Diesel makers expanding capacity to reduce delivery delays

Riding a wave of growth in commercial shipbuilding that shows few signs of ebbing, manufacturers of marine diesel engines continue to expand capacity and increase production at facilities worldwide.

The towboat Ann Peters, damaged during Hurricane Katrina, was refurbished by Ingram Barge Co., which installed a new pair of Cummins 1,600-hp QSK50 engines.

While the delays and backlogs common in the past few years have not been eliminated — lead times can still range up to two years for shipyards in need of larger engines — Caterpillar, Cummins, MTU Detroit Diesel and other top suppliers have geared up to expand factories, improve efficiencies and cut delivery times.

Caterpillar Motoren, a division of the U.S.-based power equipment giant, announced a $300 million initiative in late September to increase production of its MaK marine engines at facilities in Kiel and Rostock, Germany, and Guangdong, China. The company anticipates doubling production from 500 units annually to more than 1,000 by 2012, up from 200 a few years ago. Caterpillar is also upgrading its facility in Lafayette, Ind., which produces Cat 3500 and C280 marine engines.

“To meet market expectations, we have made a massive investment in parts production, assembly lines, test cells and employee training,” said Hans Timm, managing director for Caterpillar Motoren. “I am convinced that (we are) well prepared to serve future demands.”

Cummins has taken similar steps to keep pace with the commercial maritime market, expanding plants in the United States, the United Kingdom and India in the past five years to double the company’s capacity to produce engines. Cummins reported record revenue of $13 billion in 2007 and expects additional growth in 2008.

“We believe that we have been able to keep up appropriately with the increased demand and have also been able to take care of new customers that could not secure engines from other suppliers,” said Rachel Bridges, manager of marketing and product planning for Cummins’ marine business.

MTU, which posted a 20 percent increase in sales of its Series 4000 workboat engines in 2007, has increased production through additional staffing and by purchasing larger quantities of materials.

a Zeiss 3D Coordinate Measuring Machine tests the specs of an engine block produced at a Caterpillar plant in Germany.

“Our biggest challenge at the moment is satisfying our engine-build requirements while supporting the end user with parts, as the need for raw materials is at an all-time high throughout the world,” said Jeff Sherman, commercial marine sales manager for MTU Detroit Diesel. “We remain somewhat cautious in our predictions due to the current economic climate, but we are confident that we have the right products and customer service for this market and will continue to grow.”

While demand for diesel engines has been strong in nearly every segment of the commercial maritime industry, the market for large engines for offshore supply vessels and workboats — especially tugs — has been particularly lucrative.

“MTU has really hit it big in the tug industry, both in the ship-assist and long-haul markets,” Sherman said. “The other market that we have had some success in, and we believe will continue to offer opportunities, is the offshore market, specifically in the diesel-electric venue.”

That is also the case for Cummins, which has experienced strong demand for its engines from companies involved in the exploration and transportation of oil.

“Cummins has been very successful in powering platform supply vessels, inland waterway vessels, crew boats and tugs,” Bridges said. “There is a continued trend toward diesel electric in many of these sectors, as operators are looking to become more efficient and have recognized the cost-of-ownership benefit from high-speed diesel engines over medium-speed on larger vessels.”

Despite manufacturers’ efforts to increase output, a number of shipyards cited production delays that they attributed to tougher emissions standards and the design changes necessary to ensure engine compliance. The U.S. Environmental Protection Agency (EPA) now requires new commercial engines with displacement of less than 30 liters per cylinder to meet its Tier 2 guidelines, with stricter Tier 3 standards set for 2009.

“The new regulations have increased the lead time to get EPA-compliant engines,” said Merdith Foster, acting public relations director for VT Halter Marine in Pascagoula, Miss. “We had to change engines on an existing contract, (resulting in) a longer delivery time and engineering and production changes to meet the new EPA guidelines.”

Peter Duclos, president of business development for Gladding-Hearn Shipbuilding in Somerset, Mass., said one of the company’s projects has been delayed for four months by difficulties in acquiring engines and generators.

“The delays in question are primarily due to EPA emission regulation changes,” he said.

MTU presented the latest version of its Series 4000 marine engine at the SMM show in Hamburg, Germany. (Courtesy MTU)

Keith Whittemore, president of Seattle-based Kvichak Marine Industries, a shipyard that typically builds vessels that don’t exceed 1,400 hp, said engines of that size have been available “just within” the company’s production schedule.

“For a while getting Tier 2 engines was a problem, but (the manufacturers) are getting caught up now,” he said. “Everything we order is Tier 2 today.”

Officials at Caterpillar, Cummins and MTU cited advances in technology that they say have put the companies in good position to handle stricter emissions standards in the future, which in turn should help shipyards maintain their production schedules. The officials also cited significant market growth in one region of the world where environmental enforcement is minimal: Asia.

“(It is) certainly a strong market, and we believe it will eventually be a strong market for MTU,” Sherman said. “However, without any emissions legislation, our engines are currently ahead of the curve for many customers there.”

By Professional Mariner Staff