Komatsu and Volvo Construction Equipment reached a basic agreement for cooperation on production and development of construction equipment components as a result of discussion both companies have engaged in since last fall.

The two companies have signed a letter of intent for the production of Komatsu-designed wheel loader cabs at Volvo CE's cab plant in Hallsberg, Sweden. The cabs, currently outsourced, will be for four models of Komatsu's small wheel loaders, produced in Europe and North America.

Production is scheduled to start at the beginning of 2003 after the finalization of specific conditions. The volume will be set for about 1,500 units per year.

The cabs for Komatsu's wheel loaders produced in North America and Europe are currently outsourced to a component maker in Germany.

With the outsourcing of production to Volvo CE, Komatsu will be able to expect a reduction in costs. The agreement will also provide Volvo CE with increased operating efficiencies at its Hallsberg plant.

The agreement is part of the on-going cooperation discussions between Komatsu and Volvo CE. Discussions in progress include collaboration in the supply and development of drivelines, except engines. Conclusion of these discussions is expected to take place this fall and announcements made on these and other potential ventures will be made as basic agreements are reached.