Analysts Warn of Declining Engine Orders

Investors in stocks of diesel engine manufacturers should worry more about how declining orders will affect stock prices rather than whether the companies can meet a federal government deadline that is two years away, said Wall Street analysts.

The government wants cleaner diesel engines from Cummins Engine Co., Caterpillar Inc., Detroit Diesel Corp., Mack Trucks, Renault Vehicules, International Truck and Engine Co. (formerly Navistar) and Volvo Truck Corp. by Oct. 1, 2002. It is part of a push to reduce pollution from mobile sources as well as a requirement of the 1998 agreement between the companies the Environmental Protection Agency to settle a dispute over alleged cheating by the manufacturers on emissions tests.

Spokesmen for EPA and the Department of Justice said the manufacturers have informed the agencies that they could not produce engines by that time that would meet federal requirements ("Diesel Deadline In Jeopardy," 7-3, p. 31).

Reaction on Wall Street to that news has been negligible, and for a couple of reasons.

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