EPA’s Greenhouse-Gas Rules Sparking Cooperation Among Engine, Component Manufacturers

This story appears in the Feb. 25 print edition of Transport Topics.

ORLANDO, Fla. — Engine manufacturers will not need to make a radical shift in technology to meet federal greenhouse-gas regulations in the next five years, but engine and component makers will have to work more collaboratively to better integrate their products to boost efficiency, suppliers said.

The path to meeting the U.S. Environmental Protection Agency’s 2014 and 2017 greenhouse-gas standards will be to further improve current engine technology, a Cummins Inc. vice president said during a recent panel discussion at American Truck Dealers’ annual convention and exposition here.

“I don’t think you’ll see major engine system changes, at least in the next two rounds, like maybe you’ve seen in the prior three emission cliff events where we’ve dealt with particulates and [nitrogen oxides],” said Jeff Jones, Cummins’ vice president of sales and market communications.

Cummins launched its 2014 greenhouse gas-compliant engines in January and didn’t make any major hardware changes to meet the upcoming standard, which will require engine makers to improve fuel economy by 3% from a 2010 benchmark, Jones said. In the next step, manufacturers will need to produce another 3% efficiency gain by 2017.

“Between now and then, in 2014, ’15 and ’16, you can expect stable architecture, and it looks to us like 2017 will be further refinements of today’s products,” Jones said. “I don’t think you’ll see any major engine system changes to squeeze out another 3 or more percent.”

Other components, however, may become more important in future regulations, another supplier said.

“Transmission was really neutral in the first part of these greenhouse-gas regulations. I think they will become a player, a part of it, in 2017 and 2020,” said Steve Spurlin, executive director of global application engineering and vehicle integration at Allison Transmission.

Ken Davis, president of Eaton Corp.’s vehicle group, predicted that component makers will work collaboratively with original equipment manufacturers and engine suppliers to produce more customized products.

Instead of a standard product, “you’ll see a transmission that is tuned to fit with a specific OEM engine or a specific merchant supply engine,” Davis said. “We think that’s important, because we’ll tune the ratios, the software and the controls, working collaboratively with the engine OEMs, to fit with what works best for the fuel economy and performance of that OEM or engine maker.”

Closer partnerships with OEMs will be especially important for suppliers in the future, given truck makers’ moves toward vertical integration, building more engines and parts within their companies.

Chris Snodgrass, vice president, North America, at Meritor Inc., said the OEMs “really feel strongly — and I think the technical data is there to prove it — that a fully integrated powertrain and drivetrain system could be more efficient.”

“We, as independents, need to get into that equation,” he said. “Otherwise they’re going to do it themselves.”

Part of the value proposition offered by suppliers such as Meritor is that OEMs wouldn’t have to make a major investment in infrastructure and engineers that suppliers already have in place.

“We’ve got 500 engineers who come in every day, and all they think about is axles, brakes and drivelines, and they do it globally,” Snodgrass said. “If you want to have an integrated powertrain system and drivetrain system, let us do that for you.”

Jones, of Cummins, said his company is committed to strengthening its partnerships with OEMs and dealers.

“While we’re an independent company, we wake up every day recognizing how dependent we are on OEMs, OEM dealers and our customers,” he said. “We don’t go to market if we’re not available in an OEM.”

To deal with vertical integration, Cummins has to continue to find ways not to compete with OEMs, but complement what they offer, Jones said.

Despite the movement toward vertical integration, Cummins engines are currently available in “many more OEM installations, heavy and medium, than they were 10 years ago in North America,” he said.

Eaton’s Davis said vertical integration challenges independent suppliers to deliver the same technologies and efficiencies by working together with OEMs as those OEMs can deliver by working internally.

“Our focus is to provide the benefits of vertical integration, but leverage the scale that we bring to the industry, both in terms of the [research and development] scale, the capacity, the manufacturing scale and, certainly, the support scale,” he said.