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January 24, 2020 10:30 AM, EST

Suppliers Invest in Industry’s Future Despite Market Slowdown

Allison workerAn employee works the assembly line at an Allison Transmission manufacturing plant. (Allison Transmission)

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On the heels of a booming 2018, truck manufacturers and their key Tier 1 suppliers powered through a slower equipment market in 2019, continuing to invest in new products and preparing for a future when tightening emission standards and the electrification of trucks will provide both challenges and opportunities.

Even though new truck sales declined in 2019 and industry analysts project that demand will further soften in 2020, many component manufacturers are doubling down. They’re establishing innovation centers, investing in research and development, implementing programs to improve production efficiency, maintaining production capacity and looking to incorporate new technologies into the trucks that navigate America’s highways.

Most longtime Tier 1 suppliers are used to weathering the ups and downs of the market, said Mark Schneider, senior vice president and general manager of global products for Eaton’s Vehicle Group.

Eaton Cummins Endurant transmission

The Eaton Cummins Endurant transmission displayed at a trade show. (John Sommers II for Transport Topics)

Regardless of the business cycle, suppliers that invest in research and development, improving existing lines and continually helping their OEM customers overcome challenges, will thrive. Schneider expects 2020, even with the prospect of a slower market, to offer a number of opportunities for Eaton to differentiate its products and services.

“I see the R&D horizon focused on driving more efficiency into our products while meeting regulatory changes,” Schneider said, citing the upcoming 2024 and 2027 standards for reduction in greenhouse gas emissions.

This regulation will “drive more complex air management strategies such as cylinder deactivation or variable valve actuation,” both of which Eaton has years of experience in.

While the application is different, Schneider said “our duty cycle knowledge from commercial vehicle transmission and valvetrain coupled with this experience provides us with unique capabilities.” Innovation, he said, “will continue to play a major role.”

Eaton’s product lines include transmissions, clutches and torque management products and systems, as well as emission control components, engine valves, valvetrain systems and superchargers.

Other suppliers also are investing in research and development despite ­cooler demand for new trucks.

“Innovation is everything when it comes to product development,” said Gerry Remus, general manager of sales and business development for Hendrickson Commercial Vehicle Systems. A unit of Hendrickson International, the firm designs and manufactures suspensions, axles, braking systems and other components for medium- and heavy-duty trucks and trailers.

Hendrickson booth an industry show

The Hendrickson booth at an industry show. (John Sommers II for Transport Topics)

As vehicles evolve to meet emerging customer and regulatory demands, overall vehicle weight is increasing. That’s an undesirable trend for several reasons, among them reduced fuel economy and lower payload capability.

Reducing overall vehicle weight while maintaining durability and performance is a continual design and manufacturing challenge for component makers such as Hendrickson.

The company’s recent acquisition of LiteFlex, a composite component manufacturer, complements its strategy with expertise in designing and building lighter — and in some cases, stronger — components.

Hendrickson, like other Tier 1 suppliers, collaborates closely with OEMs to develop or adapt solutions as commercial trucks evolve and incorporate new systems and technologies. New products in both the shorter and longer term will need innovations that will allow OEMs to meet coming standards for reducing greenhouse gas and other emissions.

Lighter components will be critical to improving fuel economy and increasing payload capacity.

For Allison Transmission, which manufactures fully automatic transmissions for medium- and heavy-duty commercial vehicles, 2019 was another record year.

Allison serves diverse end markets, including on- and off-highway, hybrid transit bus, defense and aftermarket, said Branden Harbin, managing director for global marketing.

“This diversification enables us to invest through market cycles,” he said, noting that the company invested strategically during the recent down cycle to position itself to meet “unprece­dented” customer demand in 2018 and 2019.

While many industry analysts forecast a significant decrease in truck production in 2020, Harbin said Allison shouldn’t be as impacted as other propulsion solution providers by the cyclicality of the Class 8 tractor market.

He said the company is funding research and development “at an unprecedented level” to support new product innovation.

Among the projects is construction of a new 60,000-square-foot Vehicle Environmental Test Center, due to be completed this year. The building will house two environmental chambers that can simulate a broad range of environmental conditions and duty cycles.

An Allison manufacturing plant

A view inside an Allison Transmission manufacturing plant. (Allison Transmission)

Allison also broke ground last year on a new innovation center. Slated for operation in 2021, the facility will consolidate its product engineering teams and support new product development and work on advanced propulsion solutions, such as Allison’s “e-axle” technologies.

Harbin said the company’s new product pipeline includes the 3414 Regional Haul Series, which he said will be the industry’s lightest transmission in this segment. Launch is planned for this year with Daimler Trucks North America.

Allison also is advancing the development of a 9-speed transmission designed to address the GHG 2024 and 2027 mandates for OEMs in the medium-­duty truck market.

Meanwhile, the move toward truck electrification is accelerating, but its development is ex­pected to be “highly dependent upon a variety of factors, including duty cycle, range requirements, route flexibility demands and accessory needs,” Harbin said, adding that the most promising markets for electric commercial vehicles are drayage, light- and medium-­duty truck, bus, terminal tractors and transit.

Allison also expects to build on its extensive experience with hybrid and electric propulsion solutions for commercial trucks as well as buses. The company’s H 40/50 EP hybrid transmission, launched in 2003, today has more than 8,000 installations operating in hundreds of cities worldwide.

Harbin added that he expects the industry’s trend toward automated manual transmissions and fully automated transmissions to accelerate.

“Class 8 linehaul applications are now over 70% AMT or fully automatic,” a segment that until several years ago was dominated by manual transmissions, he said.

“Simply put, there are fewer drivers [today] that can drive manual transmissions,” Harbin said.

It’s a shrinking driver pool where most new entrants have no experience with manuals. That reality combined with advanced safety systems that require automated or fully auto­matic transmissions will only hasten the shift, Harbin said, as will coming developments in platooning and fully autonomous vehicles.

Bendix Commercial Vehicle Systems, a supplier of active safety, air management and braking technologies for heavy-duty trucks and trailers, expects carriers to focus on replacing equipment rather than expanding their fleets in 2020, said Scott Burkhart, vice president of sales, marketing and new business development.

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“That’s opposed to 2019 and 2018 where fleets were buying for both growth and replacement,” he said. “So, we have to size the business as we see demand over the next 12-24 months,” a capacity rightsizing process which the company started in the fourth quarter and has largely completed.

Among the challenges ahead, Burkhart said, is “identifying the priorities of the technologies that will be ­needed in the coming years,” particularly as electrification and automation further de­velop and mature.

“A lot of change will be happening in our industry in the next five years,” added Richard Beyer, Bendix’s vice president of engineering and research and development. “The trick is to develop the right tech­nology at the right time for introduction [in a way that helps] our customers meet their needs going forward. It’s a very competitive industry.”

He said Bendix works ­closely with its customers on road maps and product development to understand their needs and then design solutions collaboratively.

Both Burkhart and Beyer believe the development of electric-­powered trucks, and the components and infrastructure to support them, will continue to accelerate, driven by several factors.

“The real litmus test is can fleets make money with these vehicles,” Beyer said.

Some fleets are actively kicking the tires and have begun running electric trucks in city pickup and delivery operations and shorthaul runs.

But widespread adoption across the truckload and less-than-truckload segments is likely to be more of a long game, influenced by regulation and infrastructure.

In Europe, some cities are restricting diesel-powered trucks from entering highly populated inner-city areas in favor of electric. While not yet seen in the United States, those types of regulations could accelerate adoption.

At the same time, sufficient charging infrastructure would be necessary to support electric trucks running longer miles.

Kelly Gedert, who directs product marketing for Freightliner and Detroit at Daimler Trucks North America, also emphasized the importance of innovation for solving the industry’s challenges of today and tomorrow, especially with respect to the electric trucks of the future.

“Innovation and delivering a driver-centric, customer-­focused experience is at the foundation of everything we do,” she said.

DTNA Freightliner eCascadia

DTNA has delivered battery-electric Freightliner eCascadia models to NFI and Penske Truck Leasing for use in their freight operations. (Daimler Trucks North America)

She said Daimler is well-­positioned in the emerging electric truck segment, with more than 700 experts in its global E-Mobility Group focused on the commercial vehicle market.

DTNA has begun delivering its electric-powered Freight­liner eCascadia and eM2 models to customers through its Innovation Fleet initiative.

Gedert said the trucks are “performing real work in the real world,” providing intelligence and user experience feedback that will be incorporated into final production design, currently planned for late fourth quarter 2021.

On the safety technology side, Gedert said DTNA is the first manufacturer to put SAE Level 2 automated driving technology into series production.

Its Detroit Assurance 5.0 Adaptive Cruise Control and Active Lane Assist capabilities “make automated driving possible in all speed ranges for the first time in a series production truck,” she said, adding that the suite of safety systems is available for the Freightliner Cascadia spec’d with Detroit engines.

As suppliers look to the year ahead, most expressed a sense of optimism regarding what 2020 will have in store. Market, regulatory and economic challenges will persist, but the coming year offers promising opportunities for suppliers that can address three basic imperatives: reducing the overall weight of trucks and their components while increasing reliability and payload; increasing fuel efficiency and meeting mandates for reduced emissions; and accelerating the devel­opment and deploy­ment of components that will enable automated and electric trucks. 

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