Doctor Diesel

Cummins and Donaldson: Sharply Falling Growth Stocks

Richard Gorton's article featuring Cummins (Richard, that's how to spell it..., not 'Cummings') is off the real scenario... It appears to need better understanding of what has happened (and happening) with Cummins. The US heavy duty Diesel market has been traditionally dominated by the "Big 3", Detroit Diesel, Cummins and Caterpillar. As a 32 year corporate level veteran and competitor of Cummins, having personally conducted Diesel Engine business around the globe, let me tell you that Cummins has a tremendously bright future, made possible by huge market "vacuums" left open by Detroit and Cat. Both have withdrawn from major market segments (on-highway trucking, marine, and industrial off-highway)... Most important, Cummins folks have the savvy, skill, ambition, and progressive product development to CAPITALIZE and GROW. They're already backfilling...

Specifically... in the last half-century thru the late 90's Detroit had 30+ % of the trucking market, and with their former now defunct 2-cycle "Jimmys" (discontinued in 1999 due to emissions issues), enjoyed a whopping 90 % of the popular 40' to 70' marine market, and up to 50 % of small to medium industrial / construction applications. Today, with both Detroit Diesel and Freightliner under German (Daimler) ownership, Detroit's truck market has all but withdrawn to that one truck brand. The other truck makers, Kenworth, Peterbilt, International, and Volvo now view Detroit Diesel as a competitor having common ownership with Freightliner, and have ceased to promote the Detroit engine as an option. Caterpillar, also a significant (approx. 25 %) player in the on-highway truck engine market, now pulling out, has apparently decided to focus on what they do best, i.e. off-highway industrial. Thus substantial opportunity is left for Cummins who is addressing the issue with excellent truck power products.

Noted last, but still significant, Detroit has never generated the funds to design and replace their discontinued 2-cycle "Jimmy" which once had almost a monopoly on the aformentioned marine and small engine industrial applications. Guess who has developed an excellent small engine line based on the Dodge Pick-up, carried into small and medium boats, as well as the industrial segment... Could it be those smart "Rag Burner" (slang for Cummins) guys again...?