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Globalization: A truck maker’s perspective
International chief says SCR is fraught with challenges

LAS VEGAS, Nev. -- In a speech to the Heavy-Duty Manufacturers Association (HDMA) on Monday, International Truck an...

LAS VEGAS, Nev. — In a speech to the Heavy-Duty Manufacturers Association (HDMA) on Monday, International Truck and Engine Corp. president Dee Kapur said North American truck makers must continue to make in-roads in emerging markets.

Kapur said International has its eye on three key markets: India; China and Russia. However, he said the company must work alongside other North American manufacturers, associations and government groups to have barriers to entry, such as length limits that make conventional style tractor-trailer configurations, removed.

“We need to drive acceptance of the US alternative without going through expensive modifications to meet the European requirements in those markets,” said Kapur. “We need a coordinated effort to at least accept the US standard as an alternative. If we don’t do this, we’ll be sucking wind. It’s very important for our industry and our country to be on a level playing field (with domestic and European manufacturers).”

Kapur said International’s desire to enter non-traditional markets is based on the fact “there’s only so much growth in North America now, there’s a lot more growthin different markets, emerging markets particularly.”

He pointed out the global truck market grew 3% in 2007 and also noted there are no North American manufacturers among the top five in the world by volume. North America’s market growth is “meager” compared to global markets, Kapur said. He added going global brings “synergies and economies of scale.”

Not surprisingly, India and China have been identified by International as the most appealing emerging markets to leap into. In India, there are nearly four times as many trucks per kilometre of highway as in the US. Kapur said trucks there offer crude cabs offering little in the way of driver comfort. Kapur said International sees an opportunity there to provide trucks that offer improved driver comfort and safety standards, especially as the country’s highway system expands to allow for higher speeds and longer distances. International has already partnered with Mahindra to penetrate the truck market in India.

In China, Kapur said a local partner is required to gain access to this emerging market place. The challenge is to find a compatible partner to pair up with.

“I think now they have more miles of paved roads than the US does,” noted Kapur. He suggested International may have an advantage over North American manufacturers in China, because the very first truck built there was a copy of an International model.

The third market where International would like to make in-roads is Russia. The company previously viewed Russia as a market for used trucks only, but with an improving economy, operators there are beginning to drive a stronger new truck market.

“Economics allow them to play more in new trucks,” Kapur said. The challenge there is that European manufacturers currently dominate and they will be difficult to displace. However, Kapur noted “There’s growing appeal for the North American product, the aero-nosed product. The distances are huge and the comfort of the North American sleepers is appreciated.”

In Russia, Kapur said International may be able to go it alone without a local partner, but it would require constructing a production facility there.

One of the trends that may accelerate the globalization of the trucking industry is that emissions standards are beginning to converge. Kapur is disturbed, however, that some regions of the world view compressed natural gas (CNG) as a preferred way to meet impending emissions standards.

Kapur pointed out clean diesel, which is what’s used in North America today, is cleaner, cheaper, safer, more fuel efficient and more reliable. He also pointed out CNG produces higher levels of NOx and particulate matter than today’s North American solution, as well as 20 other pollutants.

And speaking of emissions standards, Kapur had some strong words about Selective Catalytic Reduction (SCR), widely used in Europe and the preferred method of reaching EPA2010 emissions standards in North America by Volvo and Daimler.

Kapur said SCR “is fraught with challenges.”

International has announced it will meet 2010 emissions standards using technology already in use today, along with advancements in fuel systems, air management, combustion processes and controls.

“We don’t like it,” Kapur said of SCR. “There’s a whole bunch of reasons.”

He said SCR will be costly and overly complex. He also said there will be major urea distribution challenges and it has a tendency to freeze in cold weather and evaporate when it’s hot. More importantly, Kapur said urea is simply the carrier of ammonia, which is the reductant in SCR systems. When the ammonia is extracted from the urea, CO2 is created, Kapur explained. And CO2 is the “next frontier” for the Environmental Protection Agency.

“We’re convinced, on the computer and in the lab, there are solutions that meet 2010 without urea,” Kapur said. He admitted alternatives will have challenges of their own, such as increased heat rejection and possible fuel economy degradation.

But he concluded by saying even if some manufacturers do forge ahead with SCR, it will become obsolete in 2013 or 2014 when the EPA cracks down on CO2 emissions.

“Who’s going to buy it? Not many people. Somebody’s going to take an awful lot of write-offs,” Kapur said.

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