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DMNYrED 0 18ioma07
WORLD TRUCK conference inised by the Institute of Puring and Supply a few weeks discussed the in-house proion of components, known otor industry jargon as vertiTtegration. This is an area of cle design which has been iging slowly but surely over years as manufacturers ier on the economics of lucing their own, say, ens, as a typical example.
le company which has a de interest in the demise of cal integration is Cummins, bund when I talked to David stong, the company's rely appointed automotive ceting director.
le talk turned, naturally igh, to the prospects for .e growth in the Cummins cet share. In the UK the corn
is already in a very strong :ion at the heavy end of the ;et with its 14-litre engine ily in its E290 rating. The duction of new products (inrig the joint venture with ]nd, more of which later) aventually permit Cummins tend its market down to the onne sector.
Europe, however, the Cum mins success is limited to specific niches. As David Armstrong explained: "The big challenge for us is to be able to get into a major manufacturer." This begs the obvious question "Which manufacturer?" The stock answer to questions like this is always "We talk to everyone in the automotive business." Cummins is no exception.
It is interesting to speculate on the effect on Cummins' business of the joint agreements in the USA between Renault Vehicules lndustriels and Mack, Volvo and White as well as Daimler-Benz and Freightliner. The bulk of the higher weight Meeks, for example, are powered by Cummins, so the relationship is already there...
The markets, however, are still down. Export markets and particularly the OPEC countries are well down on their peak of 1981/82. The Continental manufacturers have accordingly revised their schedules downwards with the general opinion being that the markets are not likely to get back to their peak of 1979. For this reason Cummins feels that several of the major vehicle manufacturers will be unable to maintain their current vertical integration. As production drops then the economies of scale do not look quite so satisfactory. David Armstrong obviously looks forward to this situation: "It should increase our chances of penetration as the wind will be behind us."
One interesting point raised by David is that any such penetration into one of the major vehicle builders is unlikely to be on the basis of built-up engine sales. The reasoning behind this is quite straightforward. Such a manufacturer would be employing a lot of people building engines and it would be a dubious political move to make this workforce redundant by buying in Cummins engines fully built up. Thus any such arrangement with a major manufacturer would take the form of a trading arrangement with the individual details depending upon the company.
As David Armstrong explained: "It would have to be a deal which was good for both parties". Which brings us back to the Cummins/Leyland deal announced last September as a typical example of the way David Armstrong sees Cummins business developing.
This agreement means that Leyland will manufacture 40,000 Cummins engines of the small "Family 1" design (to be marketed officially as the B-Series) every year at its Bathgate factory with production scheduled to start in 1986. The engines will be produced in four and six-cylinder form in naturally aspirated, turbocharged and charge-cooled versions to cover the 48 to 130kW (65 to 175bhp) category. So far it sounds like a fairly straightforward sales deal, but from here on it gets more complicated. Leyland will purchase blocks and heads from Cummins's US factory but will produce and sell crankshafts, connecting rods and camshafts to Cummins for use in US-built B-Series engines. It is expected that the B-Series range will eventually power about 70 per cent of the Leyland truck range with the other half of the Bathgate production being sold by Cummins to industrial' equipment manufacturers.
In this way Leyland gets access to the latest engine technology and Cummins gets a, source of engines and a guaranteed volume of components — if anything can be guaranteed in the motor industry.
David emphasised that such deals would need to be tailored to suit the partners concerned. "There will definitely be no such thing as a standard package. The arrangements will have to be a matched one."
So far as the sales performance of the new 10-litre Cummins is concerned it is too early to see if there is much substitution business against the 14litre. The initial reaction at Cummins is that most of the sales are additional business.
David Armstrong feels that what most operators are looking for since May 1 is an engine that will allow the vehicle to return the same trip time at 38 tonnes as an existing 32-tonner although this is obviously dependent upon the terrain. David claims that in the "new" engine power requirement bracket of around 290 to 350 horsepower, the 14-litre has a good pedigree in terms of reliability, durability and proven fuel economy.
The disadvantage of the en
gine, however, is its size and weight and it is for this that the 10-litre was designed to give the UK chassis manufacturers a chance to compete with the lightweight premium tractive units of some of the Continental companies.
Early sales of the 10-litre are going into fleets which are predominantly Volvo F7 and DAF 2500 which has pleased Cummins. "That's the market it's aimed at," said David. To date Seddon Atkinson has taken the most 10-litres, but that is logical as it is the only engine available in the 301, anyway.
The 10-litre has also effectively opened up a new market for Cummins in the psv sector. The sheer physical size of the 14-litre caused packaging problems and there was a limited application for the Darlington-built V8 because of its high engine speed, As David Armstrong explained: "The 10-litre will take us into markets where we have never been before. Not just buses but eight and six-wheelers as well."
Although the 14-litre will continue the drive into the premium heavy end of the tractive unit market, the 10-litre obviously carries a lot of Cummins hopes for increasing its overall market share.
The concept of the "World Truck" is one which has received a great deal of publicity in recent months and is currently a source of considerable argument. David Armstrong has a firm opinion: "It's a nice idea based on sound logic, but in practical terms no one will be able to offer the same vehicle worldwide."
The essential driving force behind manufacturer interest in the World Truck is the basic rule that the larger the volume, cheaper the production c Where the idea tends to apart, however, is on the lac harmonisation on vehicle le lation and usage and on I sourcing.
With some markets it is possible to import if there is a large local content and t local sourcing, while log from the point of view of country in question, tends to feat the purpose of a W Truck. As far as harmonisatic concerned, the markets are different in Europe (Switzerl with its 2.3m (7ft Sin) width Ii for example) and across world it becomes even worst All is not lost, however. )/k. David Armstrong is obvio unconvinced about the feat ity of the World Truck, he c agree with the concept. way I see it is that there is sc for a standard design with options. The trick is to have most expensive component standard."
David believes that peoplt right to try the concept rationalisation as much as sible because, the more thel, successful, the better the pa tial cost differences. He also lieves that, while the W Truck is a non-starter, concept of a "Euro Truck" come close to reality.
Taking the list of eng manufacturers from 15 y ago and comparing it with day's illustrates the point. suggests that this list will crease still further but "it wi a very slow process".