The quickened pace of consolidation in the heavy engineering industry on one hand reflects aspirations towards business growth through acquisition of complementary or rival enterprises. On the other hand, it is a factor of the enormous costs associated with product research and development (R&D) and investments in manufacturing technology, set against persisting weak engine prices, particularly in the shipbuilding domain.
Unremitting pressure to trim unit manufacturing costs, and to maintain a vibrant product development and refinement program with ever-shorter lead times, imposes considerable structural and strategic demands on the industry. The new scale and organizational efficiency of certain players, achieved either organically or through collaboration or takeover, would suggest that smaller firms will be increasingly hard-pressed from a competitive standpoint. The process of rationalization and industrial restructure has some way to go yet.
There will always be fear that the emergence of fewer, larger players will limit product and service choice available to the client, ultimately impelling prices upwards. However, evidence to date suggests that the creation of powerful new groupings will more efficiently safeguard the process of technological development, to the ultimate economic and competitive benefit of buyers and users.
In addition, there is little prospect of sustained, solid improvement in the shipbuilding capacity supply/demand scenario of an order that will allow the price of bought-in equipment to rise substantially, all the time that there are competing suppliers. Only a combination of the kind proposed some years ago between Europe's two leading marques could materially affect this situation. The latter move, it will be recalled, was rejected by the anti-cartel authorities. Moreover, the continuing devel- September, 1997 opment of engine building capacity in the Orient, particularly South Korea, will keep prices keen.
Growth in the global power generation market continues to have a fundamental bearing on workloads and on product development strategy. Although a resurgence in shipbuilding activity has buoyed diesel engine factory output generally, the longer term demand prognosis is more positive in the power sector.
Engine designers do not underestimate the impact of environmental issues. IMO exhaust emission limits, proposed for new machinery from 2000 onwards, have occupied the minds of engine makers to constructive and positive effect. But the real test will be increasingly stringent local, regional and national requirements. Proponents of a new generation of gas turbines better suited to commercial marine requirements may yet have their day, while electric propulsion systems can be expected to gain ground on performance, flexibility and environmental merits.
The emergence of the powerful new European force, Wartsila NSD Corporation, provides the market with a second full-line organization, like MAN B&W, offering a product range covering the gamut of propulsion, marine auxiliary and stationary power plant needs. One of the first elements of the manufacturing strategy laid down since the melding of Metra's Wartsila Diesel division with the Fincantieri-owned New Sulzer Diesel and Diesel Ricerche, has been the decision to concentrate output of the world's most powerful medium-speed engine — the emerging Wartsila 64 — in Italy. Offering an output of 2,010 kW (2,734 bhp) per cylinder at 333.3 rpm, commercial production has been assigned to Fincantieri's Grandi Motori Trieste (GMT), in which Wartsila NSD has an initial 40 percent stake.
The move is in keeping with the Wartsila philosophy of optimizing the economics of engine manufacture by having each factory specialize in one or two product lines.
Thus, major investments in engine block manufacturing and heavy assembly for the increasingly popular Wartsila 46 are underway at the Turku plant in southwestern Finland. The facilities are being extended to cater to an expected doubling of bhp demand over the second half of this decade.
One of the most significant developments this year has been the entry into service of the first of the new 320-mm bore engines from the Finnish stable. Although the Vasa 32, one of the most successful medium-speed types ever launched, remains in considerable demand after 20 years of continuous refinement, the new Wartsila 32 brings a 12 percent higher power yield per cylinder, and a margin for long-term development no longer available to the Vasa 32. Delivering 625 bhp per cylinde at 750 rpm, the new type has an extended stroke of 400 mm compared with the earlier engine's 350 mm, and offers unit powers up to 11,260 bhp. Manufacture will be the province of the company's Vaasa works, where a dedicated production unit has also been phased into operation this year for the smaller, medium-speed Wartsila 20.
Vaasa will also feed engine parts for the Wartsila 20, and later for the Wartsila 32, to a new assembly facility being set up at Innoshima under the aegis of the group's recently forged alliance with Hitachi Zosen. Entailing an investment of FMk 4.6 million (Yen 100 million) from the European side, the new entity known as Wartsila Diesel Japan Company will aim to strengthen the Wartsila NSD medium-speed presence in the Japanese shipbuilding and power plant markets.
Meanwhile, Hitachi Zosen's two-stroke engine building activities, mainly involving the MAN B&W marque at present, are to be transferred this year from Sakurajima to a new machinery plant at Ariake.
Cummins link Selective cooperation and alliances form a central part of the business strategy of U.S.-owned Cummins, a leading manufacturer of engines over 200 bhp, which has achieved a dramatic growth in commercial marine sales of the uprated K/KV series in the past two years.
The joint venture with Wartsila NSD has spawned two new engine families which have taken Cummins from its 2,000-bhp top end to 6,000 bhp while strengthening the Wartsila name in the highspeed category.
The Cummins-designated QSV, otherwise known as the Wartsila 200, became available in limited quantities in 1996 for power generation customers and propulsion applications. Under the auspices of Cummins Wartsila Engine Company (CWEC), production of the vee engine series is gathering momentum at Wartsila's Mulhouse plant in France. In addition, the QSW, or Wartsila 170, is being introduced this year in both diesel and gas versions from a dedicated CWEC manufacturing unit, scheduled to be completed this fall, within Cummins' Daventry factory in the English Midlands. Embracing both in-line and vee layouts, maximum power rating currently offered by the design is 3,200 bhp. The Daventry plant continues to make a key contribution to the development of Cummins' Quantum system of compact machinery for the marine as well as industrial and stationary power markets. This is expressed in two prospective additions to the range, the QSK45 and QSK60 types, which are due to be introduced in 1998. While the existing K38/K50 models span the 800 to 1,800-bhp band, the new designs will cater to applications between 1,200 and 2,600-bhp unit output