Clockwork Orange

Geez, and I thought we’d get out of this emissions thing without anyone getting his knickers in a public twist. Well, it seems not. The crap’s hitting the fan south of the border, and things are getting interesting in the extreme.
Interesting, that is, if you’re an observer like me.

Potentially disastrous if you’re in the business of making and selling trucks or diesel engines.

Why? Some of the biggest fleets in the States-led by Don Schneider of orange-truck fame, the biggest for-hire fleet of all-say they won’t buy trucks with the new engines that U.S. emissions rules demand starting in October. They say these diesels, all but one of which will depend on exhaust-gas-recirculation (EGR) technology, will cost too much, will burn too much fuel, and will present questionable reliability and durability. There may be some posturing here, but Schneider National buys 4000 or so trucks a year in his 16,000-truck fleet, so people listen. And remember, he’s not alone.

There’s no denying a price hike for ’02 engines (a couple thousand dollars seems likely) but the engineers are feverishly working to avoid a fuel-economy penalty. Cummins’ technical guru John Wall says there may well be no efficiency downside at all, or at worst a very small one. Others haven’t commented. As for reliability, who knows? On the oil front, you can forget extremely extended drain intervals.

A little history here before we go further: this whole mess began in 1998 when two U.S. government agencies, Environmental Protection Agency and the Justice Department, coerced the five key heavy-duty diesel manufacturers-Caterpillar, Cummins, Detroit Diesel, Mack, and Volvo-into spending more than $1 billion US in order to settle allegations that engines in as many as 1.3 million trucks made since 1988 were designed to defeat pollution controls in violation of the Clean Air Act. The engines had software that allowed them to meet laboratory emissions tests but altered their fuel-injection timing when the vehicle is being driven at highway speeds. These “defeat devices” delivers better fuel economy, the EPA said, but allow up to three times the limit of nitrous oxide (NOx), which contributes to the formation of ozone and carries a variety of health risks. The engine makers not only agreed to pay fines and boost their R&D efforts, they said they would accelerate the next round of emissions limits to October of this year, up from January 2004.

Only one engine manufacturer actually used such a device, in fact, and its legality can be argued strenuously. It was. But as I understand things, the Justice Department nonetheless threatened jail time-jail time!-against the head of this particular company. That led to a circling of the engine-maker wagons and they stood as one to take a totally undeserved but unavoidable beating.

What followed was a mad and expensive scramble to get engines ready for 10/02. As things stand now, Cummins seems most ready of all to meet the EGR challenge, but the others will be there, too. Only Caterpillar chose to go without EGR, instead focusing on new injection and combustion technologies and probably aftertreatment. Except for the C10, the engines won’t meet the new emissions rules until early 2003; the penalty will be a fine of $3000 to $14,000 for each engine sold after October that does not comply.

Now, if the Schneiders of this world don’t buy in late 2002, or buy some of the 100,000 or more late-model non-EGR used machines lying around, Cat might not lose much after all. Truck sales will surely pick up in 2003, after the true nature of the new engines is better known, and the yellow diesels will be ready at that point.

It would come at the cost of new truck sales, which is no small price to pay, but is Schneider’s strategy an answer to the glut of used trucks on the market? It’s otherwise going to take another year or three to work these older vehicles out of the way, and until they’re gone, the industry at large will be upside down-with the collective fleet worth less than the market value assumed just a year ago. So maybe there’s something in this.

To me, however, Schneider’s stated intention to hold off buying new trucks is a smack in the face to engine makers especially. Having invested hundreds of millions of dollars to meet an arbitrary EPA deadline for not very good reasons, those manufacturers could be facing a market made radically, dangerously small, even smaller than the recession dictates. His point is easy to see, but where was his voice a couple of years ago when all this silliness began?