Cummins and Mercury Marine
Joint Venture Diesel Program Press Release
14 Feb 2002
Cummins Press Release Columbus IN- 14 Feb 2002Miami, Fla. (February 14, 2002) - Cummins Marine, a division of Cummins Inc., and Mercury Marine, a division of Brunswick Corporation, today announced the formation of a 50/50 joint venture to supply integrated diesel propulsion systems to the worldwide recreational and commercial marine markets. The joint venture, Cummins MerCruiser Diesel Marine LLC, will be headquartered in Charleston, SC.
Under the terms of the agreement, Cummins will supply diesel engines 15 liters and below, including certain electronic displays and other hardware. Mercury Marine will supply the Mercury 1.7 liter, 2.8 liter, 4.2 liter and 7.3 liter diesel engines, drive units for stern drive applications and their SmartCraft electronic integration hardware. The joint venture aims to become the premier worldwide supplier of integrated diesel marine propulsion units.
"Mercury Marine has been working for some time to establish the company as an industry leader in the diesel marine propulsion segment," said Patrick Mackey, President of Mercury Marine. "With this joint venture, we are positioned to offer customers a complete range of products with exceptional customer support. A unique set of competencies is required to be successful in the diesel marine propulsion business, and this partnership is positioned to excel in this business," added Mackey.
Cummins, the market leader in North America and Australia for recreational marine diesel engines, will leverage its expertise in the engineering of diesel engines into marine applications through enhanced integration opportunities.
"Partnering with Mercury Marine presents an opportunity to provide completely integrated vessel propulsion, power generation, control and information systems," said Joe Loughrey, Executive Vice President and President, Engine Business Unit, Cummins Inc. "The system integration capabilities of the joint venture, combined with the global support capabilities of Cummins and Mercury Marine offer a unique opportunity for a very successful business from day one," said Loughrey.
Separately, Scott Patrohay, General Manager Cummins Marine, was named President of the joint venture. "I look forward to the challenges of bringing together the exceptional brand recognition and products of our two companies," said Patrohay. "Cummins MerCruiser Diesel Marine will create a new level of customer value from helm to prop by combining our leadership in these markets," said Patrohay.
Cummins will retain its current high-horsepower commercial marine and auxiliary power business, which will continue to be headquartered in Charleston, South Carolina. Mercury Marine will retain its traditional gas engine propulsion business.
Mercury Marine is a division of the Brunswick Corporation, headquartered in Lake Forest, Illinois. Brunswick Corporation is a manufacturer and marketer of leading consumer brands in the marine engine and boating markets as well as the recreational fitness, bowling and billiard markets. Mercury Marine’s home page can be found at http://www.mercurymarine.com
A global power leader, Cummins Inc., is a corporation of complementary business units that design, manufacture, distribute, and service electrical power generation systems, engines, and related technologies, including fuel systems, controls, air handling, filtration, and emissions solutions. Headquartered in Columbus, Indiana (USA), Cummins serves its customers through more than 500 company-owned and independent distributor locations in 131 countries and territories. With 24,900 employees worldwide, Cummins reported sales of $5.7 billion in 2001.
Sounds slightly logical from a freight standpoint, ship the drives and transmissions to meet the diesels (the largest, heaviest component). Merc will be shipping diesel engines AND drives (or transmissions?) shipped to Charleston. Charleston is closer to the East Coast and Gulf which are probably heavy users of diesels. Wonder where the diesel engines are really made (Columbus?) Why not put the joint venture close to that location? Might be going south to a non-union site? Maybe they can get an old DotCom warehouse in Charleston.
The press release talks about Cummins diesels up to 15 liters, and Merc supplying diesel engines below 7.3 liters (now about 300 HP). Is the whole thing about bigger engines and a larger drive? MerCruisers current drives might not like the torque from a giant diesel. Most of the big engines will probably be inboards (transmission, shaft and prop). The joint venture will make it easy to extend the product line that direction (just buy some bigger transmissions).
The Cummins press release talks about "enhanced integration opportunities". Most of them will probably be on the marketing and warranty side (would be interesting if they really offered a single point of contact full package warranty). Hardware integration between drive and engine (marinization) is MerCruiser's greatest skill. They have adapted their drive to countless versions of GM gasoline engines and have the tools (CAD, rapid prototyping, aluminum die casting, experience and people) to get it done fast. Its hard to envision any major casting changes in the diesel engines. In terms of inboards, transmissions already fit standard engine housings and power train integration is pretty smooth. Will be interesting to see if the joint venture really makes some gains in hardware integration on the stern drive side.
Somebody has to lead the venture, interesting that they picked a guy from Cummins (engines) to lead the marine venture?
Interesting that the Cummins press release refers to Propulsion Systems (probably talking about inboards and stern drives, but inboards never specifically mentioned)..
Are joint ventures the next step in vertical integration, how about GM and Merc for gas drives? One problem is that stern drives have to bolted on from the other side of the transom (not shipped bolted together).
Cummins had the press release on their web site early this afternoon (Feb 14), but Mercury and Brunswick did not. Wonder if the new joint venture will have its own web site?
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