Cat dealer is correct!!
If the coach is a "keeper" and a re-power is unavoidable I would consider replacing both engine and transmission with a late model DuraMax/Allison.
Otherwise consider rebuilding the 1160.
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1993 Newell 45'#316, 1976 Trans Am 455, 1967 GTO, 1953 Chevrolet 3105 (panel truck),1952 Chevrolet 3600,1969 Airstream Overlander. Always fixing something!