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Daimler’s global engine strategy paying off

WOERTH & GAGGENAU, Germany -- Despite a volatile global truck market, Daimler Trucks’ vast global presence and unified engine strategy has helped the company retain its position as the largest truck manufacturer in the world.


WOERTH & GAGGENAU, Germany — Despite a volatile global truck market, Daimler Trucks’ vast global presence and unified engine strategy has helped the company retain its position as the largest truck manufacturer in the world.

“We are still number one by far,” Dr. Frank Reintjes, head of global powertrain, procurement and manufacturing engineering with Daimler Trucks told visiting truck journalists this week. “If you take shear size, we are far bigger (than Volvo Group) and we are far bigger than Volkswagen. We’re still the world’s largest manufacturer and our outlook is that we’ll stay there, at least compared to the western competitors. If you include Chinese competitors, the picture is different; we are still number one but nevertheless, Chinese manufacturers are within the top five there.”

The primary benefit to being the world’s largest truck manufacturer is unmatched economies of scale, which Reintjes said allow the company to “generate customer value and translate that into market share and customer satisfaction.”

The backbone to Daimler’s strategy is its global Heavy-Duty Engine Platform (HDEP), launched in 2007 and largely derived from the Detroit Diesel engine built in the US. Engines produced under Daimler’s various brands around the world now boast 90% parts commonality, which helps control costs. Reintjes said a generally accepted rule within the commercial vehicle manufacturing business is that by doubling production volumes, you can reduce costs by 6-10%. That’s why the company now offers one common platform across all displacements in each global market Daimler serves.

Daimler is now applying those same principles to other components such as air compressors and turbochargers.

The constant struggle to reduce costs mimics, in some ways, what the truck maker’s own customers are doing.

“Fleet customers are literally counting the beans,” Reintjes said. “They are calculating total cost of ownership to two digits after the decimal. They are very intelligent people. The times are over where truck operators, at the end of the month, calculated what (revenue) came in. The big fleets in the US are big companies and they are turning every stone to save money. So, operational excellence in our plants is a top job.”

The North American market remains a pillar of strength for Daimler, having obtained more than 40% of 2013 Class 8 truck sales to date through its Freightliner brand.

“With market share above 40% in Class 8, that’s tremendous and we are quite proud that with the HDEP engine platform, that we could contribute to this excellent market position,” Reintjes said. However, he noted there are still challenges in other markets, particularly Europe.

“The debt crisis of the European states; this is driving down economic growth, and driving down GDP and specifically in southern Europe, the business is still shrinking,” Reintjes said.

One of the great challenges for a global truck manufacturer is to manage volatile – and at times unpredictable – demand cycles. For instance in 2009, production at Daimler’s Woerth truck plant fell 50% within six months.

“Management of cycles is the top job within the truck business,” Reintjes said.

Daimler’s Woerth plant is the largest commercial vehicle plant in the world, with a 1.2-kilometre assembly line. The plant is 2.9 million square metres in size and last year produced 90,000 trucks. It’s staffed by 12,000 employees and about 550 truckloads of parts are shipped into the facility each day. Assembly occurs in a just-in-time fashion, with required parts arriving exactly when they’re needed at specific spots along the production line.


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