LOUISVILLE, Ky. –Cummins is projecting a bright future for its engine business despite the loss of one OEM partner and the arrival of a new competitor in Paccar products.

Navistar will no longer offer Cummins power and Kenworth and Peterbilt trucks are now available with Paccar’s own 13-litre MX engine, but the changing landscape is nothing new for Cummins, president Rich Freeland told a gathering of trucking industry reporters on the eve of the Mid-America Trucking Show.

“We sell to people who make their own engines,” Freeland said of the arrival of the Paccar MX. “We partner with them to figure out where we can supply them engines or components and that’s not going to change, we know how to play in that world and we’ll continue to play in it.”

He noted the MX uses a significant amount of Cummins componentry and that it simply replaces the Cat C13 option in Paccar trucks. Even with the Cat C13, Cummins enjoyed significant market share in Paccar’s heavy-duty products, he pointed out.

On losing Navistar as a partner, Freeland said Cummins is confident it made the right decision in adopting selective catalytic reduction (SCR) for its 2010 products, even if it meant the end of its partnership with the truck maker.

“In each emissions cycle there’s a decision: can you stretch and get a little more out of the technology you’ve got? Our conclusion was that trying to to stretch some more out of the 07 technology was going to have a very negative impact on our customers, so we made the decision to move to the new technology,” said Freeland, who began his career with Cummins 31 years ago as a shop foreman.

He said the other reason for adopting SCR was “the learning curve on the new technology if you don’t move to it. We saw that back in the 02 timeframe, if you don’t move to it, you start out two years behind and that’s a very bad place to be. We think moving to the new technology was critically important and the right decision for us to make.”

Freeland’s predecessor, former engine business president and current vice-president, enterprise initiatives, Jim Kelly, said Cummins has built and delivered more than 2,500 EPA2010 engines and those engines are delivering fuel economy improvements of at least 5%, with “at least a half dozen to a dozen major Class 8 fleet owners reporting double digit fuel economy advantages compared to what they were used to.”

Kelly said drivers enjoy the performance of the new engines.

“We’re hearing things like ‘Are you sure this is a 425?’ ‘I can outrun everyone on the road with this thing.’ ‘This pulls really well.’ We will be back to where we were three years ago where you couldn’t find drivers, so having powerful products that are responsive to the driver and provide a positive experience from a noise and vibration standpoint is going to be important,” said Kelly.

As for reliability, Kelly admitted “it’s far too early to tell.” However, he said “The data we have today compared to the most optimistic data we had in the past (engine releases) suggest we’re in a good place.”

Looking ahead, Freeland declared that fuel economy will be the next battleground. “Whoever does that best, wins,” said Freeland, adding Cummins will be moving “aggressively” on improving fuel economy.

Cummins also addressed the future viability of liquid urea-based SCR.

“I don’t see SCR going away,” said Sean Milloy, chief technical officer, Cummins Engine Business.

He said the 2010 engines have about a 90% NOx conversion efficiency and the challenge will be to improve on that going forward.

As far as alternative ammonia delivery systems are concerned, Milloy said “We selected the fluid (diese l exhaust fluid) option because we felt it was the right technology for our 2010 products. As we look at solid type delivery systems, they have some potential benefits but we don’t think the technology is ready yet. They may have some benefits under low temperatures but as we look at the on-highway line-haul application running down the highway, it’s still our assessment that (liquid DEF) offers a 2-3% fuel economy performance improvement.”

As the truck engine market slowly recovers in North America, Cummins execs said they are bullish about the company’s future. Kelly said Cummins expects to be “a little bit stronger” in 2010 than in 09 from an earnings standpoint but he added in 2012 the company is anticipating it will exceed its record earnings performance from 2008.

“We are committed to a $20 billion sales goal by 2014,” he said, which would be about double its revenues from last year.

“I’m very bullish about our prospects.”

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‘I don’t see SCR going away.’

Sean Milloy, Cummins