Cat pays for its EGR misdeeds

Caterpillar Inc. has agreed to pay $60 million to settle claims about defects in its C13 and C15 heavy commercial vehicle engines.

Caterpillar very nearly became as embroiled as Navistar International Corporation in the scandal over exhaust gas recirculation (EGR), but almost at the last moment chose to exit the field of on-highway truck engines and revert to that which it knew best – diesel engines for construction equipment.

Look at any piece of Cat equipment and you can see it is constructed for the long haul, solid, dependable. Unlike Cummins Inc. which, when push came to shove, chose to create a new 15-litre engine (ISX15) to replace its tried and trusty 14-litre job, Cat maintained its ‘old’ engine designs for on-highway duty.

The previous-to-ISX15 Cummins 14-litre engine, rather like Caterpillar’s 14-litre, had evolved gradually over the years. But then, looking to the future, the Columbus, Indiana independent engine maker decided to bite the bullet and create a new engine that would eventually embrace Selective Catalytic Converter (SCR) technology.

For its part, in developing its C13 and C15 engines, Cat believed it could take construction equipment diesels and translate them directly across to on-highway applications. But, as legislators tightened their screw on the North American heavy diesel engine industry, Cat realised that its EGR-only C13 and C15 engines would not up to the mark.

And so Cat decided to throw in the towel for its EGR-only C13 and C15 on-highway engines ahead of EPA 2010 emission regulations. Even so, there must be many thousands of compliant engines still in service, notably in Class 8 Paccar (Peterbilt and Kenworth) chassis.

Navistar on the other hand, under the misguided leadership of Daniel Ustian, elected to push ahead with EGR-only engines, believing its engineers could master the technology and thus avoid going down the road of EGR and SCR with its added implications of urea consumables.

Caterpillar, before throwing in the towel, did produce C13 and C15 engines embracing its own version of EGR which it chose to name the CAT Regeneration System; it had no wish to have its emissions ‘technology’ tainted by what was going on at Navistar.

But Cat eventually had to face the grim facts of life – just as Navistar had to do, causing boss Troy Clarke to buy in Cummins engines – and withdrew the C13 and C15 engine from the market, nudged on no doubt by widespread fleet reports fleets of shutdowns and sudden horsepower loss.

Caterpillar, which had made its C13 and C15 engines comply with 2007 emissions regulations, announced this latest $60 million financial settlement with plaintiffs; they represent truck and bus companies. The plaintiffs brought the suit in US District Court in New Jersey.

The issues with the CAT Regeneration System emissions control system included such matters as to whether they could be repaired. Litigation has been in progress for at least five years and the outcome involves an agreement that covers engines made between 2006 and 2009.

"Caterpillar thus endorses the settlement class as a realistic resolution of this class action," the company said in its motion to approve the settlement. "Given the uncertainties and costs of continuing litigation, the proposed settlement is the best way to end the uncertainty and delay, and most importantly, will ensure fair compensation to Caterpillar customers who may not have received expected value from their product."

The settlement offers a range of compensation. The maximum is estimated at $10,000 for those who had to have the engines repaired six or more times. Those with one to five repairs stand to receive $5,000. The minimum is $500 for those truck operators that did not have the engines repaired but nevertheless suffered lost residual value.

The actual amount of the settlements in each of the three categories depends on how many plaintiffs accept the settlement, according to a statement. Fleet owners or those involved in leasing transactions have the option not to accept the settlement and seek to continue their cases with the potential to receive a maximum of $15,000 if one or more repairs was made.

Those operators which choose not to accept the settlement must opt out by 6 August 2016, and those who choose to object to it face a deadline of 21 August 2016 to take that step.

COMMENT. Caterpillar's C13 and C15 engines have been around for a while, having evolved gradually over the years as Cat’s engineers year-on-year tweaked bore and stroke to extract more power. However, Cat’s senior engineers and top executives finally decided; enough was enough. They could not meet EPA 2010 emission regulations with EGR alone.

At the same time, they elected not to embark on a new engine like Cummins. They also decided not to go down the route of adding SCR to make their existing on-highway engines compliant, a move that would have allowed Cat to continue supplying Class 8 truck builders.

Perhaps executives could see the writing on the wall: the trend to increased vertical integration would make life difficult for independent diesel engine builders like Cat. With Detroit Diesel part of Daimler AG, and Cummins and Navistar already making diesel engines, the marketplace looked crowded as competition from Europe eased ever closer.

Perhaps Cat executives preferred to remain with the trade they knew best – building engines for construction equipment and thus cement their own in-house strategy of vertical integration.

Perhaps there was the fear, that should Cat elect to build on-highway engines with EGR and SCR, they would face resistance from US truckers. Although adding SCR would increase engine costs (which might be justified), perhaps the greatest wall to climb might be that of overcoming truckers’ resistance to having to fill yet another consumables tank – but this time with expensive urea.

Whatever the real reason, Cat remained loyal to the market it knows best, a market in which engines run at near constant speed, facing none of the complicated load and speed duty cycles experienced by on-highway engines.

And in fact, of course, the world moved on and now there are companies like Iveco and Scania, both in Europe, using SCR-only engines. Both Iveco and Scania claim fuel economy is improved with EGR and SCR, but Iveco goes so far as to say that SCR-only engines offer even better fuel economy.

But, and there is a big but with the Iveco trucks. Account has to be taken (alongside the cost gains with improved fuel consumption) of the cost penalties of adding urea as this fluid is also a consumable.

On the other hand, increasingly widespread use of Adblu in passenger cars, like those of Mercedes-Benz, suggests that intervals for topping up with Adblu can be made to coincide with servicing and so there is no additional burden to the owner – except that of the cost of the urea.