Costly end to diesel emissions dispute
By Staff -- Industrial Distribution, 12/1/1998
Washington, D.C.--Diesel engine manufacturers have less than three years to produce engines that pollute 80 percent less, according to an expensive settlement with the federal government.Seven manufacturers of heavy-duty diesel engines will spend more than $1 billion to settle charges that they illegally polluted the air by masking their true emissions. That includes an $83 million civil penalty, the largest in environmental enforcement history, the U.S. Justice Department announced in late October.
While it's unclear how the settlement will immediately affect manufacturers and their distributors, it is expected that the engine companies will pressure suppliers to cut costs even more.
Distributorships that use fleets of large "long-haul" diesel trucks to transport products long distances will also be affected, says Glenn Keller, executive director of the Engine Manufacturers Assn.
"Our member companies are very concerned about the potential added costs of the lower-emission engines, and it makes it highly likely for our customers to keep the older, higher-emission engines longer, and that's one of the issues we need to work out," says Charlie Souhrada, a spokesman for the association. "I don't think anyone can tell you how this will impact sales or the jobs involved."
The government alleged that manufacturers installed computer software in the engines that keeps emissions within limits during inspections. But once on the road, the software allows trucks to emit illegal levels of nitrogen oxide, which contributes to smog and acid rain.
Michael Turnbull, president of Purchased Parts Group, Inc. in Livonia, Mich., which counts diesel engine manufacturers among its top customers, believes the deal will further squeeze a volatile industry.
"We haven't been able to determine any impact except that all year long, these guys have just been beating the tar out of us on costs," he says. "They're not doing well and the pressure's been unrelenting so far.
"I'm sure with the settlement the financial outlook will not lessen," he says. Turnbull suggests that for distributors, potential changes in components bought by the manufacturers may be less important than large-scale shifts of direction by the top engine makers.
Under the agreement, the companies should spend at least $850 million to produce cleaner engines and meet stricter emissions standards now set for October of 2002 instead of 2004.
Nitrogen oxide emissions should be cut in half by January of 1999, and by 80 percent by 2002. I
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