Detroit Diesel Corp.

Detroit Diesel Corp., based in Detroit, Michigan, is a leading manufacturer of on-highway medium- and heavy-duty diesel engines ranging from 190 to 560 horsepower for use in commercial trucks.^[1] The company’s engines are also used in buses, coaches, commercial and pleasure marine craft, power generation plants, in the construction industry, and by the military.^[2]

Since it was first established in 1938 as a division of General Motors, Detroit Diesel has produced and sold more than five million diesel engines.^[3] The company’s signature engine, the Series 60, developed and first introduced to the market in 1987, was the first four-stroke heavy-duty electronically controlled diesel engine in the world; it remains the company’s best-selling diesel engine to date. In more recent years, the company has also branched off into the development of alternative fuel engines.

[edit] History

Detroit Diesel was founded in 1938 as a division of General Motors. Two factors contributed to an increased market demand for diesel engines at the time—one was the switch from steam engines over to diesel engines within the locomotive industry and the other was the demand for diesel engines for use in war materials such as aircraft, tanks, landing craft, road building equipment and generators. These early diesel engines manufactured by the company were lightweight, compact, two-stroke engines.

After World War II ended, the company’s continued growth paralleled an increasing reliance on on-highway trucks to transport and deliver goods. In 1957 the company launched its Series 53 and Series 71 diesel engines for on-highway and off-road use.^[4]

With the commercial truck market booming, the opportunity and demand for more powerful diesel engines was wide open. Even though Detroit Diesel faced stiff competition from other engine manufacturers such as Cummins Engine Co., the company was able to occupy a large part of the market by the '60s. It also expanded the use of its diesel engine into the industrial market. In 1965 Detroit Diesel was renamed the Detroit Diesel Engine Division.^[5]

[edit] Detroit Diesel Allison Division

In 1970 Detroit Diesel was consolidated with the Allison Division of General Motors. GM’s Allison Division—the transmission and gas turbine arm of GM— was founded in 1929 to develop and build aircraft engines used in World War II by American and Allied Forces. About 70,000 aircraft engines were built by the division over the course of the war.^[6] Even in the face of a recession, the Detroit Diesel Allison Division continued to perform well through the mid-1970s, occupying about 30 percent of the U.S. domestic market behind Cummins Engine Co.^[7] However, Detroit Diesel was not able to secure a 30 percent share of the diesel engine market for long. Over the next six years the company experienced a steady decline in its share of the market to less than five percent.^[8] Most of the loss was to the American Cummins Engine Co. Critics cited two reasons for the company’s substantial decline in market share. One was the high influx of diesel engine imports into the U.S. from Europe and Japan. Detroit Diesel was also criticized for producing poorly performing engines. By 1987 GM was searching for a buyer to take the struggling division off its hands.

[edit] Roger Penske Takes the Wheel

One person intrigued with taking over the failing GM division and revitalizing it was an auto racer by the name of Roger Penske. In 1988 Penske signed an agreement with General Motors. In the agreement Penske obtained 60 percent of Detroit Diesel’s stock while GM retained the remaining 40 percent. Penkse kept the same personnel and management, many of which had a long-standing affiliation with GM.^[9] He focused instead on realigning the company’s corporate goals and making cuts to the company’s operating budget by as much as US$70 million.^[10] As a result, Detroit Diesel doubled its market share within the first two years under Penske’s leadership. By 1993 the company occupied 23 percent of the market and generated a net income of $US20 million.^[11] The same year it also became a publically traded company listed on the New York Stock Exchange under the ticker symbol DDC.^[12]

[edit] The Series 60 Engine

One factor attributed to Penske’s success at Detroit Diesel was the introduction of the company’s first electronically controlled diesel engine in the world—the Series 60—in 1987. In a 1991 publication of Business Week magazine the new engine was described as “ground breaking.”^[13] The engine proved to be durable and reliable, essentially helping the company overcome its tarnished reputation for poorly performing products. By 1993 the Series 60 engine brought Detroit Diesel US$82 million in sales.^[14] The company also looked further abroad at increasing its percentage of foreign sales through a number of joint ventures that would ensure its longevity in the diesel engine market.

[edit] A Focus on Fuel-efficient Engines

In the 1990s the Environmental Protection Agency (EPA) of the U.S. imposed new standards on buses and trucks that presented Detroit Diesel with a new set of challenges but also an opportunity to become the first manufacturer to come out with a new model. Drawing off the technology of the Series 60 engine, only one percent of the engine’s components needed to be modified to meet the reductions in particulate emissions set out by EPA from 1991 through to 1994. Detroit Diesel’s diesel engines continued to meet EPA emission standards up until 1997.^[15] The company also invested a lot of the company’s operating budget into the research and development of new engines powered by cleaner fuels. Some the early experimentation of test units included engines capable of running on natural gas as well as methanol, ethanol, and alcohol-based fuels. By the mid-1990s, however, Detroit Diesel was carrying a large debt load. To offset the company’s debt by US$99 million, an initial public offering (IPO) of 4.75 million shares of common stock was made in October 1993.^[16]

[edit] The Company Today

In 2000 DaimlerChrysler completed a tender offer for all outstanding shares of Detroit Diesel including a 48 percent ownership interest in Penske Corp. Detroit Diesel, now a subsidiary of Daimler, was consolidated along with Mercedes-Benz Industrial Engines into Daimler’s Commercial Vehicle Division under a new business unit named DaimlerChrysler Powersystems. Today Detroit Diesel employs 2,600 people and manufactures and sells its engines through a network of 800 outlets across North America.^[17]

[edit] Equipment List

• Diesel engine

[edit] References

1. ↑ What Detroit Diesel Does. Fast Facts. Detroit Diesel Corporate website. 06-05-2009.
2. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
3. ↑ What Detroit Diesel Does. Fast Facts. Detroit Diesel Corporate website. 06-05-2009.
4. ↑ Detroit Diesel Through the Years. History. Detroit Diesel Corporate website. 06-05-2009.
5. ↑ Detroit Diesel Through the Years. History. Detroit Diesel Corporate website. 06-05-2009.
6. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
7. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
8. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
9. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
10. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
11. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
12. ↑ Detroit Diesel Through the Years. History. Detroit Diesel Corporate website. 06-05-2009.
13. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
14. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
15. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
16. ↑ Detroit Diesel Corporation. Funding Universe. 06-05-2009.
17. ↑ What Detroit Diesel Does. Fast Facts. Detroit Diesel Corporate website. 06-05-2009.