Thursday 18 October 2012

Torotrak: where to now?

Torotrak has a new CEO. Is the company now about to deliver the goods, or is a long wait still in prospect?

Many are the explanations why chief executive officers leave their companies. Some, like bankers, do so after feeling the ire of public, shareholders or government. Others feel they have reached the end of the road in what they can achieve. Others are tempted by the prospect of new challenges.
Only Dick Elsy knows the real reason for leaving transmission innovator Torotrak plc to join the High Value Manufacturing – Catapult from the first of  this month as chief executive officer, replacing the interim CEO. This particular Catapult first opened in October 2011.
Elsy is replaced as CEO by Jeremy Deering, Torotrak’s finance and commercial director; he has been with Torotrak since 2006.

        By his own admission, Elsy leaves Torotrak “at such an exciting time when our plans are really starting to deliver.” If so, why not stay and enjoy the full rewards of his work?
When Elsy joined Torotrak from Jaguar Cars in January 2003, the share price was around 12p; at the end of his first year in March 2004 it topped 70p. Prior to announcing his departure, some eight years later, the share price languishes at 34p.
Over the last nine years, almost routinely loss-making, Torotrak’s turnover has blossomed seventeen-fold to £4.3 million; its cash position has improved six-fold to £10.5 million, while employee numbers have fallen 60% to just 40.
So what is Torotrak really about? And what is the future?
For more years than many can remember, Torotrak a tiny company based in Leyland, Lancashire, has toiled to develop stepless, friction-drive transmissions for city cars, buses and on- and off-highway vehicles.
Its novel design of continuously (or infinitely) variable transmission – CVT/IVT – relies on rolling components: usually toroidal cavity discs containing rollers that link the engine with final drive. Speed ratio is changed by varying roller angle. 
So after all these years, could the end be in sight as Torotrak views the prospect of its CVTs in trucks and buses? Is the prospect tangible or merely a precursor to yet more waiting?
      When new technologies appear, it is easy to overlook how old some really are. In fact, CVT activity began at Leyland in early 1983 when Leyland Vehicles announced plans to replace its ageing Pneumocyclic semi-automatic bus transmission with a ground-breaking 'new' design. Leyland inked in production for 1986 with £2 million to spend on plant and equipment.
However, Leyland engineers’ breakthrough CVT had its roots in a toroidal patent first penned in 1899. Trials were set for 1984 and further applications were planned, including cars and trucks; even F1 motor racing and military.
Push the clock forward five years to January 1988 and the name Torotrak appeared; the new company embraced seven of Leyland’s CVT engineers and their technology. Torotrak soon claimed to be in talks with seven potential licensees. Chrysler and Ford were among those tipped.
At the time, Torotrak Holdings was a subsidiary of British Technology Group (BTG), itself earlier spun out of the National Research Development Corporation (NRDC). BTG had begun work on CVTs some time previously and in 1988 aimed to commercialise this effort through Torotrak.  
A year later, Torotrak made noises it was about to sign up Ford Motor Company, whilst fitting a 'new' CVT (using half the parts of the former design) in a Rover 800.
Roll forward to August 1994 and Rover Group look set to follow Ford in exploiting Torotrak's CVT technology. By then, Ford Motor Company had become Torotrak's first licensee; enthusiasts spoke glibly of 500,000 Mondeos a year with CVTs. The future looked bright.
Gradually, Ford fell by the wayside, but not before serious attempts to apply CVTs to chunky sports utility vehicles. Other big names in the automotive industry sidled up to inspect Torotrak’s technology, like General Motors and Toyota, but without much success. In Japan, Nissan Motor Company researched its own CVT design.

                                            Early development

But why CVT? In early motor cars, a one-to-one connection between engine and final drive was out of the question if the power unit was to operate at its most efficient. Early manual gearboxes had few fixed ratios but the number gradually increased – and so did complexity; today's complex fully-automatic gearboxes can offer eight ratios.
Lately, dual-clutch transmissions (DCT) have opened up new possibilities. Volkswagen and Ford have these in production for passenger cars. Compared with CVT/IVT, DCT offers known technology, with cost and packaging understood and containable.
Meanwhile, inventors persist with their attempts to adjust speed ratio in a seamless, continuously variable manner to provide the right connection at all times between engine and final drive, including reverse.
In 1899, a patent using rollers to transmit power and vary ratio was taken out by W. D. Hoffman. Following prototype work by Cloudsley Engineering Company and consultant engineers Halford, Moult and Brodie (later of the de Havilland Engine Company), the Austin Motor Company produced limited numbers of the Hayes Self-Selector Transmission as a £50 optional extra for its 1934 six-cylinder saloon cars. Elsewhere, GM ran a big test programme but no production followed.
In 1956, following an earlier private study by a British engineer, a transmission based on parts from an old Austin, suitably modified and fitted to a Hillman Minx, achieved fuel savings of 20-25%.  Eventually, NRDC (later BTG) took control and funded development.
In the US, GM persisted with CVTs until the mid-1960s; others briefly entered the fray, like Lycoming Corporation in the US and English Electric in the UK.
By the mid-1970s, several other UK companies became captivated by CVT, most notably GKN and BL Technology.  Indeed, BL Technology in Gaydon, Oxfordshire, (then part of British Leyland but now JaguarLandRover) conducted detail studies into toroidal transmissions. It installed one in a 1.8-litre car, but while the traction drive aspects gave little cause for concern, work on the CVT was eventually halted.
Meanwhile, Leyland Vehicles continued its work on toroidal designs for trucks and buses, providing the roots for Torotrak's later work.
In 1998, Torotrak demerged from BTG and floated on the London Stock Exchange. It pursued several options to find “strong and reliable potential routes to market”, ranging from passenger car, outdoor machinery equipment, trucks, buses and construction equipment. Over 75 patent families and 448 patents have been lodged.
Elsy’s first annual report bowed in 2004. By the time of his 2005 annual report, Torotrak could announce a new partner, leading German transmission manufacturer ZF. With pride, Torotrak noted: “ZF recognises Torotrak as an innovative and highly competent partner in full toroidal traction drive (IVT) technology. We will continue in partnership with Torotrak to explore the full potential of IVT to meet the demanding requirements of our automotive and off-highway customers.” Mention was also made of Getrag, another leading German automotive transmission maker with links to Ford.
Torotrak also confirmed a three-way tie-up with Equos and Koyo in Japan, claiming transmissions had been “installed in target customers’ vehicles”.
By late 2005, Torotrak embarked on the next stage in its “strategic development” and formed Infinitrak with MTD Holdings Inc. of Cleveland Ohio, signing away CVT rights in the 0-45kW range for outdoor power equipment, like sit-on mowers. This offered the then biggest potential IVT application.
Ironically, Torotrak’s 2006 annual report made no reference to ZF, so was ZF merely “having a look-see” at the UK company’s ideas? However, Torotrak reported it had worked with a European truck and bus maker for a year to “achieve fuel economy and emissions reductions”. A project with a European bus maker led to an IVT bus. First drives suggested “our fuel economy targets should be achievable”.
By June 2007 Xtrac, which designs and makes gearboxes for racing cars, signed a license agreement to develop part of a mechanical energy recovery device for F1 cars. The mechanical hybrid system to store braking energy in a flywheel used Torotrak's CVT, linked to the car's existing gearbox.
Recurring names include India’s Tata Motors and Allison Transmission Inc. of the US, not to mention the ever-elusive "European truck and bus manufacturer" or ETBM. Likewise, new "with-it" technologies appeared, like hybrids, and Flybus with its KERS or kinetic energy recovery system.
At the Geneva Motor Show in March 2011, Tata highlighted its Pixel city car. Its ability to manoeuvre and park in tight spots was possible through Torotrak’s "zero-turn" traction-drive IVT. Nothing more has been heard of this project which on paper offered much potential, especially for Torotrak. That does not mean it is dead.
With a 1.2-litre three-cylinder turbo-diesel engine, Tata claimed Pixel could offer fuel economy of 3.4 litres/100km and CO2 emissions of only 89 g/km. In city cars, unit powertrain manufacturing costs and packaging are vital to overall cost-effectiveness, with pressure to contain these through design simplicity and control elegance.

                                      CVT development

In development, giving focus to the  following can bring improved toroidal CVTs: film traction and suitable fluids; disc and roller design and related fatigue life; losses; noise; effects of temperature on maximum shear strength which in turn determines the limiting traction; regime gearing arrangements; materials development; machining; production packaging; and an effective and durable control system. Last year, Torotrak completed over 25,272 hours of durability and fatigue testing with a design life of 300,000 miles declared.
Roller diameter is vital for compactness. For the same power rating, Torotrak has been able to reduce roller diameters. Rollers now range from 140 mm for heavy trucks to only 47.5 mm for its new V-Charge supercharger.
Traction fluids too are critical to CVTs. The basic principal of a toroidal CVT is: the end-load which must be applied for the rolling assembly to transmit torque is inversely proportional to the coefficient of traction; and life is inversely proportional to the end-load cubed. So an increase in traction coefficient gives a cubic increase in life for the same torque, or a pro-rata improvement in torque rating for the same life, all for no change to transmission configuration. High traction therefore has to one prime goal of fluid suppliers as it impacts on fuel economy and durability. Oil giant Shell has played an important role in developing traction fluids.
                                               The future

Torotrak's annual reports have grown thicker and glossier over the years, but its main ethos remains unchanged: "The design and development of traction drive technology based on the toroidal variator as a means of infinitely changing gear ratio."
The latest report – for 2012 and Elsy’s last – gives the clearest indication of where the future lies: passenger cars and light vans using M-KERS, the mechanical kinetic energy recovery system; city buses using M-KERS; hybrids; off-highway vehicles using IVTs; and finally medium and heavy trucks, again using IVTs.
Across all these fronts in Europe and the US, the message is the same: emissions’ legislation and demands for fuel improvements of 20 per cent are driving change. Torotrak claims its systems can deliver this level of fuel saving and bring new ‘business’.  
  For example, Torotrak has secured £600,000 additional license fees from Tata to extend its non-exclusive license to encompass M-KERS and V-Charge. And on 18 May, Torotrak signed a co-operation and license agreement with Univance Corporation of Nagoya, one of Japan’s leading car and industrial vehicle transmission makers.
Tata, JaguarLandRover and Volvo Cars are Torotrak’s partners for passenger car applications with Flybrid Automotive of Silverstone playing a vital part.  In particular, Volvo Car Corporation, Volvo Powertrain and SKF are engaged in a flywheel development programme that brought together Flybrid Automotive’s flywheel technology and Torotrak’s CVT for use in volume car applications.
 For buses, Optare, Ricardo and the ETBM are Torotrak’s principal partners. And the Flybus M-KERS system for city buses is moving to next stage hardware for installation into fleet trial vehicles with bus operators.
Carraro Group of Campodarsego, Italy, a global leader in power transmission systems, and farm machinery maker Iseki & Co. Ltd of Tokyo, Japan are Torotrak’s partners for construction equipment applications, But it is in distribution trucks that the first major returns could come. Here ETBM, Allison and Volvo Powertrain are all in various partnerships with Torotrak. 
Allison is the world's largest manufacturer of fully-automatic transmissions for medium- and heavy-duty trucks, with first-half 2012 sales reaching $1.161 billion and net income topping $470 million (adjusted net income $231 million). Although Allison will not disclose how many transmissions it makes a year, it is a huge company and its total cumulative license fees paid to Torotrak have passed £15 million since the agreement was signed 9 March 2009.
Allison continues its commitment to Torotrak through a multi-million dollar option, implying it has ample internal resources to develop toroidal technology.
If Allison is equipping a facility to make the new IVT it is tight-lipped; it is certainly keeping quiet about how many engineers are engaged on the project and what they are doing. Allison’s headquarters in Indianapolis could be the first to produce any novel design, as this is where development has been conducted under tight security.
                                         Tide turning?

So is the tide turning in Torotrak's favour? On 26 July 2012 the company announced Allison had agreed "an advance commitment of £2.5 million against its final £10.62 million option, to be paid this August. The final option, exercisable in 2013, would secure exclusive rights for main drive transmission applications in commercial vehicles".
In Europe, Allison’s rights will co-exist with Torotrak's other two commercial vehicle licensees: Tata and ETBM. Shareholders can but hope that any such transmissions will catch the expected doubling of global new commercial vehicle registrations expected by 2020, with EBTM in a “strong first-to-market position”. 
However, such is the clandestine nature of the ETBM programme that no one will declare how well this activity is performing; or even hint at percentage fuel economy gains. As fuel economy is an important parameter in commercial vehicle operation, any figure would yield an insight into how effective or ineffective the IVT development work has been. But it has to be assumed gains of over 20 per cent have been achieved.
The latest company statement continues the mystique of smoke and mirrors that has surrounded the programme for years, claiming that "further testing reported previously has now been concluded with very positive results". It suggests fuel economy gains from Torotrak’s technology extends "further into their vehicle range. This presents a stronger opportunity than previously thought.” This statement contains no precise depth of meaning – except to those “in the know”.
Torotrak has another iron in the fire, although not yet as significant as the Allison project. V-Charge (previously called Rotrak) supercharger boost technology is said to be "seeing significant strengthening of interest".
Torotrak claims V-Charge, a forced induction system that combines supercharging with the best of turbocharging, provides “the only cost-effective route to affordable downsized engines" and low CO2 with the driveability of a larger, naturally aspirated engine. Tests in a development vehicle confirm the system can boost torque from zero to 95% in 400 ms.
Such programmes are “work in progress”. Meanwhile, shareholders continue to wait for a return on their investments. As they do so, some might ask if this technology is one in which the goalposts are constantly moving? Others might begin to wonder, if they have not done so already, in whose best interests is the company being operated: employees, including of course directors, clients (i.e. customers) or shareholders?