A sigh of relief, holding our breath

THE diesel engine — mounted on a test stand — started flawlessly with the typical diesel sound, but without the typical puff of smoke. Curious magazine editors, guests of the engine manufacturer, watched intently. A demonstration of how 2007 engines meet the new emissions regulations was underway.

As the crowd gathered around to witness the performance, we couldn't help but wonder: is there a ventilation system in this room? Big engine, small room. Bad combination. As the engine continued to run and the exhaust gases continued to flow, the question was obvious: who among us will be the first to succumb to carbon monoxide poisoning?

The host of the demonstration had an answer: no one. “This engine,” he explained, “does not produce carbon monoxide. The exhaust consists of carbon dioxide (the stuff plants breathe) and water vapor.”

The demonstration, conducted recently by Cummins Inc, had to be a glorious moment for the folks at the Environmental Protection Agency — dozens of trade press guys breathing second-hand smoke from a 2007 engine — and living to tell about it.

EPA had given the industry an extremely difficult target to hit — and the industry will hit it. Yes, it cost zillions in research and development. Yes, it will cost zillions more when truck customers buy and operate them. Eventually these costs — and the benefits — will be passed on to all of us. But there is no doubt that the new engines will make our air a little easier to breathe and a little more difficult to see.

Less clear, however, are the secondary effects of the regulations. Minor details such as: Will the new engines be reliable? How much more will they cost to buy? What effect will they have on fuel economy? On maintenance costs? Will the additional costs lead customers to rush to buy trucks ahead of the deadline? If they do, will it affect their ability or desire to buy trailers? How will the higher temperatures affect truck body and equipment installations? Will the higher temperatures make these trucks unsafe?

Slowly but surely we are getting answers.

No, truck manufacturers have explained, the new technology will not convert trucks into Class 8 blowtorches that incinerate every object they drive past. As the Cummins demonstration showed, exhaust gas (even when heated to 1,000° F or more) dissipates quickly once it leaves the tailpipe, tolerable to the touch after only a foot or so.

As the 2007 deadline approaches, it appears that the technology will be ready, and truck manufacturers and the truck equipment industry will figure out how to work with it.

But it also appears that truck customers don't want to pay the extra cost — whatever that might be. After attending multiple engine and truck OEM press conferences this spring, it is apparent that neither type of manufacturer — truck or engine — wants to say how much extra the new technology will cost. Engine manufacturers have been dodging the “how much” question by pointing out that truck pricing is the truck OEM's decision. The truck guys respond to the same question by saying that they haven't received final pricing from their engine suppliers. This scenario is not good news for checkbooks.

A few brave souls have announced pricing — an extra charge of roughly $5,000 to $9,000. Not surprisingly, customers are throwing orders at truck salesmen in an effort to grab whatever 2006 production slots remain. The result: record truck sales in March.

But truck OEMs believe that much of the money they are getting now is coming at the expense of next year's sales. Most analysts we have heard expect truck sales to decline 30% next year. Some truck manufacturers are bracing themselves for a 50% drop.

So far, basics are going as planned. Engine manufacturers have responded by meeting the EPA's challenge. Truck manufacturers are responding by packaging the new technology in a way that gives truck equipment distributors a fair amount of latitude in terms of equipment installations. And truck buyers are responding as expected to the anticipated extra cost.

The big surprise has been the trailer market. Last year, conventional wisdom went something like this: customers have only so much money to spend on equipment. A disproportionate amount of it will go to buy tractors in 2006. That means less money for trailers. Yet ACT Research reports trailer manufacturers received orders for more than 37,000 trailers in March — a 67% increase from last year. How does that happen? Because profits for motor carriers have been surprisingly strong so far this year, and fleets apparently have plenty of money to buy both. For that, trailer manufacturers could breathe a sigh of relief — if they weren't working so hard to supply enough trailers to meet demand.

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