subsidiary. The company replaced Freightliner CEO Jim Hebe in May and last month said it would fire 1,120 of Freightliner's North American workers. DaimlerChrysler also owns engine maker Detroit Diesel Co.