Freightliner: The road ahead

As the largest global truck maker, Daimler Trucks have a major presence on every continent. Their organisation in North America includes Freightliner trucks, Detroit Diesel engines, Western Star trucks and a number of bus, chassis and component brands. Their truck sales in the heavy-duty market constitute more than a third of all trucks sold in North America and in the medium duty market their market share is more than 37 per cent, as Navistar continue to lose US truck sales.

The President and CEO of Daimler Trucks North America (DTNA), Martin Baum, has been given the job of taking the group of companies in the US into a more integrated future as an entity supplying equipment to the North American truck market and to the global market. Baum's job includes integrating various arms of the organisation in North America but also integrating work being done in North America with the activities of the group globally.

Daimler were the first of the big three global truck manufacturing groups and, as such, are pioneering the process of integrating vastly disparate manufacturing, development, distribution and selling systems for trucks in use in the many parts of the global empire. The small lead has also given Daimler some advantages as the first of the global truck manufacturers to start selling a global truck engine in Europe, North America and Japan.

The road to integration in North America has been quite difficult for DTNA. Originally, Mercedes-Benz bought the Freightliner organisation and a certain amount of integration took place but it has been more dramatic in the past 14 years with the introduction of Western Star, Detroit Diesel and, more problematically, Ford, later Sterling, into the DTNA group. The organisation took a couple of wrong turns in the process but, according to Baum, they are settled within the integration and moving forward as a unified whole, while still maintaining the important brand differences.

When commenting only decision by Freightliner to end the Sterling brand, just 10 years after taking over the Ford trucks organisation and transforming it into Sterling, Baum reckons the decision was due to the fact that the Sterling brand was too close to that of Freightliner.

“Sterling was just another Freightliner with a different badge, at the end of the day,” Baum says. “When that is the case, you can always question why you should have to pay an extra three or four thousand dollars for what is basically the same truck. In the US, in the medium duty market, the only difference between the Freightliner Business Class and the Sterling Acterra was the bonnet design. We were building 15,000 Sterling trucks to compete with the 70,000 Freightliner Trucks we were building, and they were all the same.

“However, when you look at Western Star, from my point of view, you see a different truck in a different style right from the basics, the chassis. Freightliner is a classic on highway, comfortable and fuel efficient truck, while Western Star is rugged, able to overload and uses less technology, appealing to a completely different kind of customer.”

Global technology development is a very large and expensive project, even for a company as large as Daimler, the hoped-for savings in terms of research and development and componentry across all the trucks sold around the world are expected to pay for the changes, in time. The costs of developing the latest technology are rising rapidly and conventional wisdom states organisations have to be the kind of scale large global groups have reached in order to amortise those costs over the largest number of trucks possible.

“We have more than 5000 engineers around the world and, for me, anything which is thought up in one of those brains, we need to pick it and we want to get it out to the other regions if there is a market for it,” Baum says. “Our plan, at the moment, is to get the basic layout, the DNA of the truck, so common that we can reduce costs across the business. This was the problem in the past, we would have a great technology somewhere in the business but it would cost us millions to move it across to other products in another country and you never get that money back.”

In the US the changes have come thick and fast for the constituent parts of DTNA. The manufacturing of Freightliner trucks left its hometown of Portland in Oregon and is now based in plants on the other side of the US in North Carolina and Cleveland. The original plant where Freightliner started on Swan Island in the Willamette River is now home to the Western Star manufacturing plant, which moved from its roots in Kelowna, British Columbia, Canada.

However, Freightliner has retained headquarters in Portland and is still a major employer in the Oregon city. Detroit is still the home of Detroit Diesel; it could hardly be any other way. The Michigan city on the Canadian border is seeing tough times with the decline of the automotive industry, generally, in the US, but Detroit Diesel continue at a relatively high level of production and are the development centre for the heavy duty diesel engines used by Daimler around the globe.

Freightliner has a dominant position throughout the US truck market with the Cascadia model selling large numbers in the heavy-duty market and the Business Class M2 trucks selling in similar numbers in medium duty. When these modern models were developed no account was taken in the design process for them to become right-hand drive trucks.

“Don't ask me why it is the case these trucks were never developed for right-hand drive, I don't have the answer and have the benefit arriving after it happened,” Baum says. “I would give anything to have a right-hand drive Cascadia, and if we did have one it would be on sale tomorrow in Australia. It is a great truck, but if you don't design it from scratch as a right-hand drive as well, it is extremely difficult to switch it over.

“In the future it will be. There are certain things you need to do with steering and the room available around the front axle. It's not that difficult, but if you use that space for some other significant technology it is impossible to then remove it. A truck design is like a game of Sudoku. You can't just take one number and replace it with another number. If you remove it you have to redo everything.”

When asked about the possibility of trucks manufactured in China making inroads into the massive US truck market, Baum predicts there will be no penetration of these trucks in the next 10 years. He admits it is impossible to predict any further into the future and sees a number of obstacles to the introduction of Chinese trucks being in place for some time.

“The regulatory hurdles set on truck importers are fairly high,” Baum says. “Also, in the truck business you always have this chicken and the egg problem – you need a network to sell the trucks and you need trucks on the road in order to have a network. For me, this is a huge barrier. Thirdly, the market here is a highly sophisticated, custom-made one. The moment our customers would accept a standardised white truck which is a one-size-fits-all and can come off the ship straight into the dealership, then they will have a chance.

“Here in the US we have to stock 75 different mirrors to suit different applications and different regulations. Each of the 50 states has its own bridge formula for mass. All of the body manufacturers want a PTO in a different position. As long as the market is like this you lose the benefit of the faraway mass production of trucks. I can see more and more components being made in countries like China but not the actual trucks themselves, in this climate.”

When asked about the future development of the Argosy product, Baum took a long while before answering. The future of this cabover, which is currently only sold in Australia, New Zealand and South Africa may be problematic as the US market does not buy cabover trucks while Europe looks for a different style of cabin.

“First of all, I still think Argosy is an up-to-date product,” Baum says. “However, if we had to start from scratch today I would say Freightliner would not design our own cabover. We will definitely take elements from the Mercedes family. In the future, it's more a matter of seeing how many features you would include from under the hood from other product. There is a new Actros on the market in Europe and it has the same engine, basically, as we are selling in North America.

“There will never be a cabover truck available all over the world like there is something like a global Mercedes-Benz S Class. You have so many different requirements around the world; Brazil wants a different type of cabover to Australia. One wants it light, the other wants it rugged, one has high pollution, the other has different fuel, there are different regulations – every country is different.

“Will you see common features in our cabovers around the world? Absolutely. However, you will always see diversity in the cabover product. When we introduced the DD 13 and the DD 15 in 2008, Germany and Japan took it in 2010 and they had already improved a couple of features in their engines. Now it has been launched in the new Actros in 2012, and it is better again. In the future we will be taking this engine with the German improvements plus a couple of our own for the 2016 update of the engine. This is the way I can see us developing a future global cabover.”

The massive Daimler organisation was once described by former Scania CEO, Leif Ostling, as an “interesting experiment” as he watched with interest what they would do next. Ten years later, the practical process of developing a global set of brands continues but with many more certainties for those involved. The group has been down the road of developing global products and have a better knowledge of what works and what doesn't. They are nurturing the expertise to be genuine global players.

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