In what is considered as a departure from the traditional way of doing business, Daimler Truck AG has inked a deal with Cummins Inc.
Story by Bhushan Mhapralkar
Daimler Truck AG and Cummins Inc. have announced the signing of a memorandum of understanding to establish a global strategic partnership for medium-duty engine systems. Evaluating other opportunities for collaboration too, the two companies, as per the MoU will see Cummins investing in further development of medium duty engine systems for Daimler Trucks and Buses and globally produce as well as deliver them beginning from the second half of the decade. Expressed Martin Daum, Chairman of the Board of Management at Daimler Truck AG and a member of the Board of Management at Daimler AG, “The memorandum of understanding between Daimler Truck AG and Cummins makes engine production at the Mannheim location fit for the future.” “With the changeover to Euro VII, we are now freeing up funds to focus them on technologies that are crucial to our long-term corporate success in the transformation of our industry rather than to invest them in further development of our medium-duty engines,” he added. Tom Linebarger, Chairman and CEO, Cummins Inc., averred, “We are pleased to announce this important strategic partnership with Daimler to provide the medium duty engine systems for Daimler Trucks and Buses in global markets. “Our partnership is a terrific opportunity for both the companies to be more competitive, drive global innovation, expand offerings to customers and reduce emissions,” he added.
Looking at exploring other potential opportunities while it works with Daimler on the production of medium-duty engines, Cummins, as a leading independent global power solutions provider, with the Daimler contract by its side, would be in a strategically advantageous position to pursue its core philosophy concerning powertrains and powertrain technologies. Keen to offer its customers right solutions at their doorsteps, and from among a broad portfolio that comprises advanced diesel, near-zero natural gas, fully electric, hydrogen and other technologies, Cummins, according to Linebarger, will establish an engine plant within the Mercedes-Benz Mannheim campus, efficiently utilizing existing resources to produce medium duty engines compliant with the Euro VII emissions standard for Mercedes-Benz and ensuring continued joint success in the medium duty vehicle segment. With this strategic partnership, Daimler Truck AG and Cummins will help maintain employment at the Mannheim plant. Cummins will use its existing footprint and strong production and supply chain networks in all other regions for use in other Daimler Trucks’ brands, including those of Daimler Trucks North America.
Of the opinion that the arrangement would present a clear future perspective for the Mannheim site which produces medium duty engines today and will continue to do so, Daum mentioned, “By signing this memorandum of understanding, the clear future perspective for the Mannheim site would spell a good move into the future.” It is a given that the Mannheim site would undergo some changes as per the regulatory and other criteria, which need to be adhered to.
Said Daum that the changes to the site would be carried in cooperation with the works council. Looking at his Group and Cummins to shape the changes in the coming years in the view of developing joint solutions, and keeping the interests of the customers, employees and other stakeholders at the front, Daum is keen to get a handle on the alternate fuel technologies as they emerge and proliferate. Anticipating the partnership with Cummins will enable it to increase and accelerate its development efforts on alternative and emerging technologies, including non-diesel engines, Daimler Truck AG, it is clear, in focusing on the further progression of zero emission drive technologies as well as further development of commercial heavy-duty drivetrains. The production of the current medium duty engine generation (MDEG) by Daimler Truck AG will end with the start of production of the Cummins engines at Mannheim where engineer Carl Benz invented the world’s first automobile with the patent number 37435 in January 29, 1886. The Mannheim site to say the least is linked by a very special history thus. The site has over 5000 employees working on the production of engines and associated components for all categories of commercial vehicles worldwide. The plant’s foundry is one of the world’s leading producers of cast-iron vehicle components.
As the next step of the strategic cooperation deed, the partners will evaluate a broader global strategic cooperation through identifying potential synergies in areas such as powertrain components and engine system components. The Daimler heavy-duty engine platform (HDEP) for the heavy-duty vehicle segment of Daimler Trucks and Buses will remain in the Daimler Truck AG portfolio. The HDEP engine family will continue to be manufactured by the global production network in Mannheim and Detroit, Michigan (USA) and will be fitted in heavy-duty trucks, in touring coaches as well as in third-party products worldwide. Raising eyebrows as the development involving Cummins and the historic Mannheim site comes just after Daimler AG announced that it is spinning off its truck and bus business into a separate entity, a picture that seems to be emerging is about cost sharing and technology sharing to rebound to profitability amid a new world order influenced by unprecedented developments like the Covid-19 pandemic. Focusing on restoring earnings and starting production of an electric big rig in the form of the e-Actros, the truck and bus business of Daimler, getting ready to separate from the larger Mercedes-Benz luxury-car division after more than a century, looks destined to induce more agility; to lift profitability and advance the development of carbon-neutral drive technologies.
Of the opinion that the planned independence will help them make even faster progress into the future, Daum said about the Cummins cooperation that it would further strengthens his company’s competitiveness. Known to traditionally produce more components itself than many peers, with the acquired independence, the Daimler Truck AG is expected to enter more cooperation agreements to enhance operational efficiencies. It is also expected to leverage its production site in India to produce trucks and buses for the Asian region as well as source components for its sites across the world. Collaborating with Volvo on fuel cells; with Waymo LLC on autonomous driving, the Daimler Truck AG business in India has from the beginning concentrated on achieving high levels of localisation. Its medium-duty engines from the start of Daimler’s operation in 2013 came to be built by AVTEC, claim sources. Sources also mention that AVTEC supplies transmissions to some BharatBenz CVs as well. In India, the Daimler Truck AG’s subsidiary produces BharatBenz, Fuso, Mercedes-Benz and Freightliner trucks for domestic consumption as well as exports.
