What's in the water in Columbus? - Top Dead Center - Cummins Inc., strategical moves - Brief Article

Diesel Progress North American Edition, May, 2002 by Mike Osenga

What's up with Cummins?

Formerly the leader in the "Who's Going to be Bought Next" derby, Cummins Inc. has seemingly taken on a different mindset and attitude in recent months. It's an aggressive, confident, almost "damn the torpedoes" posture that is as surprising in its strength as it is in its timing.

Start with emissions. On the truck engine side, Cummins has gotten in everyone's face about exhaust emissions regulations and technology. "We can do it. We're gonna do it. Play ball or go home." In a series of battles being fought as much in the court of public opinion and legislative/regulatory quicksand as in engine labs, Cummins has come out with all guns firing.

Second, while it introduced a new engine line at ConExpo--Con/Agg the "other" announcement Cummins made in Las Vegas was even more stunning. Tier 3. Off-highway No aftertreatment. No external changes to the engines. Yes, in fact, you will be able to simply trade out a Tier 2 off-highway diesel for a Tier 3 engine later this decade. This after we were told repeatedly that Tier 3 would "change engine life as we know it."

Nope, says Cummins. Same footprint.

Will the others do the same things? Maybe. Probably But Cummins set the agenda by being out there first. Score one for the PR battle. Your serve.

The deal for small diesels with Korea's Kukje Machinery was surprising mostly in that it didn't leak out before the announcement and that it was not the Korean diesel manufacturer the rumor mill had linked Cummins with.

While time will tell about Kukje, and history has not been especially kind to U.S. diesel manufacturers under 100 hp, it is a comparatively low-risk, no-equity move for Cummins that expands its engine range into one of the diesel world's most competitive market segments.

Whether they, or anyone, can make any money in that horsepower range remains to be seen. Having a compete line looks good on paper, but makes sense only if it makes money Either way they are gutsy moves.

And gutsy moves may define Cummins lately From being super aggressive on all things emissions, to expanding their engine portfolio in a down market, to going way out on a Tier 3 limb long before they had to, Cummins Inc. is definitely not Cummins Engine Co.

I guess I'm jaded enough to wonder, even briefly, if this isn't window dressing for some larger purpose like attracting a buyer, partner or suitor. Being an independent engine manufacturer is not a hot business model.

There certainly have been enough similar aggressive campaigns in recent years, with exactly that end in mind, that it causes a boy to wonder.

But the hunch is no.

These don't seem to be the actions of a company with status quo as a mission statement.

Mike Osenga

mosenga@dieselpub.com