Cats out of the bag

Citing volume challenges facing independent engine suppliers, Caterpillar said it will not offer EPA 2010-compliant engines – such as the C15 shown here – for on-highway trucks. Cat will continue to supply engines through 2009 and support existing engines thereafter.

Over the past year, heavy-duty truck engine makers have gradually confirmed or announced their on-highway emissions solutions for 2010, but the question had remained: What about Caterpillar? Last month, the company finally declared its 2010 solution: Nothing.

On June 12, Caterpillar announced that it would not supply engines to on-highway original equipment manufacturers (OEMs) in North America, effective with the next emissions reduction mandated by the Environmental Protection Agency in 2010. Simultaneously, Caterpillar and Navistar International Corp. unveiled a tentative deal to market through Cat dealers a Cat-branded severe service truck built by Navistar and powered by Navistar’s new heavy-duty diesel engine. The two companies also agreed to pursue jointly on-highway truck business opportunities outside of North America and to cooperate on a variety of engine platforms.Navistar would continue to build and market its own severe service offerings – the WorkStar and the PayStar.

Cat said its decision to exit the on-highway engine market for 2010 was independent of the Navistar deal.

“The writing’s on the wall for independent engine suppliers,” said George Taylor, director of Cat’s global on-highway business, citing on-highway engine market oversaturation amid tightening demand. “It will be increasingly difficult to participate in the North American market as an independent engine supplier.”

Investors, however, apparently didn’t see it that way. On the day of Cat’s announcement, Cummins’ stock price closed up 10 percent from the previous day. By the close on June 16 – the day Cummins formally announced an engine supply agreement with Navistar – Cummins stock was 17 percent higher than the June 11 close.

For Cat, nothing changes through 2009, Taylor says. Cat will continue to supply current-technology engines to OEMs and to support the engines it already has sold. “Caterpillar and our dealers will continue to provide product support and service beyond 2010 for all Caterpillar on-highway engines regardless of truck brand,” said Douglas Oberhelman, Caterpillar Group president.

Oberhelman said the new severe service truck would give Caterpillar’s construction and mining customers “a one-stop solution” for their equipment needs. Cat also will continue to build engines for markets other than on-highway.

Changes set in motion
Cat’s decision to exchange on-highway engines for its own severe service truck leaves Cummins as the lone non-captive engine supplier in the Class 8 market. At basically the same time as the Cat announcement, Navistar and Cummins announced last month that they had extended their engine supply agreement for Class 8 engines through 2013, covering the ISL, ISM and ISX engines in International-brand trucks.

As things stand today, not only would Cummins be the only alternative to OEMs’ proprietary engines, but its ISX engine also would be the only option at all in 2010 for International, Kenworth and Peterbilt customers wanting 15- or 16-liter displacement. Navistar’s new MaxxForce engine will be available in 10.5- and 12.4-liter displacements. Paccar currently is building a truck engine plant in Columbus, Miss., where it will manufacture 12.9-liter and 9.2-liter truck engines for Kenworth and Peterbilt.

Cat’s 2010 departure prompted Daimler Trucks North America – parent of Freightliner, Sterling and Western Star – to add Cummins as an option in Class 8. Cummins already was available in International, Kenworth, Peterbilt and Volvo Class 8 trucks, but Cat has been the only non-captive engine option for Daimler’s commercial heavy-duty trucks for several years except for the Cummins ISL, offered in Sterling trucks. On the other hand, Cummins is Daimler Trucks’ exclusive external supplier of medium-duty engines.

The day after Caterpillar announced it wouldn’t supply an EPA 2010-compliant engine for on-highway, Daimler Trucks said it would offer the 14.8-liter Cummins ISX engine throughout its Freightliner, Sterling and Western Star product lines beginning with the 2010 emissions regulations as an alternative to the 14.8-liter DD15. In addition, Freightliner will offer a 2007-compliant ISX in the Freightliner Cascadia, beginning in January 2009.

Meanwhile, Daimler is changing its own engine lineup based on the global platform Detroit Diesel launched with the DD15, which features turbo compounding and amplified common-rail fuel injection. In the coming months, Detroit Diesel will roll out the 12.8-liter DD13 and the 15.6-liter DD16, which will replace current Detroit Diesel and Mercedes-Benz offerings, says Daimler Trucks spokeswoman Maria McCullough.

Settling technology options
Cat’s decision also settles the technology choices truck buyers will face in 2010. Daimler, Paccar and Volvo Class 8 truck customers will be able to choose either a proprietary engine that uses selective catalytic reduction (SCR) to lower nitrogen oxides (NOx) to EPA-mandated levels in exhaust or a Cummins engine that promises to handle NOx reduction solely through a combination of high-pressure fuel injection and enhanced cooled exhaust gas recirculation, or EGR. Cummins is, however, using an SCR aftertreatment for its medium-duty engines.

Navistar also is relying solely on fuel injection and EGR enhancements in its 2010 MaxxForce solution, so the technology battle is lining up as Cummins and Navistar on one side and everyone else on the other. That also means that regardless of the brand spec’d, Navistar trucks will not offer an SCR-based solution – and neither will the Navistar-built-and-powered Cat severe service truck.

With truck owners facing a substantial differentiation among engine solutions in 2010, the two camps are pushing their points of view hard. The debate began in earnest at the Mid-America Trucking Show in March and is continuing on several fronts – even in so-called “new media.” Last month, Daimler Trucks said it had made available on its website a podcast outlining Detroit Diesel’s plans to use Daimler’s BlueTec SCR technology for the next round of emissions cuts.

Whether ongoing confusion or a lack of focus due to soaring fuel prices and other challenges is to blame, heavy-duty fleet owners appear overwhelmingly undecided over their preferred 2010 engine technology. In a survey last month of CCJ readers involved in on-highway freight transportation, two-thirds said they did not know whether they would choose engines that rely on NOx reduction within the engine block or those that use SCR to break down NOx in the exhaust. But CCJ conducted its survey several days before Cat announced its engine decision and planned strategic alliance with Navistar. With that uncertainty gone, fleet owners soon might start picking sides.