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Five in a bed
Page 30
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Navistar is set to become MAN's gateway to the US, but as Oliver Dixon reports, both parties come to the relationship with baggage.
MAN's decision to team up with Navistar should come as no surprise. The two companies have long been spoken of as potential marriage partners, and while a 'strategic alliance' on components, including engines, suggests cohabitation, as opposed to vows and vicars, there can be little doubt the fit is a good one.
At a structural level there is very little overlap between the two businesses. MAN is a predominantly European player, with a nascent operation in China and a deal in India; Navistar has a large footprint in LatinAmerica as well as North America. So far so good.
But, as is so often the case, things get more complicated when the in-laws are involved.
MAN has a growing relationship with Scania, which is seemingly affianced with Hino. Navistar's links with Ford are similarly apparent — the Blue Oval is out of heavy truck manufacturing following its sale of Sterling to Freightliner, but it still markets a lightweight LCF Cabover, built by Navistar and launched at the Mid America Show earlier this year. What's more, a number of senior executive positions at Navistar have been filled by ex-Ford people.
A combination of MAN, Navistar, Scania, Hino and Ford is an intriguing one,particularly in the light of the mooted global emissions protocol, which Commercial Motor believes is likely to be introduced in around 2012.
The US Environmental Protection Agency has come out against after-treatment processes for emissions compliance, which makes EGR — and its heir apparent, HCCI — a compelling area of research. MAN's decision to go against the grain and adopt EGR for Euro-4 now seems to have been far-sighted, to say the least.
Smiling suits
No doubt there are smiles aplenty in the MAN and Navistar boardrooms. But there are others who are going to be affected by this move whose demeanour is liable to be less cheery.
Cummins has effectively signalled its intention to exit the EU marketplace with the admission that it is not going to take its heavy truck product to Euro-4.What, though, of its business in the NAFTA market? Cummins currently supplies about 60% of Navistar's proprietary engine needs; presumably this volume will be reduced markedly by the MAN deal.
Factor in the likely adoption of Dafs MX range by Paccar — which currently sources 40% of its engines from Cummins — and the picture darkens further. Cummins has an established core competence in the design and development of high-pressure injection systems (as demonstrated by its work with Scania) but the fact remains that it is beginning to slip to Tier 2 status, and the gulf between Tiers 1 and 2 is a big one.
This deal is very much the beginning as opposed to the end of the affair. With five potential stakeholders in this relationship — MAN, Navistar, Scania, Hino and Ford — there must be some distance to be travelled before this new alliance can be truly consummated. si