Sunday, April 15, 2007

Bound to Happen

Fleet Owner: PACCAR joins the engine club
Last month Paccar announced plans to build a $400-million facility to manufacture 12.9-liter and 9.2-liter engines for its Peterbilt, Kenworth and DAF-branded Class 8 trucks for the OEM's North American and global markets. The plant, which will be built at an undisclosed location in the Southeastern U.S., is scheduled for completion in 2009.

The announcement confirms a long-rumored Paccar initiative to vertically integrate its engines in the North American market.

“The Paccar 12.9-liter and Paccar 9.2-liter engines are of a similar displacement as to what's being offered in DAF trucks worldwide,” says Andy Wold, Paccar treasurer.

......According to investment firm Bear Stearns, the Paccar announcement provides yet more evidence of a trend to build greater vertical integration among truck OEMs and would likely erode the market share of engine maker Cummins. The engines built at the Paccar facility will not compete directly with Cummin's 11- and 15-liter engines, but dealers may try to shift customers to Paccar-branded engines to gain more aftermarket parts business, Bear Stearns says.

With this announcement all of the major truck manufacturers will have proprietary engine families. Add in the intense engineering needed now to design workable cooling for the new EGR engines and the result is fewer choices under the hood. I remember when Mack was the only major manufacturer to offer a proprietary engine in a heavy truck and was considered something of an odd duck as a result. When Renault bought them out one of the first turnaround steps was to allow more 3rd party engines. Times (and the owners of Mack) have changed. Cummins and Cat have to wonder how long they are going to be able to keep a viable business in heavy duty diesel engines. The one thing that will help them is trucking is a very conservative industry as a result of the razor thin margins and delivery schedules most carriers work under.

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