In the most hotly debated decision in the seven years Diesel Progress has been recognizing the company, person, technology, market or subject that made the most news in the industry, Caterpillar Inc. has been selected as the 2003 Newsmaker of the Year.
This year, there were a lot of possibilities: Caterpillar; Caterpillar's ACERT technology; JCB's new engines; DaimlerChrysler's announced vertical integration strategy; Same buying into Deutz; and AGCO getting into the diesel business with Sisu via its Valtra acquisition.
For big picture fans, the whole move of equipment manufacturers buying engine builders late this year was also a worthy candidate. A case could also be made for the large spark-ignited engine regulations coming next month, both for its impact on that segment as well as for what it says about future regulatory thinking.
The list of possibilities was so strong that Editor-in-Chief, Mike Brezonick, has penned a "dissenting" opinion that follows this article.
In the end, however, our editorial board decided on Caterpillar--making it the first two-time winner in the award's history--for a number of reasons. First, in sheer volume of news in 2003, Caterpillar seemed to be everywhere. It expanded its presence in India acquiring the outstanding shares of Hindustan PowerPlus Ltd; it announced a marketing and supply agreement with Blount for the forestry markets; it made significant moves in its larger gas engine lines and is essentially overhauling its marine product line; it signed a joint venture with Eaton for power-gen controls; it made a number of significant moves in the school bus business.
Further, its Perkins Engines operations announced plans to assemble engines in North American next year and open a plant in Brazil this year, both of which make an interesting statement about the possible future of diesel engine manufacturing. It also, somewhat unnoticed in all the engine news, introduced a decent amount of new or upgraded equipment.
And then there's ACERT.
No matter what ACERT is or isn't, Caterpillar came out very, very strongly, though maybe a little late, with its plans for future emissions technology. They did it in a very un-Cat like, publicly aggressive way that captivated the industry's attention, judging by e-mails and phone calls immediately following the mid-March introduction.
In fact, Caterpillar made such a strong statement with ACERT that the subject merited stand-alone consideration as Newsmaker of the Year. It merited thought considering it was the most money the Peoria, Ill., manufacturer has ever spent to develop anything.
Cat's decision to drop cooled EGR and go with ACERT may rank as one of the riskiest (and most expensive) decisions made in the development of any type of engineered product. The market jury still has a long way to go before rendering the final decision, but it was a very gutsy move.
Beyond the technology, the other aspect of ACERT that caught the industry's attention was Vice President Jim Parker's statement (see accompanying quote) that the new emissions technology was going to demand a premium price.
Nobody in the engine business talks about price in a punic forum. Like age or weight in proper society, it's something that just isn't talked about.
Yet here was a senior official of Caterpillar in front of the press and with much of the industry looking on via the Internet, saying "boys, emissions is going to cost all of us some money."
It was a watershed type of statement. Again very out of character for Cat, signaling to all that, like it or not, engines going toward Tier 3 and Tier 4 were going to cost more, so be prepared. Everybody thought it or whispered it, but Cat went public with it.
Time will tell if Caterpillar will be able to demand the reported 30-plus percent premium for ACERT technology it hopes to get, but it certainly made news with its announcement and it threw the gauntlet down on price. It was big, big news. And the Newsmaker of the Year is about making news.
Emissions is The Story in industrial engines in 2003 and ACERT was the biggest emissions story of the year, on many levels. Caterpillar was also previously named Newsmaker of the Year in 1998 largely because of its acquisition of Perkins.
As much news as Caterpillar generated in 2003, it almost got nipped at the wire by the frenetic activity with primarily off-highway equipment manufacturers buying engine companies. Frankly, if the rumored courting of Daewoo's diesel group by Terex had come to pass before this was written, the rice might have been too dose to call.
As discussed in Top Dead Center elsewhere in this issue, the flurry of activity since about Sept. 1 has literally changed the face of the industry. For long-term impact, this probably was the story of the year. We're still digesting what it all means. What we do know is that the number of major manufacturers of equipment, on highway and off-road, without an equity, position in engines is down to very few. And the number of truly independent, high-volume engine manufacturers is down to one.
In near term retrospect, it has been trending this way for awhile. But nobody expected it to move this fist and this completely.
The year started out slowly. Business was inconsistent and average at best. Conventional wisdom had the mobile markets getting healthier late this year and in fact, that has started to happen.
In January and February it appeared like it was going to be a flat, quiet year; in publishing terms a comparatively slow news year.
The year crept in like a lion and went out like a Cat.
Quote of the Year
"We intend to sell at a premium compared to our competition. We've invested heavily in this (ACERT) technology, it's clear we have a significant advantage. We intend to get a premium. As we said, it's a game-changing technology, and we intend to change the commercial game as well."
James J. Parker
Vice President
Caterpillar Inc.
March 19, 2003
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