Long time US truck market commentator Oliver Dixon is casting doubt on the long term future of Cummins as a supplier of heavy duty truck engines, saying the ISX is likely to disappear form the company’s offering in the next few years.

You can read Oliver’s latest opinions at the World Trucks Blog

Dixon casts doubts starting to be expressed about Cummins position in a market with ever increasing fitting of proprietary engines and not vendor engines as they have in the past, especially in the USA.

Cummins has announced that it will add Selective Catalytic Reduction (SCR) aftertreatment to its Heavy-Duty products for the US market in 2010 to deliver the best fuel efficiency for its customers.

The SCR technology will be included in the next generation of engines for North America in order to meet US EPA 2010 at emission levels not due for introduction here in Australia until 2013.

As previously announced, Cummins’ Heavy-Duty ISX engine family will incorporate the XPI fuel system, proven cooled Exhaust Gas Recirculation, the Cummins VG turbocharger, Cummins Particulate Filter and advanced electronic controls for the best performance, fuel economy and reliability.

“Cummins’ expertise in engine system integration means that we have the capability to make the engine systems and aftertreatment technologies work together seamlessly,” said Steve Charlton, Vice President, Heavy-Duty Engineering.  “The addition of the new SCR catalyst technology ensures that Cummins will deliver the best fuel economy in the industry and total operating cost benefits to our customers.

“This move demonstrates Cummins’ ability to adapt to a changing environment by leveraging technology advancements from our MidRange engine development and Cummins Emission Solutions,” said Ed Pence, Vice President and General Manager, Heavy-Duty Engine Business.  “Our 2010 engine development is progressing on plan and customers can depend on Cummins to deliver these new products on-time, with the reliability, performance, and fuel economy that they have come to expect from us.”

When asked whether there were technical difficulties with the previously announced non-SCR engine, Cummins strenuously denied.

“That product was all set to launch in January, 2010,” said Steve Charlton, vice-president of heavy-duty engineering with Cummins. “The program was performing well, the product was performing well and we were hitting all our targets.”

Cummins have announced it has concluded its joint ventures with CNH Global and Iveco, two Fiat Group companies. Under the new agreement, Cummins will purchase CNH’s equity stake in Consolidated Diesel Company (CDC) and will sell its interest in the European Engine Alliance.

CDC, which is located in North Carolina, USA, will become a wholly-owned entity of Cummins Inc. Cummins entered the joint venture with Case Corporation in 1980, and has produced more than 2.7 million mid-range engines. Cummins will purchase CNH’s 50 percent interest in CDC.

The European Engine Alliance (EEA) was established in 1996 as a joint venture between Cummins and two Fiat Group companies, Iveco and New Holland, which is now CNH Global, to develop a new generation of 4, 5 and 6-litre engines. EEA includes manufacturing assets in Turin, Italy.  Cummins will sell its one-third interest in the EEA to Fiat Powertrain Technologies.

“We have enjoyed a long and successful relationship with our partners. This change will essentially be transparent to the CDC employees and to our customers,” said Jim Kelly, President of Cummins Engine Business. “On July 1, we celebrated the 25th year of CDC’s successful production of engines and components with our employees there, and we look forward to continuing this success together well into the future. Our customers can continue to depend on Cummins and CDC for the quality products and support they have always received.”

Fallout from the Caterpillar/Navistar deal continues with an announcement by Freightliner concerning the return of Cummins as an engine supplier in the US. Freightliner have only offered Detroit or Cat in heavy duty for the last five years on their domestic market.

News websites in the US reports that Daimler Trucks North America have said they will have both a Selective Catalytic Reduction and a non-SCR engine option available for customers in 2010.

Freightliner are quoted as saying it will offer Cummins ISX power, as well as the Detroit Diesel DD15, in its heavy duty Freightliner, Sterling and Western Star trucks.

“This decision will complement our current successful and proprietary product line of Detroit Diesel and Mercedes-Benz engines. It will expand and strengthen the range of choices for our customers, and establish Cummins as a full range vendor engine partner,” said Chris Patterson, president and chief executive officer of Daimler in the US.

“This action was a result of many months of carefully considered planning and consulting with our key customers to determine engine needs and preferences. We are convinced that expanded engine options will offer the best suite of solutions on the market, bar none,” added Patterson.

Daimler’s own Detroit Dioesel DD15 will use SCR to meet EPA2010 emissions standards while Cummins says it won’t need SCR choosing instead to introduce the XPI fuel injection system to reduce exhaust emissions.

In a surprise move the company also stated Cummins ISX will be available in the Freightliner Cascadia in an EPA07 configuration with deliveries to start in January 2009.

The fallout from Caterpillar’s decision to get out of the highway truck engine market in the US after 2010 has started to reverberate around the North American truck engine makers world.

Almost as soon as the Cat news got out, Cummins released a statement about their ongoing relationship with International despite the agreement between their owners, Navistar, and Caterpillar. International were at pains to reassure customers Cummins would be available in Inters after 2010. The deal announced was to ensure supply of Cummins ISL, ISM and ISX engines.

“The North American on-highway markets have long been important to Cummins, as is our relationship with an important customer like Navistar,” said Tim Solso, Cummins Chairman and Chief Executive Officer. “We look forward to the exciting growth opportunities this partnership represents.”

“Navistar has a long-standing association with Cummins and the ISX engine enjoys significant share in our Class 8 products” said Daniel C. Ustian, Navistar Chairman, President and Chief Executive Officer. “We are pleased that this agreement will extend our relationship through 2013.”

“Navistar and Cummins have a strong partnership and history of collaboration in serving our mutual customers,” said Ed Pence, Cummins Vice President and General Manager – Heavy-Duty Engine Business. “We have been working closely with Navistar to integrate our 2010 solutions, and this agreement will deliver the right technology to meet customers’ needs for operational efficiency and low operating costs, with high performance and reliability.”

The statement says part of the long-term agreement, beginning in 2010, Cummins will be Navistar’s exclusive supplier for 15- and 16-litre big bore diesel engines (Cummins ISX) for Navistar’s International trucks in North America.

Cummins engines in 2010 will incorporate an integrated technology solution that includes the XPI High Pressure Common Rail (HPCR) fuel system, next generation Cooled Exhaust Gas Recirculation (EGR), advanced electronic controls, proven air handling and the Cummins Particulate Filter.

Liquefied Natural Gas (LNG) engines made by Westport, as seen at the recent Melbourne Truck Show in the Innovation Kenworth, are starting to make progress in the US market with a sale of 20 HPDI LNG engines to a single customer in California.

HayDay Farms of Blythe, California has ordered 20 heavy duty liquefied natural gas (LNG) trucks featuring Westport’s High Pressure Direct Injection (HPDI) technology. Fitted to Kenworth T800s and based on the Cummins ISX diesel engine with cooled EGR, the LNG version of the engine offers the same horsepower, torque, and efficiency as the base diesel engine rating it is replacing.

LNG tank system on Kenworth Innovation Truck

“At over US$4 per gallon for diesel and the natural gas equivalent at approximately US$3 per gallon, purchasing LNG trucks delivering the same torque and efficiency just makes sense,” said Dale Tyson, Vice President of HayDay Farms. “Running LNG trucks with Westport’s HPDI technology can help reduce fuel costs and harmful emissions providing economic and environmental drivers in line with HayDay’s core business values.”

“Providing a highly efficient, low-emission Westport ISX G 15 litre engine with a comprehensive support program for customers like HayDay Farms gives Westport a distinct competitive advantage,” stated Michael Gallagher, President & Chief Operating Officer of Westport Innovations. “The economic drivers in concert with environmental benefits for customers like HayDay Farms are now creating unprecedented interest in our new natural gas fuel systems for heavy duty trucks.”

The Westport LNG system comprises LNG fuel tanks, proprietary Westport fuel injectors, cryogenic fuel pumps and associated electronic components to facilitate robust performance and reliable operation.

The Westport LNG system for North American markets is available with 400 and 450 horsepower ratings and up to 1,750 lb-ft torque for heavy-duty port, goods distribution and other commercial truck applications. LNG fuel tanks can be configured to suit customer range requirements. Trucks are eligible for federal tax credits in the United States and may be eligible for other state-specific emissions credits.

Cummins is on pace to report a fifth consecutive year of record sales and profits in 2008, and is poised for significant further growth over the next several years, Chairman and Chief Executive Officer Tim Solso told shareholders at the Company’s annual meeting in the US.

Speaking to shareholders from the Columbus Engine Plant, Solso recapped Cummins’ 2007 performance and then outlined the Company’s growth plans.

Cummins enjoyed its most profitable year ever in 2007 when it reported net earnings of US$739 million on US$13.05 billion in sales.

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“Cummins remains on track for further profitable growth, this year and beyond, despite the economic uncertainty affecting some of our U.S. consumer-oriented markets,” Solso said. “We have gained share in key markets in the U.S. in the past year, and our international presence continues to strengthen.

“Our strong financial position today gives us the flexibility to invest in the people, products, facilities and technologies for future growth.”

Solso discussed the Company’s growth targets for 2008: 12 percent sales growth and an Earnings Before Interest and Taxes goal of 10 percent of sales. The Company also is targeting a 20 percent return on equity and a 25 percent return on average net assets.

Solso spoke of three broad global trends, increasingly strict emissions standards, the globalisation of the world economy and rising demand for energy around the world, that will benefit Cummins over the next several years.

“As a leader in emissions technology, Cummins stands to benefit from new emissions standards around the world over the next several years, both for the Company’s engines and components such as exhaust aftertreatment devices, fuel systems, turbochargers and filters,” said the Cummins statement accompanying the annual meeting.

“Cummins has large and growing businesses in key international markets, such as China, India and Brazil and is pursuing growth opportunities in new emerging markets such as Russia, Vietnam and Africa.

“The Company expects continued strong growth in its joint venture operations, especially in China and India, and its North American distribution network.

Solso also outlined several key drivers for the Company’s expected future growth.

“Cummins’ deep technological capability. The Company is investing in the right technology across its full range of products, using world-class tools and methods. That investment is reflected in the recent market share gains, and has allowed the company to pursue profitable growth opportunities in many of its markets around the world,” he said.

“Cummins’ strong global network, which helps insulate it from downturns in an individual market or region. Cummins does business in more than 190 countries and territories. Fifty-four percent of the Company’s sales were generated outside the United States in 2007, with that number growing to 57 percent in the first quarter of 2008. Likewise, Cummins produced nearly 900,000 engines in 2007, more than half outside the United States.”

Cummins has announced a large number of new products that are now being introduced or will be introduced during the next several years, including: light-duty engines in the U.S. and China by 2010; engines that meet the next wave of on- and off-highway emissions standards in the U.S. and Europe over the next few years; a new industry-leading common rail fuel system and innovative user-friendly filters.

“I’m proud of our efforts over the past several years to grow the Company and improve our financial structure, which have produced good returns for our shareholders,” Solso said. “That work has positioned us extremely well, and I am more excited about the future of the Company than at any time during my 37 years with Cummins.”