LISLE, IL — Perhaps to nobody’s surprise, Navistar International announced earlier today (while our website was disabled) that it will enlist the help of Cummins in coming to market with an EPA-compliant engine lineup next year. And that includes engineering a Cummins ISX15 into certain International trucks.
For its part, Cummins is quick to say that the two companies have signed “a non-binding memorandum of understanding” that does not yet constitute a contract of any sort. “It signifies our intent to negotiate a supply agreement,” Cummins spokesperson Carol Lavengood told Today’s Trucking.
Navistar’s announcement today comes three weeks after the groundbreaking news that it would disband its EGR-only approach to 2010 emissions control in favor of what it called ‘ICT+’ (In-Cylinder Technology Plus). The company said it would combine its existing in-cylinder approach with liquid-based aftertreatment to meet present and future Environmental Protection Agency standards. In other words, like all other engine makers did to meet 2010 rules, it would add selective catalytic reduction (SCR) on top of EGR. We wrote at the time that there had been speculation that Cummins might be involved in this change in direction, but were led to believe Navistar’s SCR technology would be developed in-house. The company does, after all, have SCR-equipped trucks working in both Europe and Brazil now.
Today’s announcement listed three strategies that Navistar will employ “to enhance the company’s competitive position and drive profitable growth and shareholder value.” These actions include: “Adopting a U.S. market proven aftertreatment solution to accelerate delivery of ICT+, Navistar’s next-generation clean engine solution; a market-transition plan for class 8 engine sales; and securing a $1.0-billion loan commitment, which further enhances Navistar’s liquidity.”
In practice, assuming a deal is struck, that means Cummins Emission Solutions will supply its proven urea-based aftertreatment system to Navistar for use on the MaxxForce 13. They’ll begin the introduction of ICT+ on the 13-liter in early 2013. “Navistar expects that by combining Cummins’ aftertreatment system with its existing MaxxForce engines,” the company said, “its ICT+ will meet 2010 U.S. Environmental Protection Agency emissions regulations and position the company to meet greenhouse gas (GHG) rules in advance of 2014 and 2017 requirements.”
The fate of the MaxxForce 15 is a little unclear at this point. As part of the expanded relationship with Cummins, Navistar said it plans to offer the Cummins ISX15 engine in certain models, “expanding the company’s vehicle lineup and on-highway market opportunity.” Navistar will introduce the ISX15 engine as part of its North American on-highway truck lineup beginning in January of next year.
Does this signal the end of the MaxxForce 15 as presently conceived? An engine based on a long-proven Caterpillar block with Navistar fuel, air, and emissions systems on top, it was also to be used in Cat’s CT660 truck as well as International models. We’re assured that red Cummins engines will never be painted yellow, but will we actually have a Cat CT15 (a re-badged MaxxForce 15) sporting a Cummins emissions system in the CT660?
It’s among several interesting questions arising out of this latest announcement, none of which yet have answers attached. “During the transition to ICT+,” Navistar says it “will continue to build and ship current model EPA-compliant trucks in all vehicle classes using appropriate combinations of earned emissions credits and/or non-conformance penalties (NCPs).
The company continues to have productive discussions with the EPA and the California Air Resources Board regarding its transition to ICT+.” The financial piece of the puzzle sees Navistar entering into “a firm commitment letter with a group of banks led by JPMorgan Chase Bank, N.A. and Goldman Sachs Lending Partners LLC and including Merrill Lynch, Pierce, Fenner & Smith Incorporated and Credit Suisse pursuant to which the banks have committed to provide an up to five year $1.0 billion senior secured term loan. A portion of the proceeds from this financing will be used to pay down the existing borrowings under Navistar’s ABL credit facility.”