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[RichardJensen]

What is the cost to of putting the 6.7 Cummins and Allison combo back into the 750?

 

If putting the Cummins/Allison combo results in a 15% take rate and a 10% bump in sales, it's not a good idea. You're not adding volume as much as you're adding cost.

 

It has nothing to do with a callous reference to mass suicide that isn't even factually correct (the Jonestown victims drank Flavor-aid).

Edited May 30, 2016 by RichardJensen

[7Mary3]

Purely anecdotal, but I am seeing very few of the new Ford 650/750's around L.A.. I wonder if Ford's class 6 sales claims include some F-550 models.

[Bob Rosadini]

 

If putting the Cummins/Allison combo results in a 15% take rate and a 10% bump in sales, it's not a good idea. You're not adding volume as much as you're adding cost.

 

It has nothing to do with a callous reference to mass suicide that isn't even factually correct (the Jonestown victims drank Flavor-aid).

Educate me- what is the dif. between a 15% take rate and a 10% bump in sales?? Does that mean 5% of production sits unsold? And in any case, a combo previoiusly engineered for the truck, with very similar HP and torque specs, is going to add cost??? I think the premium for a Cummins/Allison combo will be a pass through. As for added cost? What do they need? some added racks? Handling slings?? Specifics please- I'm always learning even at my old age.

 

OH--"callous reference"? Give me a break. The reference to Kool Aid drinkers from my perspective applies to anyone who swallows the party line-hook line and sinker.

[Bob Rosadini]

Purely anecdotal, but I am seeing very few of the new Ford 650/750's around L.A.. I wonder if Ford's class 6 sales claims include some F-550 models.

As I pm'd you, was out your way a month or so ago. Agree -I may have seen two! The 650 numbers are good but we all have seen U-hauls on lots. Plus in my area there are probably 4 or 5 dealers advertising 650 inventories that NEVER carried the old trucks. I suspect this area is not unique-Ford obviously lowered the bar as there is no longer the requirement to be Cummins-Cat certified as in the pre OAP "one size fits all mode". Once the dealer inventory issue is satisfied we will see-again-hope I'm wrong about 750 sales. I think the 650 gas option will continue to do well but I do believe another engine trans option is needed to build good numbers.

 

As for Hino, not surprised at the latest class 7 stats. They are all over the place here- ramp trucks, propane bobtails, home heating oil, boxes etc. No clue on pricing. You have any idea on Hino vs Ford-Navistar??

[blazerdude20]

Sioux Falls has an odd setup where the first responder for medical emergencies is the fire department, and they usually arrive in a medium duty truck that (IIRC) can haul passengers. However, they usually dispatch an ambulance for transport. I don't think I've ever seen an ambulance on scene before a fire department vehicle. And the ambulances are all class 2/3 cutaways.

Portland area is moving to this setup as well. The local ambulance company has contracts with hospitals and prioritizes hospital transportation calls and staffing over emergency calls. As such the local fire departments are building seperate ambulance stations with their own ambulance and incidence response teams. That way they don't have to send a fire truck to accompany the ambulance.

[RichardJensen]

Educate me- what is the dif. between a 15% take rate and a 10% bump in sales?? Does that mean 5% of production sits unsold? And in any case, a combo previoiusly engineered for the truck, with very similar HP and torque specs, is going to add cost??? I think the premium for a Cummins/Allison combo will be a pass through. As for added cost? What do they need? some added racks? Handling slings?? Specifics please- I'm always learning even at my old age.

 

OH--"callous reference"? Give me a break. The reference to Kool Aid drinkers from my perspective applies to anyone who swallows the party line-hook line and sinker.

 

15% take rate means 15% of vehicles sold have the Cummins/Allison transmission. 10% boost in sales means that 5.5% of the trucks sold with the more expensive Cummins/Allison combo would have been sold with the cheaper Ford/Ford combo. You've raised your volume and reduced your margin. That's bad business when you're having to cut your margins just to penetrate the market in the first place.

 

Arguing that the excess costs of Cummins/Allison can be 'passed through' is a dead end, IMO. Ford either sacrifices volume by charging the true cost of those additions (as well as their negative impact on related volume) and ends up at a price disadvantage to other manufacturers, or they eat those costs (as other manufacturers are able to do, given their higher volumes) and succeed only in falling further behind the longer they stay in the market.

 

And yes, 'drinking the Kool-aid' is an exceptionally callous reference. It is a direct and specific reference to the Jonestown massacre. It does not come from anywhere else. You can use it as much as you want, but I find it to be in poor taste and as stupid as calling people Nazis.

Edited May 30, 2016 by RichardJensen

[theoldwizard]

What is the cost to of putting the 6.7 Cummins and Allison combo back into the 750? It has to be minimal.

The engineering and manufacturing costs WOULD be minimal.

 

I have to agree with Richard. The "cost" added to the bottom line that the customer would see will be substantial !

 

I don't know if fleets really care, but doesn't the For powertrain come with a 3 year warranty ? Much too early in the life cycle for Ford to abandon their current strategy.

[twintornados]

So, all this "add a Cummins/Allison combo" chatter can be quelled if Ford brought in an Ecotorq engine and paired it with the torqshift transmission....article dated 4/4/16 from the "Invest in Turkey" website.

 

...Ford Otosan is the only company in Ford’s global network that designs and develops diesel engines for heavy commercial vehicles. These engines will also be manufactured in China, under license from Ford Otosan, to be used in JMC brand trucks,” he said, adding that Turkey had become an exporter of R&D services.

.

 

[twintornados]

So, all this "add a Cummins/Allison combo" chatter can be quelled if Ford brought in an Ecotorq engine and paired it with the torqshift transmission....article dated 4/4/16 from the "Invest in Turkey" website.

 

...Ford Otosan is the only company in Ford’s global network that designs and develops diesel engines for heavy commercial vehicles. These engines will also be manufactured in China, under license from Ford Otosan, to be used in JMC brand trucks,” he said, adding that Turkey had become an exporter of R&D services.

.

 

JMC trucks made in China....wondering if the joint venture with Ford would allow export of cabs and frames for final assembly at Avon Lake medium truck facility or even just bring the stampings here and produce all locally.

Edited May 31, 2016 by twintornados

[7Mary3]

I thought the smaller Ecotorq engines were license built FPT products.

 

Bottom line is I think adding the Cummins/Allison drivetrain would help sales of the 650/750, however I don't think the decrease in profitability would be offset by the increase in sales. The only way I see this 650/750 having any success is if it is the lowest purchase cost competitor.

[RichardJensen]

I thought the smaller Ecotorq engines were license built FPT products.

 

Bottom line is I think adding the Cummins/Allison drivetrain would help sales of the 650/750, however I don't think the decrease in profitability would be offset by the increase in sales. The only way I see this 650/750 having any success is if it is the lowest purchase cost competitor.

 

Given enough time, they may be able to add Cummins/Allison, but they need to build a solid base first. They can't build a customer base by being the least profitable retailer of Cummins/Allison powered trucks.

[Bob Rosadini]

 

15% take rate means 15% of vehicles sold have the Cummins/Allison transmission. 10% boost in sales means that 5.5% of the trucks sold with the more expensive Cummins/Allison combo would have been sold with the cheaper Ford/Ford combo. You've raised your volume and reduced your margin. That's bad business when you're having to cut your margins just to penetrate the market in the first place.

 

Arguing that the excess costs of Cummins/Allison can be 'passed through' is a dead end, IMO. Ford either sacrifices volume by charging the true cost of those additions (as well as their negative impact on related volume) and ends up at a price disadvantage to other manufacturers, or they eat those costs (as other manufacturers are able to do, given their higher volumes) and succeed only in falling further behind the longer they stay in the market.

 

And yes, 'drinking the Kool-aid' is an exceptionally callous reference. It is a direct and specific reference to the Jonestown massacre. It does not come from anywhere else. You can use it as much as you want, but I find it to be in poor taste and as stupid as calling people Nazis.

 

Sorry- I am thick. I fail to see your logic that says..."5.5% of the trucks sold WOULD have had the cheaper Ford combo. Are 750 sales down? Yes! Logic says to me, the lack of a diesel engine/transmission option could be the reason-there are plenty of "old school" utility bucket trucks running around this area-Eversource, National Grid. I have yet to see any of these utilities with a new 750.. A utility bucket truck today with bucket/auger is a heavy piece of equipment. If I had to guess I would say the obstacle is the transmission issue more so than the engine issue.

 

Oh and PLEASE pardon my political incorrectness. I did not mean to offend YOUR sense of propriety. Uh- you DON"T think that there are people who act like NAZIS? Then again, seems like you haven't been in a pissing contest in a few weeks so I guess we were due

The engineering and manufacturing costs WOULD be minimal.

 

I have to agree with Richard. The "cost" added to the bottom line that the customer would see will be substantial !

 

I don't know if fleets really care, but doesn't the For powertrain come with a 3 year warranty ? Much too early in the life cycle for Ford to abandon their current strategy.

I think from my perspective, I would like the choice. Am I a Ford guy? Yes. do I want to roll the dice with a less than proven powertrain-at 33,000lbs or more?-No I hear you on the warranty and I understand Ford is banking on that hook- I say the sales stats say that is not working. Keep in mind, many operators worry less about "warranty" than they do about "in service time". If that 33,000 lb truck is critical to your operation the fact that it craps out is of greater consequence to you than "its okay-covered by warranty".

 

So, all this "add a Cummins/Allison combo" chatter can be quelled if Ford brought in an Ecotorq engine and paired it with the torqshift transmission....article dated 4/4/16 from the "Invest in Turkey" website.

 

.

 

TT-see below

 

I thought the smaller Ecotorq engines were license built FPT products.

 

Bottom line is I think adding the Cummins/Allison drivetrain would help sales of the 650/750, however I don't think the decrease in profitability would be offset by the increase in sales. The only way I see this 650/750 having any success is if it is the lowest purchase cost competitor.

I say you are correct. Fiat Power Train licenses the manufacture of these engines. Now the site that TT has provided would lead one to believe that Ford CLEARLY designed this motor.- I have posed a question to a knowledgeable guy.-Stay tuned.

 

 

Given enough time, they may be able to add Cummins/Allison, but they need to build a solid base first. They can't build a customer base by being the least profitable retailer of Cummins/Allison powered trucks.

If you make a buck selling a Cummins/Allison 750, its one more buck than you have if you did not. And its one less truck that Hino, Navistar or F'liner will sell. By the way-do you regularly receive truck sales "rags"? I do, and I can say that there are virtually NO dealer ads for heavy spec diesel 750's. everything is 650 and mostly gas at that.

[RichardJensen]

 

Sorry- I am thick. I fail to see your logic that says..."5.5% of the trucks sold WOULD have had the cheaper Ford combo.

 

 

 

sample numbers

 

I sell 10,000 trucks with a Ford/Ford setup.

 

I sell 11,000 trucks with a Ford/Ford setup or a Cummins/Allison setup.

 

15% of the 11,000 trucks are Cummins/Allison.

 

That means that 1650 of the trucks have the Cummins/Allison combo.

 

That means that 9,350 of the trucks were sold with the Ford/Ford combo.

 

That total is 650 lower than the 10k Ford/Ford. That's 6.5% (pardon my defective math earlier) fewer Ford/Ford trucks.

 

Let's say that at 100% Ford/Ford my net margin is 9%. Let's say that with a mix, my margin is 8% Ford/Ford and 5% for Cummins Allison.

 

At 10,000 sales - Ford/Ford, my margin is 9%.

 

At 11,000 sales, with a Ford/Ford and Cummins/Allison mix at 85/15, my margin is 7.55%.

 

My margins have decreased 16% (= 1.45/9), while my sales have only increased 10%.

 

In short, I am making less money than I was with a strictly Ford/Ford setup, even though I'm selling more vehicles!

 

I have no idea how close those numbers are to reality, but what I'm showing you is basically the exact math that Ford planners used when choosing to drop the Cummins/Allison (even if the numbers are incorrect, the formulas are pretty much spot on).

[twintornados]

 

sample numbers

 

I sell 10,000 trucks with a Ford/Ford setup.

 

I sell 11,000 trucks with a Ford/Ford setup or a Cummins/Allison setup.

 

15% of the 11,000 trucks are Cummins/Allison.

 

That means that 1650 of the trucks have the Cummins/Allison combo.

 

That means that 9,350 of the trucks were sold with the Ford/Ford combo.

 

That total is 650 lower than the 10k Ford/Ford. That's 6.5% (pardon my defective math earlier) fewer Ford/Ford trucks.

 

Let's say that at 100% Ford/Ford my net margin is 9%. Let's say that with a mix, my margin is 8% Ford/Ford and 5% for Cummins Allison.

 

At 10,000 sales - Ford/Ford, my margin is 9%.

 

At 11,000 sales, with a Ford/Ford and Cummins/Allison mix at 85/15, my margin is 7.55%.

 

My margins have decreased 16% (= 1.45/9), while my sales have only increased 10%.

 

In short, I am making less money than I was with a strictly Ford/Ford setup, even though I'm selling more vehicles!

 

I have no idea how close those numbers are to reality, but what I'm showing you is basically the exact math that Ford planners used when choosing to drop the Cummins/Allison (even if the numbers are incorrect, the formulas are pretty much spot on).

.

And if they brought over the big Turkish Ecotorq motors that are Euro 6 complaint, it should be a breeze sliding them in to existing chassis at Avon Lake for say, an exclusive F750 power train option.

[theoldwizard]

The only way I see this 650/750 having any success is if it is the lowest purchase cost competitor.

I CONCUR !!

 

Low costs sells !!!!

[twintornados]

I CONCUR !!

 

Low costs sells !!!!

.

Low cost to buy and low cost to operate...that is the ONLY thing most fleets care about.

[bzcat]

.

And if they brought over the big Turkish Ecotorq motors that are Euro 6 complaint, it should be a breeze sliding them in to existing chassis at Avon Lake for say, an exclusive F750 power train option.

 

Fleet buyers want Cummins and Allison for maintenance commonality. Ecotorq doesn't help fleet achieve that goal. Just ask Volvo how selling their own diesel engine and transmission in Class 7/8 is going for them...

Edited June 1, 2016 by bzcat

[Bob Rosadini]

 

sample numbers

 

I sell 10,000 trucks with a Ford/Ford setup.

 

I sell 11,000 trucks with a Ford/Ford setup or a Cummins/Allison setup.

 

15% of the 11,000 trucks are Cummins/Allison.

 

That means that 1650 of the trucks have the Cummins/Allison combo.

 

That means that 9,350 of the trucks were sold with the Ford/Ford combo.

 

That total is 650 lower than the 10k Ford/Ford. That's 6.5% (pardon my defective math earlier) fewer Ford/Ford trucks.

 

Let's say that at 100% Ford/Ford my net margin is 9%. Let's say that with a mix, my margin is 8% Ford/Ford and 5% for Cummins Allison.

 

At 10,000 sales - Ford/Ford, my margin is 9%.

 

At 11,000 sales, with a Ford/Ford and Cummins/Allison mix at 85/15, my margin is 7.55%.

 

My margins have decreased 16% (= 1.45/9), while my sales have only increased 10%.

 

In short, I am making less money than I was with a strictly Ford/Ford setup, even though I'm selling more vehicles!

 

I have no idea how close those numbers are to reality, but what I'm showing you is basically the exact math that Ford planners used when choosing to drop the Cummins/Allison (even if the numbers are incorrect, the formulas are pretty much spot on).

Richard,

Thx for the attempt, but I still don't get it.

 

Your statement...."Let's say that at 100% Ford/Ford my net margin is 9%. Let's say that with a mix, my margin is 8% Ford/Ford and 5% for Cummins Allison." is confusing. How does the Ford/ Ford margin change? If that combo earned a 9% margin, I can't see where the margin of the combination would change unless there was such a huge swing to the alternative, that somehow the component costs of the Ford/Ford combo were inflated.

 

Furthermore, it seems your case assumes a significant reduction in "Ford/Ford" sales when there is another alternative. I say there might be some defection to the alternative power trains but my contention is without that alternative power choice, Ford is NOT getting those sales-and 750 lower sales figures support that.

Will Ford make less per unit with an outsourced power train? Probably. But my contention is the without the outsourced option, there are fewer sales. Granted some buyers will settle for the Ford combo but I say more sales are being lost because of the absence of a diesel option.

[fordmantpw]

Richard,

Thx for the attempt, but I still don't get it.

 

Your statement...."Let's say that at 100% Ford/Ford my net margin is 9%. Let's say that with a mix, my margin is 8% Ford/Ford and 5% for Cummins Allison." is confusing. How does the Ford/ Ford margin change? If that combo earned a 9% margin, I can't see where the margin of the combination would change unless there was such a huge swing to the alternative, that somehow the component costs of the Ford/Ford combo were inflated.

 

Furthermore, it seems your case assumes a significant reduction in "Ford/Ford" sales when there is another alternative. I say there might be some defection to the alternative power trains but my contention is without that alternative power choice, Ford is NOT getting those sales-and 750 lower sales figures support that.

Will Ford make less per unit with an outsourced power train? Probably. But my contention is the without the outsourced option, there are fewer sales. Granted some buyers will settle for the Ford combo but I say more sales are being lost because of the absence of a diesel option.

 

If you sell fewer widgets, your fixed costs for those widgets (tooling, real estate, etc) stays the same, so your cost / widget goes up. That's what happens if you sell fewer Ford/Ford combos...the cost per unit for the other units goes up, and your margin goes down.

 

So, yes, Ford does sell fewer models than if they offered other options, but if having higher sales does not equal higher profit (it could equal less profit), then why offer the options to get the higher sales?

[RichardJensen]

I can't see where the margin of the combination would change unless there was such a huge swing to the alternative

 

As Fordmantpw pointed out, fewer units means fixed costs are higher per unit. Plus you are adding complexity to the assembly process, and with a 1% decrease in net margin, you're talking like $450 per unit. I don't believe that's an outrageous assumption for higher costs if you're going to install two very different engines (one an I-6, the other a V8) and transmissions in the same truck. Bearing in mind that the Cummins/Allison margin would be higher if the lineup was 100% Cummins/Allison as well.

 

Furthermore, as I said, these are the calculations that Ford planners made when they conscientiously decided to give up some Class 7 volume in order to have a much more profitable and therefore sustainable Class 6 offering.

 

This isn't like a restaurant where the cost of expanding your menu is minimal.

[Joe771476]

Does Ford have any documentation that dealers can show customers that durability has been proven for 500K miles plus, or better yet in engine hours? And by the way, what would the milestone be for proven engine hours? I think the most grueling test would be an F750 running a fire apparatus pump for 5 or more hours straight. This would be the best test for the cooling system since there would be no cool air moving through the engine compartment like there would be in a moving vehicle scenario. Ford MUST have their own proven in-house diesel and gain the experience and know-how if they are going to compete in the ever-changing global market. These millenials aren't interested in owning cars, so if Ford wants to be a global mobility company, that has to include diesel-powered buses and maybe even marine and rail.

[Bob Rosadini]

Ok guys, thx for the comments/attempts to educate this old guy. I have to say, having spent 44 years in one industry I completely understand the difference in fixed costs, variable costs, sunk costs blah blah. I also accept that one definition of "Statistics 101" is..."how to lie with numbers".

 

I again must say, I am suggesting that the continued downward spiral in class 7 sales, is based on the lack of an alternative to the PowerStroke/Torqueshift combo-as well as a better option to the V-10 as a gasoline option. And I think we all agree that there is a need for a good gasoline(gaseous) option in class 7 for someone who does not run the miles/engine hours needed to payout a diesel premium but does need the power in that weight range.

 

You all seem to be piling on that another diesel option will drive fixed costs up because PowerStroke/Torqueshift sales will suffer. I say- hardly. We all agree that the PS/PT combo is an attractive package because of its pricing-and low price sells.

 

The typical PS/PT buyer is not going to LOOK at a more costly option-those sales are safe.. However, when you look at Ford's 3 mo. sales figure in class 7 of 488 units, against 7145 for F'liner, 3092 for Navistar and 2402 for Paccar, I think there are plenty of those buyers who WOULD have gladly considered a Ford 750 had another power train option been available. And what is really scary is Hino for the first time blew Ford away in class 7. Perhaps a one month hit?- I doubt it. As I have said-around here I see Hino in all sorts of applications. 750's? don't see any and more importantly, none of the dealers seem to be stocking them-that tell you something? 650 gas jobs?-take your pick. Dealer friend of mine told me he got a call from the "district". they built two loaded 750 diesel dump chassis-33,000 lb-trying to find a home for them-he passed.

 

And Richard, I certainly understand that you have probably far more knowledge than do I when it comes to Ford's cost accounting. I must disagree however with your contention that to once again offer a Cummins/Allison combo, OAP's manufacturing costs would go up significantly. The engineering costs would have to be minimal given the fact the chassis was previously engineered into the truck and GVW/GCW combos would not be changed. I'm not suggesting anything complicated at this point-like manual or semi-automated transmissions- just a simple 6 cylinder/allison combo-something most fleets are very comfortable with.

 

And TT, I agree-if Ford is so hung up on internal sourcing-bring one of the 6 cylinders over from Turkey.

[twintornados]

....And TT, I agree-if Ford is so hung up on internal sourcing-bring one of the 6 cylinders over from Turkey.

.

According the article I was reading, Ford/Otosan is licensing the assembly of the Ecotorq tractor motors to Fords' JV in China...Turkey, China....just bring it over, and for gods sake...continue to call it Ecotorq in NA applications.

[RichardJensen]

I must disagree however with your contention that to once again offer a Cummins/Allison combo, OAP's manufacturing costs would go up significantly

 

nobody said you had to agree with me

 

Ultimately, it comes down to this: Ford's previous strategy was flat out not working. They were a bit player with a product that cost them a lot of money to make (paying the Blue Diamond JV, using outside engine/trans).

 

Their new home-built/home-powered product has seen a significant increase in sales and could, within a couple years, be the established standard in Class 6.

 

I argue that is by design.

 

With that in mind, the Cummins/Allison combo is not only unnecessary, it's entirely the wrong product for this truck.

 

Nobody is going to pay a premium for, essentially, a Class 6 truck with a Class 7/8 motor in it, and depending on how you subsidized it, you would probably see a few brand/status conscious small scale Class 6 buyers (not fleet operators) opting for Cummins/Allison instead of Ford/Ford.

 

At some point in the future, Ford may come out with a legit Class 7/8 package and at that time the whole powertrain issue will need to be addressed again.

 

But for now, I think the results speak for themselves. Would anyone be surprised if Ford ends the year with the biggest piece of the Class 6 market?

Edited June 5, 2016 by RichardJensen

[RichardJensen]

The same argument framed in a different context.

 

Several years back, an unnamed member of this forum loudly criticized Ford's decisions to close plants, layoff workers, and reduce models and brands.

 

His argument, superficially quite logical, was that 'you don't cut your way to success'.

 

And, while that's true. The mistake that he made was assuming that Ford's cutting would not be followed by expansion once their cost base had been rationalized.

 

Same situation here.

 

I don't believe that Ford will be content with this product.

 

But this is where they have to start if they want a self-sustaining product line.