Cummins Inc. is further diversifying as a company to fuel growth by placing an emphasis on electrification and digital technologies.
Chairman and CEO Tom Linebarger and nine other company executives took part in a 59-minute conference call early Wednesday evening to share the company’s plans in those areas, and discuss how they think Cummins will be leaders in such markets.
Linebarger stressed that while the company is most often identified as a diesel engine manufacturer after nearly a century in that market, it’s actually a power technology company.
“We understand the world is changing … we know things are changing in our markets, both from a regulatory point of view and from a technology point of view, and we think that means opportunity,” Linebarger said. “We’ve been an industry leader for 100 years, and will continue to innovate to make sure we’re a leader for the next 100.”
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To that end, Cummins has taken some new steps to support its electrification and digital technologies efforts.
“Digital technologies are a really important trend in our industry,” Linebarger said. “The opportunity given the cost of acquiring data and processing data, the opportunity to make a huge difference in how customers experience our products has never been greater using digital technologies.”
Cummins already incorporates telematics with its engines — such as its Connected Diagnostics product — to provide real-time, long-distance transmission of computerized information to help truck fleets avoid or respond to problems and save money.
Now it has launched a separate organization called Digital Accelerator to take product ideas from concept to commercialization in a faster way, Linebarger said.
For example, Cummins just launched a new company called ZED Connect that develops a smartphone app that helps truckers log hours and meet a new electronic log requirement in the U.S., Linebarger said.
He added that a public release of the product is expected in about a week.
The desire for greater fuel efficiency and lower emissions will continue to drive the need for technological innovation, said Jennifer Rumsey, the company’s chief technical officer.
“The diesel (engine) will continue to play a significant role in some of our markets for a long time, however we look to the future. And as Tom said, we see a trend away from diesel, and we will continue to evolve,” Rumsey said.
The rate of development for reducing the cost, recharging time and size of batteries needed for full electrification of many vehicles isn’t feasible at the moment and won’t be for a while, said Srikanth Padmanabhan, president of the Engine Segment.
Instead, a process of first moving to extended-range vehicles that utilize both batteries and diesel engines is more likely for truck fleets, he said.
Cummins also launched its Electrification Business earlier this year to seize on opportunities with commercial electric vehicles in urban markets, such as buses and delivery trucks.
Although Cummins employees have worked on electrification projects for decades, Linebarger said this is an exciting new area for the company to further develop.
In many cases, urban communities are driving the demand for electric vehicles because of their desire to reduce noise and pollution, Linebarger said.
The Electrification Business is focusing first on powertrains, and expects to have a fully electrified powertrain system to market for customers by the end of 2019, and an extended-range powertrain ready for customers by 2020, said Julie Furber, executive director of Electrification Business development.
Furber and Linebarger said the transit bus market is the company’s target for the launch of these products.
With the new emphasis on electrification and digital technologies, Linebarger said that the company would be spending more than its typical 3 to 4 percent of sales on research development — although he declined to provide a more specific figure.
Linebarger said that the number of employees with expertise in electrification and digital technologies would increase to support the needs of the groups, but that he thinks the company’s current facilities are suited for those needs and wouldn’t need changes.
Because changes in markets are not uniform, Cummins needs to be flexible and able to adapt quickly, Linebarger said. That’s the impetus for the creation of the company’s Growth Office, headed by Thad Ewald, vice president for corporate strategy, Linebarger said.
The office’s job is to look at opportunities inside and outside the company — including mergers, acquisitions and joint ventures — that can help Cummins meet the technology needs of customers and markets. Cummins’ recent joint venture with Eaton to design, assemble, sell and support automated transmissions for heavy-duty and medium-duty commercial vehicles is such an example, Linebarger said.
“We understand the world is changing … we know things are changing in our markets.”
— Cummins Chairman and CEO Tom Linebarger