Detroit Diesel to Renovate Michigan Facility
This story appears in the June 28 print edition of Transport Topics.
Detroit Diesel Corp. said it will spend $194 million to renovate its 72-year-old Redford, Mich., plant, the latest example of truck makers pouring investments into diesel engine facilities to manufacture the complicated new power plants and vertically integrate production.
Since 2007, truck original equipment manufacturers have allocated a combined $800 million on four new U.S. engine plants. The spending correlates with two rounds of tough-er federal emissions standards for diesel engines, demands by fleets to lower carbon output by improving mileage and truck makers’ desires to source engines internally.
“This is a prediction about the future demand for diesel engine products and the transformation of the industry to new, cleaner diesel technology,” said Allen Schaeffer, executive director of the Diesel Technology Forum, Frederick, Md.
The advancement of engine technology, even since the mid-1990s, has been highly significant, Schaeffer said, and original equipment manufacturers are finding it necessary to make major changes.
“There have been fundamental changes in the architecture of engines. Manufacturers have upgraded and modernized as far as they can, but now they need to invest in new plants and capabilities. Fifteen years ago you didn’t have the pollution controls or computers. Now there’s lots of new stuff,” Schaeffer said.
DDC and its corporate parent Daimler Trucks North America announced the factory overhaul June 18.
The 3 million-square-foot Redford plant is DDC’s only factory for new production. It opened in 1938 when Detroit Diesel was a General Motors Corp. subsidiary. The company makes its major lines there — DD13, -15 and -16 engines — as well as Series 60 off-highway models, diesel particulate filters and truck axles.
To help finance the investment, Michigan Gov. Jennifer Granholm (D) gave the company a $56.8 million tax credit. DDC spokeswoman Maria McCullough also said the company will get a partial abatement of local property taxes and a “brown field” redevelopment credit for improving an older industrial site.
“This is a major capital investment in the Redford facility to bring in an integral component in engine production,” said McCullough. Work is scheduled to start next month and will run through September 2011.
The company said a major part of the project will be adding new equipment for machining engine cylinder heads. Currently the heads are machined in the Daimler Trucks plant in Mannheim, Germany.
After the project’s completion the machining will be done by DDC employees in Redford. DDC has a six-year contract with the United Auto Workers that was ratified in May and runs into April 2016. Total current employment at Redford is about 1,900 people, the company said.
The Redford renovation follows the 2009 completion of the new Paccar Inc. Columbus, Miss., engine plant. Paccar will use the $400 million facility to make MX engines for its truck OEMs, Kenworth Trucks and Peterbilt Motors.
The first MX engines have been manufactured by Paccar’s Dutch OEM, DAF Trucks, and imported so Kenworth and
Peterbilt can offer an option to engines made by independent manufacturer Cummins Inc. The Columbus plant is doing final assembly on the Dutch imports now, but is scheduled to go into full production in coming months.
Kenworth dealer Kyle Treadway said fleets will benefit from sharp competition by truck OEMs and Cummins.
“Caterpillar Inc. has exited the truck engine market and that was 80% of my market. That’s a big void to be filled, so you see everybody reaching for market share.
“All of these manufacturers want to make a name for themselves, so I think you’ll see better service and support,” said Treadway. He owns Kenworth Sales Co, which has a dozen locations in Western states. Treadway also is chairman of American Truck Dealers.
In September 2008, Navistar Inc. opened an engine plant in Huntsville, Ala., to make its MaxxForce 11- and 13-liter engines. The $60 million facility covers 300,000 square feet and can make 60,000 engines a year, assuming two shifts.
Navistar also makes medium-duty engines at a separate Huntsville plant.
Since 2007, Swedish truck maker Volvo AB has poured more than $100 million into its Hagerstown, Md., factory, which cranks out heavy-duty diesel engines and gearboxes for automatic transmissions for Volvo Trucks North America and Mack Trucks.
“We made a $150 million investment in our Hagerstown facility for our 2010 efforts,” said Curt Hassinger, vice president of key accounts for Volvo Powertrain.
That investment includes $40 million to develop a new engine test lab “where we did all the work to comply with 2010 emissions” cuts, Hassinger said.
The Hagerstown plant spans 1.5 million square feet and began life as a Mack Trucks plant in 1961.
Staff Reporter Dan Leone contributed to this story.
