This industry includes establishments primarily engaged in manufacturing diesel, semidiesel, or other internal combustion engines, not elsewhere classified, for stationary, marine, traction, and other uses. Establishments primarily engaged in manufacturing aircraft engines are classified in SIC 3724: Aircraft Engines and Engine Parts, and those manufacturing automotive engines, except diesel, are classified in SIC 3714: Motor Vehicle Parts and Accessories.
336399 (All Other Motor Vehicle Parts Manufacturing)
333618 (Other Engine Equipment Manufacturing)
In 2001, Mercury Marine Group of Fond du Lac, Wisconsin, was by far the industry leader with $20 billion in sales and 6,000 employees. Detroit Diesel Group of Detroit was second with more than $10 billion in sales and 3,000 employees. As of 2003, Detroit's marine engines were to be marketed under another of its parent company's brands. Rounding out the top three was Cummins Inc. of Columbus, Indiana, with $5.8 billion in sales and 24,900 employees.
Diesel engines are used primarily in large trucks and buses, in high-powered farm tractors, and in heavy construction machinery. Other markets include marine vessels and lawn-and-garden equipment. The industry dates from 1893, when Rudolph Diesel, a young German engineer, filed a patent application entitled "Theory for the construction of a rational thermal engine to replace the steam engine and other internal combustion engines currently in use." Four years later, Diesel built the first diesel engine.
The Environmental Protection Agency (EPA) and the U.S. Justice Department rocked the industry in 1998 when they cracked down on diesel engine manufacturers' installation of "defeat devices," or software that changed engine performance and emissions under highway driving conditions. The industry defended itself by pointing out that the use of the defeat devices was filed on public record, and that the EPA never expressed opposition to this use until the sudden crackdown. Regardless, the EPA slapped the industry with what it called the largest civil penalty in the history of environmental law: an $83.4 million fine, on top of an estimated $850 million in costs for meeting tighter emissions standards on a quicker schedule than before the settlement. Additionally, six companies, including the "Big Three" industry leaders, would have to rebuild existing engines in order to meet cleaner emissions specifications and recall pickup trucks to remove defeat devices from them.
Caterpillar Inc. of Mossville, Illinois, shared the brunt of the civil settlement with Cummins. Each company paid $25.0 million of the $83.4 million fine. Navistar International Corp. of Chicago paid only $2.9 million and was not required to conduct the environmental projects that cost Caterpillar and Cummins $35.0 million each. The other companies that shared the blame (as well as the fines) were Mack Trucks Inc., which paid $13.0 million of the civic penalty and $18.0 million in environmental projects; Detroit Diesel Co., which paid $12.5 million of the civic fine and $12.0 million in environmental projects; and Volvo Truck Corp., which spent $5.0 million on the civic penalty and $9.0 million on environmental projects.
Despite this setback, or perhaps even spurred by it, the industry continued to introduce innovative new engine designs that increased both efficiency and power. For example, Caterpillar replaced its 3406E model with the C-15 and the C-16. Not only did this extend the company's model numeration past C-10 and C-12, it also incorporated design specifications from these other models into their designs, such as the ADEM (Advanced Diesel Engine Management) 2000 electronic control system to monitor the engine's function. The new models were 200 pounds lighter, quieter, more reliable, and more fuel-efficient than their predecessor, the 3406E. Cummins also introduced new designs: the ISX series with optional additional torque, and the Signature 600 engine that delivered 600 horsepower at 2,000 revolutions per minute.
In 2003, the Environmental Protection Agency estimated that non-road diesel engine emissions could be reduced by 90 percent with the newer planned regulations. Due to the emission regulations into the year 2007, manufacturers were adding particulate filters as standard components of the diesel engine. The filters were designed to act as barriers, preventing the diesel emissions from being released into the air. In addition, engines manufactured in earlier years were being retrofitted with the filters by the thousands. In certain heavy-duty engines, the high temperatures of the exhaust allowed for passive filtering. This was the filter of choice for retrofitting existing engines in the early 2000s. All of the filtering systems were expected to need active management in order to remain compliant and in working order, especially with the stricter regulations expected in the years ahead.
In late 2003, the industry had recovered somewhat from the EPA compliance requirements and stood ready to spend research and development hours and dollars on innovative products. The challenge was to manufacture products that were both compliant with emissions standards and the right design to fit with standard equipment,
and also more powerful and reliable than ever before. Looking ahead, hydrogen fuel was one power alternative garnering lots of attention by those in the marine transportation industry. For large offshore service vessels, diesel-electric power was seen as more economical over than long haul than other propulsion methods, primarily due to fuel cost savings. Manufacturers were looking to design systems that could be easily tailored to current needs, whatever they may become.
The fortunes of U.S. diesel engine makers depend heavily on the market for heavy-duty trucks. The end-user has the option of choosing his own engine, so companies must impress both truck operators and truck makers, which may decide to make an engine standard on a specific line. Although the heavy-duty truck market fell in the mid-to-late 1990s, it was still healthy by historical standards. Some industry observers thought the traditional boom-and-bust cycle of the industry had softened somewhat, due to modest inflation and a more stable economy. According to the U.S. Department of Labor, Bureau of Labor Statistics' Economic and Employment Projections , output for the transportation equipment manufacturing industry as a whole was expected to increase every year until 2012, at the same time that employment was projected to decrease annually for the industry.
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