Cummins to Remain Profitable Through Technology, Execs Say

This story appears in the April 4 print edition of Transport Topics.

LOUISVILLE, Ky. — Executives of Cummins Inc. said that despite the trend by truck manufacturers toward vertical integration of engines and trucks, the sole remaining independent manufacturer of heavy-duty truck engines will be able to offer unique technology and service that will keep their company profitable.

Cummins executives also said that the company is well into research to meet expected 2014 federal government regulations on carbon dioxide emissions.

Since 2010, all North American Class 8 truck manufacturers have developed their own engines to go with their vehicles, on the model of European and Japanese “vertically integrated” companies.

Caterpillar Inc., which had produced Class 8 engines, as an independent supplier like Cummins, withdrew from the market after 2009.

“We have to be like an internal engine division of our customers,” Tom Linebarger, Cummins president and chief operating officer, said during a media event held March 29 in conjunction with the 2011 Mid-America Trucking Show.

“We have to earn the business every day. Our customers make engines, too, so we have to be out there hustling.”

Linebarger added that Cummins knew that it had “to be better, not the same as the truck makers’ proprietary engines.”

Other executives said Cummins also knew it had to focus on service as well to stay relevant.

“We have the most dense service network in North America,” said Ed Pence, general manager of Cummins’ heavy-duty engine division.

Pence said that besides the company’s own dealer network, “we make an effort to have a Cummins-certified technician at every truck dealership.”

“Fleets that run nationwide or in irregular routes know that they can always find a technician who knows our engines,” Pence said. “No vertically integrated truck builder can offer that.”

Cummins supplies engines to Freightliner Trucks, a division of Daimler Trucks North America, Kenworth and Peterbilt trucks, both divisions of Paccar Inc., and Volvo Trucks North America, part of Volvo AB, for their trucks along with their proprietary engines.

Navistar Inc., second in Class 8 sales to Freightliner, offered Cummins Class 8 engines through 2009 and sold many “legacy” Cummins engines through much of 2010 but offers only its own MaxxForce brand engines.

Jeff Jones, Cummins vice president, said the company is expanding its Cummins Care program to constant coverage via telephone for all customers, not just the large fleets using it now. Jones said the company opened a new facility in Nashville, Tenn., to answer questions and solve problems, 24 hours a day, for heavy- and medium-duty truck operators.

Steven Charlton, chief technical officer of the engine business, said Cummins spent much of the previous 10 years meeting regulatory demands for lower levels of nitrogen oxide and particulate matter emissions, but the main focus of engineers has switched to carbon dioxide.

Charlton said that Cummins expects the Environmental Protection-National Highway Traffic Safety Administration rule on greenhouse-gas emissions, or carbon dioxide, will be put into its final form sometime this summer.

“We worked with them,” Charlton said. That helped place the focus on carbon output per ton-mile rather than a raw mileage standard.

Charlton said Cummins spends about 3% of its revenue on research and engineering — $300 million a year — on trying to manufacture more fuel efficient engines.

Charlton also said that “calibrations” introduced earlier this year to the 2010 Cummins ISX15 have increased the engine’s fuel efficiency by 6% over the 2007 model.

“Using our extensive bank of real-world data from customer field units and by working closely with our customers, we have been able to deliver significant calibration improvements that positively impact both fuel consumption and diesel exhaust fluid consumption,” Charlton said. “We know that many of our customers will realize even better than a 6% improvement. The range of improvement will vary depending on the customer’s actual load factors and duty cycles.”

Cummins, along with all other heavy-duty engine manufacturers, introduced new technology power plants to meet new federal regulations for both 2007 and 2010. Charlton was alluding to improvements Cummins made in its 2010 engines, comparing them to fuel economy of its 2007 models.

Transport Topics Staff Writer Joe Howard and Associate Editor Jonathan Reiskin contributed to this article.