Navistar, Cummins Ink Deal on Engines, SCR Systems

This story appears in the Oct. 29 print edition of Transport Topics.

Navistar Inc. has completed a definitive agreement with Cummins Inc. for the engine maker to supply heavy-duty power plants and aftertreatment systems for its International brand trucks.

“This agreement represents a natural extension of the long-standing relationship between Navistar and Cummins and our history of collaboration in serving our mutual customers,” said Troy Clarke, Navistar’s chief operating officer. “With the addition of the Cummins ISX15 and the use of the proven Cummins aftertreatment system, we are on a clear path to providing customers with proven, reliable and fuel-efficient clean engine technology.”

Cummins spokeswoman Carol Lavengood confirmed the Navistar statement.

Navistar said it will start installing ISX15s in ProStar+, PayStar and 9900-model tractors in November and deliver them to customers as early as December.

On the 11- and 13-liter side, Navi-star will modify its own MaxxForce engines by adding the Cummins selective catalytic reduction after-treatment systems. Limited production is scheduled to begin in March with full production coming in April.

The addition of SCR technology to the Navistar lineup of tractors ends the debate on how to meet the federal government’s 2010 emissions standards. Daimler Trucks, Paccar Inc. and Volvo Group — all of which have substantial operations in Europe — selected SCR early as the means for limiting nitrogen oxide compound emissions to 0.01 gram per brake horsepower-hour.

Cummins, the independent engine maker, held out longer in considering a third-generation of exhaust gas recirculation, but ultimately decided on SCR as well. All of the SCR manufacturers also use some EGR technology in their engines.

In contrast, Navistar stood alone in advocating an EGR-only approach, but ultimately could not meet Environmental Protection Agency certification without the use of banked emissions credits.

Navistar had planned to use Cummins EGR engines until that company switched technology paths.

Lee Long, director of fleet services for less-than-truckload carrier Southeastern Freight Lines, said he was pleased with the Navistar-Cummins agreement.

“This is good thing for the industry with Navi-

star offering the Cummins product. It’s a proven technology, and we’re looking at all options, including this,” said Long, who is also chairman of American Trucking Associations’ Technology & Maintenance Council.

Southeastern, Columbia, S.C., has a fleet of 2,800 power units, including some Navistar tractors and Cummins engines in Volvo tractors.

An International Trucks dealer also welcomed the news.

“I think it’s a good move. The two-engine strategy gives us some flexibility. Many people have bought Cummins engines for years,” said Richard Ryan of Carolina International Trucks, also in Columbia.

Ryan represents International dealers on the American Truck Dealers board of directors and said the brand’s dealers have been “quite excited” about the Cummins addition. Ryan said his dealership has not sold any of the early Navistar-Cummins production yet, “but we’ve been quoting quite a few deals already.”

Navistar spokesman Stephen Schrier declined to specify the length of the agreement.

“A wide range of variables will impact actual volume, including the broader U.S. economy and overall status of the trucking industry, as well as used truck demand, aging fleets, fuel prices, preference for 13-liter power versus 15-liter power, etc.,” Schrier said.

Some stock analysts who follow Navistar have written that the Cummins deal will give Navistar a volume of sales, but without profits as the OEM will have to endure higher costs. Schrier disagreed with that assessment.

“We have no intention of ‘just treading water.’ We’re in this business to deliver great products for our customers and make money while doing so, and that’s just what we plan to do,” he said.

Separately, the Lisle, Ill., manufacturer’s parent company announced a secondary offering of 10 million of its common shares.

Navistar International Corp. said Oct. 24 it began offering the additional shares for sale and will use the proceeds for general corporate purposes.