1 00:00:08,000 --> 00:00:10,840 Speaker 1: Hi everyone, this is Lee Clasgow and we're Talking Transports. 2 00:00:10,880 --> 00:00:14,920 Speaker 1: Welcome Bloomberg Intelligence Talking Transports podcast. I'm your host, Lee Clascow, 3 00:00:15,240 --> 00:00:19,200 Speaker 1: Senior Freight Transportation Logistics Analysts at Bloomberg Intelligence, Bloomberg's in 4 00:00:19,239 --> 00:00:22,720 Speaker 1: house research arm of almost five hundred analysts and strategists 5 00:00:22,720 --> 00:00:26,000 Speaker 1: around the globe. Before diving in a little public service announcement, 6 00:00:26,079 --> 00:00:29,080 Speaker 1: your support is instrumental to keep bringing great guests and 7 00:00:29,160 --> 00:00:32,519 Speaker 1: conversations to you, our listeners, and we need your support. 8 00:00:32,600 --> 00:00:35,519 Speaker 1: So please, if you enjoy this podcast, share it, like 9 00:00:35,600 --> 00:00:38,040 Speaker 1: it and leave a comment. Also, if you have any 10 00:00:38,040 --> 00:00:41,080 Speaker 1: idea for future episode or just want to talk transports, 11 00:00:41,080 --> 00:00:43,760 Speaker 1: please hit me up on the Bloomberg terminal, on LinkedIn, 12 00:00:43,880 --> 00:00:48,280 Speaker 1: or on Twitter at Logistics Lee. Now onto our episode today, 13 00:00:48,280 --> 00:00:49,960 Speaker 1: We're going to be doing something a little different and 14 00:00:50,000 --> 00:00:52,839 Speaker 1: special if you ask me. Today's episode is going to 15 00:00:52,840 --> 00:00:56,520 Speaker 1: be co hosted by my Bloomberg Intelligence colleague, Chris Chiolino, 16 00:00:56,880 --> 00:01:01,600 Speaker 1: senior US Machinery Analysts. Hi, Chris, you don't, I'm fantastic, Thanks, Lee. 17 00:01:01,680 --> 00:01:03,279 Speaker 1: Chris and I have a lot in common. Not only 18 00:01:03,360 --> 00:01:06,840 Speaker 1: are we a bi analyst, we're also atica college alums. 19 00:01:06,880 --> 00:01:10,000 Speaker 1: Go bombers, go bombers. All right, and we're delighted to 20 00:01:10,040 --> 00:01:14,440 Speaker 1: have Brett Merritt, President of Cummens Engine Business, which generated 21 00:01:14,480 --> 00:01:17,440 Speaker 1: over eleven point seven billion in revenue and delivered one 22 00:01:17,440 --> 00:01:21,959 Speaker 1: point three million engines to customers worldwide. The entirety of 23 00:01:21,959 --> 00:01:24,800 Speaker 1: his twenty sixth career has been in the automotive and 24 00:01:24,880 --> 00:01:28,880 Speaker 1: commercial vehicle industry, starting in the automotive emission space with 25 00:01:29,240 --> 00:01:32,760 Speaker 1: Arvin in nineteen ninety eight. Brett was promoted to his 26 00:01:32,840 --> 00:01:36,080 Speaker 1: current role in January twenty twenty four, following a successful 27 00:01:36,080 --> 00:01:39,360 Speaker 1: career in various management roles since joining Cummins in two 28 00:01:39,400 --> 00:01:42,600 Speaker 1: thousand and eight. He holds a bachelor's degree in biology 29 00:01:42,600 --> 00:01:46,440 Speaker 1: and Liberal Arts management from Indiana University, Go Hoosiers, and 30 00:01:46,520 --> 00:01:50,400 Speaker 1: a master's in business administration from Harvard Business School. He 31 00:01:50,520 --> 00:01:53,680 Speaker 1: serves on the board of directors for the American Transportation 32 00:01:53,800 --> 00:01:57,880 Speaker 1: Research Institute. Brett, Welcome to the podcast. Thanks for having us. 33 00:01:58,320 --> 00:02:01,400 Speaker 2: Hey, Thanks Lee, I'm excited to be here, thanks to 34 00:02:01,440 --> 00:02:01,960 Speaker 2: you and Chris. 35 00:02:02,800 --> 00:02:06,440 Speaker 1: All right, great, So, Cummins for us is somewhat of 36 00:02:06,480 --> 00:02:08,760 Speaker 1: a household name. Can you provide us with a little 37 00:02:08,800 --> 00:02:11,080 Speaker 1: background about the company. 38 00:02:10,720 --> 00:02:13,960 Speaker 2: And the division that you lead. Sure, no, happy to 39 00:02:14,200 --> 00:02:17,440 Speaker 2: I'm glad to hear it's a household name. So Cummins 40 00:02:17,520 --> 00:02:21,079 Speaker 2: is a one hundred and six year old company, and 41 00:02:21,160 --> 00:02:24,680 Speaker 2: we are really separated in five divisions. And so we 42 00:02:24,760 --> 00:02:27,320 Speaker 2: have the engine division that's mine, which is somewhat the 43 00:02:27,400 --> 00:02:30,399 Speaker 2: oldest and kind of heart of the company. We also 44 00:02:30,440 --> 00:02:34,120 Speaker 2: have a components group, which essentially makes a variety of 45 00:02:34,120 --> 00:02:36,799 Speaker 2: components that we serve on our engines as well as 46 00:02:36,880 --> 00:02:41,919 Speaker 2: other engines to other oiams and engine manufacturers around the world. 47 00:02:42,440 --> 00:02:45,040 Speaker 2: Then we have a power systems business which essentially makes 48 00:02:45,200 --> 00:02:48,600 Speaker 2: very very large engines and or incorporates engines into power 49 00:02:48,639 --> 00:02:53,200 Speaker 2: generation business. And then we also have a distribution group 50 00:02:53,320 --> 00:02:56,960 Speaker 2: which either sales or helps us with sales or does 51 00:02:57,000 --> 00:03:00,480 Speaker 2: the service of this business all around the world. Finally, 52 00:03:00,480 --> 00:03:04,120 Speaker 2: we have Accelera, which is our zero emissions business. So 53 00:03:04,120 --> 00:03:08,799 Speaker 2: those all combine provide power to a variety of customers 54 00:03:09,240 --> 00:03:12,760 Speaker 2: in a series of markets. If you look at my 55 00:03:12,840 --> 00:03:14,920 Speaker 2: business alone, as you said, it's about a twelve billion 56 00:03:15,000 --> 00:03:19,160 Speaker 2: dollar business. We have about fourteen thousand people. We are 57 00:03:19,200 --> 00:03:23,560 Speaker 2: truly global, you know, we're in hundreds of countries around 58 00:03:23,600 --> 00:03:27,120 Speaker 2: the world, but we primarily operate in the large on 59 00:03:27,320 --> 00:03:32,359 Speaker 2: and off highway markets and have historically had great strength 60 00:03:32,480 --> 00:03:38,480 Speaker 2: in India, China, Brazil, growing in Europe and Japan, and 61 00:03:38,520 --> 00:03:40,240 Speaker 2: then the bread and butt of our business has been 62 00:03:40,280 --> 00:03:42,920 Speaker 2: the North American on highway market, which is probably what 63 00:03:43,000 --> 00:03:47,120 Speaker 2: our topic is today. And there we serve a wide 64 00:03:47,200 --> 00:03:50,520 Speaker 2: variety of customers and incredible number of applications from anything 65 00:03:50,600 --> 00:03:56,000 Speaker 2: vocational to fire trucks, to transit buses all the way 66 00:03:56,080 --> 00:03:58,760 Speaker 2: to just the Class eight truck you see going down 67 00:03:58,800 --> 00:04:00,840 Speaker 2: the road today. Gotcha. 68 00:04:00,960 --> 00:04:03,760 Speaker 1: And for those that are interested, Cummins is a public 69 00:04:03,800 --> 00:04:06,960 Speaker 1: company trades under the ticker CMI space US on the 70 00:04:07,000 --> 00:04:10,720 Speaker 1: Bloomberg Terminal and has a forty six billion dollar market cap. 71 00:04:11,040 --> 00:04:13,680 Speaker 1: So could you just briefly tell us about where growth 72 00:04:13,760 --> 00:04:18,480 Speaker 1: is coming from within Cummings. Yeah, absolutely, So growth is 73 00:04:18,520 --> 00:04:21,960 Speaker 1: coming through really three different areas. We've had a lot 74 00:04:22,000 --> 00:04:25,200 Speaker 1: of growth in our power systems and distribution businesses because 75 00:04:25,200 --> 00:04:26,120 Speaker 1: of data centers. 76 00:04:26,680 --> 00:04:29,159 Speaker 2: So data centers are growing all around the world. They 77 00:04:29,200 --> 00:04:33,159 Speaker 2: need very very large diesel and natural gas backup power. 78 00:04:33,600 --> 00:04:37,279 Speaker 2: These are ninety five Leader or sixty Leader engines, literally 79 00:04:37,320 --> 00:04:40,159 Speaker 2: the size larger than the room you're sitting in. Lee 80 00:04:41,200 --> 00:04:44,520 Speaker 2: and frankly we can't even make enough of them to 81 00:04:44,560 --> 00:04:48,520 Speaker 2: service that market for the upcoming years. Second major one 82 00:04:48,680 --> 00:04:51,960 Speaker 2: is content. As emissions continue to get more and more 83 00:04:52,000 --> 00:04:55,320 Speaker 2: stringent and difficult all around the world, we'll add content 84 00:04:55,360 --> 00:04:58,760 Speaker 2: to our engine systems and our components business in order 85 00:04:58,839 --> 00:05:01,880 Speaker 2: to meet those in miss needs for customers, and so 86 00:05:01,960 --> 00:05:05,200 Speaker 2: that generally has driven And then the third is we've 87 00:05:05,200 --> 00:05:09,080 Speaker 2: had a series of growth opportunities and largely that's growing 88 00:05:09,120 --> 00:05:13,320 Speaker 2: our market presence in a wide variety of areas. And 89 00:05:13,360 --> 00:05:16,200 Speaker 2: then I think many people know we partner quite well, 90 00:05:16,560 --> 00:05:18,600 Speaker 2: so we have multiple joint ventures all around the world, 91 00:05:18,640 --> 00:05:21,560 Speaker 2: but we're also growing with the likes of Daimler and Asuzu, 92 00:05:21,600 --> 00:05:24,359 Speaker 2: where you've seen some announcements that say they're going to 93 00:05:24,440 --> 00:05:27,520 Speaker 2: choose Cummins to make their medium duty engines as they 94 00:05:27,880 --> 00:05:30,279 Speaker 2: as they continue to pursue growth around the world. So 95 00:05:30,520 --> 00:05:32,840 Speaker 2: those are the three major areas of growth we've seen. 96 00:05:33,560 --> 00:05:36,680 Speaker 1: And just generally speaking for Cummins, is the growth organic 97 00:05:36,839 --> 00:05:39,000 Speaker 1: or are you guys very much acquisitive? 98 00:05:39,400 --> 00:05:41,039 Speaker 2: Well, it's a great it's a great question, and I 99 00:05:41,040 --> 00:05:44,080 Speaker 2: forgot the fourth area of growth, so I appreciate the prompt, 100 00:05:44,080 --> 00:05:47,280 Speaker 2: which is those three were organic, but we also have 101 00:05:47,720 --> 00:05:50,880 Speaker 2: made some acquisitions. A lot of those acquisitions are smaller 102 00:05:50,920 --> 00:05:54,039 Speaker 2: ones in the acceller business unit for where we're having 103 00:05:54,160 --> 00:05:57,120 Speaker 2: zero emissions. But the primary growth area was we did 104 00:05:57,160 --> 00:06:00,640 Speaker 2: purchase Maritor a couple of years ago. It's become a 105 00:06:00,720 --> 00:06:04,880 Speaker 2: part of our component's business and so that growth into 106 00:06:04,960 --> 00:06:08,799 Speaker 2: more content via the truck itself, whether it be axles 107 00:06:08,880 --> 00:06:13,440 Speaker 2: or brakes, was a large growth move for US about 108 00:06:13,480 --> 00:06:14,400 Speaker 2: two and a half years ago. 109 00:06:15,680 --> 00:06:20,200 Speaker 3: So, speaking of emissions, we have new US EPA regulations 110 00:06:20,200 --> 00:06:23,520 Speaker 3: for heavy trucks coming in twenty twenty seven that require 111 00:06:23,600 --> 00:06:28,080 Speaker 3: reduction in Knox emissions. The expectation is that this rule 112 00:06:28,120 --> 00:06:30,800 Speaker 3: will create a pre buy as fleets seek to buy 113 00:06:30,839 --> 00:06:34,320 Speaker 3: equipment before they're required to use the new more expensive engines. 114 00:06:34,800 --> 00:06:37,120 Speaker 3: I guess, how are you guys thinking about the potential 115 00:06:37,320 --> 00:06:41,039 Speaker 3: magnitude and duration of this pre buy? When do you 116 00:06:41,080 --> 00:06:43,440 Speaker 3: expect the pre buy to start to start? And I 117 00:06:43,440 --> 00:06:46,400 Speaker 3: guess how confident are you that the current regulation will 118 00:06:46,440 --> 00:06:50,000 Speaker 3: proceed as is, particularly around the extended warranty component. 119 00:06:51,240 --> 00:06:53,600 Speaker 2: Yeah, this really is the question of the day in 120 00:06:53,640 --> 00:06:57,720 Speaker 2: the on highway market. We do anticipate a pre buy 121 00:06:58,360 --> 00:07:01,240 Speaker 2: for the twenty seven Knox and green house gas emissions. 122 00:07:01,279 --> 00:07:05,920 Speaker 2: It will require additional content as well as some additional 123 00:07:06,200 --> 00:07:11,520 Speaker 2: mandatory warranty, which will essentially change pricing for the overall 124 00:07:12,080 --> 00:07:17,000 Speaker 2: engine system but also truck to the end consumer. And historically, 125 00:07:18,520 --> 00:07:21,680 Speaker 2: regardless of price change, there has historically been a pre 126 00:07:21,760 --> 00:07:25,000 Speaker 2: buy at an emissions change market. If that pre buy 127 00:07:25,120 --> 00:07:28,800 Speaker 2: means a larger price, we would generally say that there's 128 00:07:28,840 --> 00:07:32,200 Speaker 2: a little bit larger pre buy. So typically we're talking 129 00:07:32,240 --> 00:07:36,600 Speaker 2: one year, so you're thinking Jan one, twenty six. However, 130 00:07:36,960 --> 00:07:40,720 Speaker 2: given the recent demand over the past few years and 131 00:07:40,840 --> 00:07:45,280 Speaker 2: some of the industry's supply challenges, we're anticipating that that 132 00:07:45,320 --> 00:07:48,000 Speaker 2: pre buy comes into the second half of twenty five, 133 00:07:48,880 --> 00:07:52,600 Speaker 2: and so in the company's guidance, we've said that you'll 134 00:07:52,600 --> 00:07:55,800 Speaker 2: have a second half twenty five pre buyde really driven 135 00:07:56,160 --> 00:08:01,200 Speaker 2: off the twenty seven emissions. All of that said, as 136 00:08:01,240 --> 00:08:06,400 Speaker 2: you mentioned, what are the questions regarding emissions regulations, there's 137 00:08:06,440 --> 00:08:10,880 Speaker 2: a lot of them. You've seen the EPA have a 138 00:08:10,920 --> 00:08:16,400 Speaker 2: variety of statements. There's some open questions about Phase three rules, 139 00:08:16,440 --> 00:08:19,120 Speaker 2: which are further out and we could discuss a little 140 00:08:19,160 --> 00:08:23,320 Speaker 2: bit more, but openly, it is not completely certain that 141 00:08:23,360 --> 00:08:28,000 Speaker 2: the twenty seven regulation comes through exactly as we see 142 00:08:28,000 --> 00:08:31,400 Speaker 2: it today, and so that does put some unknown into 143 00:08:31,440 --> 00:08:34,600 Speaker 2: the second half pre buy, but as we say, it's 144 00:08:34,600 --> 00:08:37,280 Speaker 2: a little bit unknown. So the plan is the plan. 145 00:08:38,160 --> 00:08:42,160 Speaker 2: We still anticipate it today and we're progressing that way. 146 00:08:43,360 --> 00:08:47,680 Speaker 3: So, speaking of those price increases associated with the new regulations, 147 00:08:48,080 --> 00:08:51,920 Speaker 3: you know, we've heard some pretty broad projections around pricing 148 00:08:52,000 --> 00:08:56,000 Speaker 3: for new twenty twenty seven EPA compliant trucks anywhere, you know, 149 00:08:56,040 --> 00:09:01,040 Speaker 3: from ten thousand to thirty thousand per vehicle. So how 150 00:09:01,160 --> 00:09:04,360 Speaker 3: is Cummins thinking about pricing and that incremental cost per 151 00:09:04,480 --> 00:09:07,160 Speaker 3: vehicle and is there any way to kind of decompose 152 00:09:07,320 --> 00:09:10,640 Speaker 3: the hardware piece versus the extended warranty component. 153 00:09:11,800 --> 00:09:14,400 Speaker 2: Yeah, and you know, we're always I hate to be 154 00:09:14,440 --> 00:09:16,760 Speaker 2: a spoiler here, but we're always careful about how we 155 00:09:16,800 --> 00:09:19,840 Speaker 2: say this publicly. But what we would say is it 156 00:09:19,920 --> 00:09:24,440 Speaker 2: is a major stare step. You're talking major additions in 157 00:09:24,520 --> 00:09:28,160 Speaker 2: order to hit the lowest Knox level in the world 158 00:09:29,120 --> 00:09:34,160 Speaker 2: for diesel and natural gas engines at point zero three five. 159 00:09:34,360 --> 00:09:38,319 Speaker 2: And so those advancements, as well as hitting some of 160 00:09:38,320 --> 00:09:44,520 Speaker 2: the greenhouse gas standards, will mean major architecture changes for 161 00:09:44,559 --> 00:09:48,160 Speaker 2: any engine across the range. Obviously, the price will depend 162 00:09:48,280 --> 00:09:51,000 Speaker 2: on size of engine, So we generally serve everything from 163 00:09:51,040 --> 00:09:52,960 Speaker 2: the six seven all the way to the fifteen lider, 164 00:09:53,320 --> 00:09:56,920 Speaker 2: and so those prices will vary because the systems themselves 165 00:09:57,320 --> 00:10:01,280 Speaker 2: are different sizes. And I think the EPA has come 166 00:10:01,280 --> 00:10:05,520 Speaker 2: out and themselves said that they believe about sixty or 167 00:10:05,559 --> 00:10:08,720 Speaker 2: forty percent of the changes warranty and sixty percent of 168 00:10:08,720 --> 00:10:11,000 Speaker 2: the change is hardware. And I would say it's somewhere 169 00:10:11,000 --> 00:10:14,880 Speaker 2: in that ballpark. You're talking of fifty to fifty warranty, 170 00:10:15,640 --> 00:10:18,720 Speaker 2: fifty to fifty to sixty forty warranty to hardware change 171 00:10:19,240 --> 00:10:23,360 Speaker 2: and a major stairs up, so equivalent or larger than 172 00:10:23,440 --> 00:10:27,880 Speaker 2: the changes that you saw in twenty ten and you've 173 00:10:27,920 --> 00:10:31,720 Speaker 2: seen again in twenty seventeen or twenty one, Hey Brett. 174 00:10:31,720 --> 00:10:35,280 Speaker 1: So for our listeners, you know, not everyone's buying trucks. 175 00:10:35,760 --> 00:10:40,920 Speaker 1: What is the average cost or your your retail price 176 00:10:41,000 --> 00:10:45,040 Speaker 1: if you will, of your most popular engines, so we 177 00:10:45,080 --> 00:10:47,800 Speaker 1: can get our arms wrapped around you know, the increases 178 00:10:47,840 --> 00:10:50,400 Speaker 1: that we're hearing about that it could be ten to 179 00:10:50,440 --> 00:10:52,720 Speaker 1: thirty thousand dollars more for these new engines. 180 00:10:53,080 --> 00:10:56,640 Speaker 2: Yeah, the average engine across the market of these markets 181 00:10:56,640 --> 00:10:59,760 Speaker 2: full system. This is with after treatments and others, you're 182 00:10:59,760 --> 00:11:02,079 Speaker 2: going to be in the ranges of fifteen to thirty 183 00:11:02,120 --> 00:11:05,880 Speaker 2: five thousand dollars, again depending on the sizes, and so 184 00:11:07,280 --> 00:11:10,200 Speaker 2: it's you can't really buy those engines on them their own, 185 00:11:10,240 --> 00:11:12,840 Speaker 2: you're buying them within a truck. So I can't always 186 00:11:12,840 --> 00:11:15,319 Speaker 2: say what then are the costs that the truck OEMs 187 00:11:15,320 --> 00:11:18,160 Speaker 2: would put on top of those, but call it in 188 00:11:18,200 --> 00:11:21,600 Speaker 2: that ballpark of a range. And then you know, there's 189 00:11:21,600 --> 00:11:25,440 Speaker 2: been some public statements that pretty large increases versus those numbers. 190 00:11:26,640 --> 00:11:28,440 Speaker 1: I don't know if you're familiar with this, but there's 191 00:11:28,760 --> 00:11:30,240 Speaker 1: talks of tariffs going on. 192 00:11:31,800 --> 00:11:32,800 Speaker 2: I haven't heard at all. 193 00:11:32,920 --> 00:11:36,280 Speaker 1: Yeah, yeah, well you know, no matter what industry you're 194 00:11:36,320 --> 00:11:40,840 Speaker 1: getting hit with tariffs. How will you know with the 195 00:11:40,880 --> 00:11:44,160 Speaker 1: talk of tariffs view the magnitude of the pre buy 196 00:11:44,840 --> 00:11:48,440 Speaker 1: and shape. I guess this cycle from your standpoint, And 197 00:11:48,480 --> 00:11:50,560 Speaker 1: do you think we could see more fleets to fur 198 00:11:50,600 --> 00:11:54,320 Speaker 1: purchases altogether ahead of the new regulation, because as you 199 00:11:54,360 --> 00:11:57,160 Speaker 1: mentioned earlier, there's some fluidity there. 200 00:11:57,679 --> 00:12:00,520 Speaker 2: Oh it is. It is crazy. Every day is different, 201 00:12:01,400 --> 00:12:04,560 Speaker 2: and what you hear from me is uncertainty is bad. 202 00:12:05,080 --> 00:12:09,000 Speaker 2: For our industry. Most industries, uncertainty is bad, but our 203 00:12:09,000 --> 00:12:12,480 Speaker 2: industry as well. When you're thinking about emissions mandates for 204 00:12:12,520 --> 00:12:17,000 Speaker 2: the twenty seven launch, we started those development programs in 205 00:12:17,080 --> 00:12:21,160 Speaker 2: the twenty two timeframe. So we will spend well over 206 00:12:21,240 --> 00:12:24,440 Speaker 2: one point five billion dollars in research and engineering bringing 207 00:12:24,440 --> 00:12:27,560 Speaker 2: those engines to market. Not only that, will invest over 208 00:12:27,600 --> 00:12:31,080 Speaker 2: a billion dollars in capital in our US plants in 209 00:12:31,200 --> 00:12:36,200 Speaker 2: order to make and assemble those engines in North Carolina, Columbus, Indiana, 210 00:12:36,280 --> 00:12:41,360 Speaker 2: and Jamestown, New York. So what do tariffs do? Tariffs 211 00:12:41,400 --> 00:12:46,280 Speaker 2: create uncertainty, and at the end of the day, they 212 00:12:46,320 --> 00:12:50,640 Speaker 2: operate like attax on our business. We have all as 213 00:12:51,200 --> 00:12:57,119 Speaker 2: industrial companies created pretty global supply chains. However, what's important, 214 00:12:57,160 --> 00:12:59,680 Speaker 2: one hundred percent of our on highway engines for North 215 00:12:59,720 --> 00:13:02,559 Speaker 2: America are made in the United States, assembled in the 216 00:13:02,679 --> 00:13:05,560 Speaker 2: United States. So those three plants that I mentioned, but 217 00:13:05,679 --> 00:13:09,440 Speaker 2: you leverage some global supply chain and so we develop 218 00:13:09,520 --> 00:13:12,160 Speaker 2: those supply chain based on long term trade agreements and 219 00:13:12,200 --> 00:13:16,040 Speaker 2: so we are completely compliant with USMCA and the future 220 00:13:16,120 --> 00:13:20,800 Speaker 2: USMCA requirements. But as you start to place tariffs, we 221 00:13:20,880 --> 00:13:26,280 Speaker 2: don't have tons of flexibility where some components are manufactured. So, 222 00:13:26,440 --> 00:13:29,480 Speaker 2: for instance, some of our components blocks and heads would 223 00:13:29,520 --> 00:13:34,320 Speaker 2: be manufactured in Mexico, and therefore tariffs would be applied 224 00:13:36,600 --> 00:13:39,160 Speaker 2: when those components are brought in. So at the end 225 00:13:39,200 --> 00:13:41,720 Speaker 2: of the day, that will just increase the amount of 226 00:13:41,760 --> 00:13:45,640 Speaker 2: cost we have in our systems and therefore will drive 227 00:13:46,160 --> 00:13:50,440 Speaker 2: pricing into the business because it's an actual cost that 228 00:13:50,480 --> 00:13:54,360 Speaker 2: we couldn't avoid. We most likely couldn't avoid with a 229 00:13:54,400 --> 00:13:57,640 Speaker 2: three to four year warning. We definitely can't avoid within 230 00:13:57,679 --> 00:13:58,920 Speaker 2: a one month warning. 231 00:14:00,200 --> 00:14:02,520 Speaker 1: And then on that do you do you know the 232 00:14:02,559 --> 00:14:05,800 Speaker 1: makeup of you know, of the components that are assembled, 233 00:14:05,880 --> 00:14:08,840 Speaker 1: what are not made in the USA? Are all the 234 00:14:08,880 --> 00:14:11,440 Speaker 1: components out made outside the United States? 235 00:14:11,720 --> 00:14:15,240 Speaker 2: Oh no, no, no, we definitely have. We we meet 236 00:14:15,840 --> 00:14:19,200 Speaker 2: by America requirements and so we do have a large 237 00:14:19,240 --> 00:14:21,920 Speaker 2: predominant amount of our components are made in the United States. 238 00:14:22,480 --> 00:14:25,160 Speaker 2: But the end of the day, certain componentry and certain 239 00:14:25,200 --> 00:14:31,080 Speaker 2: subsystems will be made externally. Some of your electronic components, 240 00:14:31,560 --> 00:14:35,040 Speaker 2: some of your small castings and forgings. Frankly, a lot 241 00:14:35,080 --> 00:14:37,920 Speaker 2: of the foundry business itself is not based in the 242 00:14:38,000 --> 00:14:42,240 Speaker 2: United States any longer, and so those core componentry will 243 00:14:42,280 --> 00:14:45,960 Speaker 2: be made in some global locations, and they are a 244 00:14:46,000 --> 00:14:50,040 Speaker 2: variety of those global locations. But the uncertainty around tariffs 245 00:14:50,120 --> 00:14:53,000 Speaker 2: and which countries are applied and what is applied to 246 00:14:53,560 --> 00:14:58,560 Speaker 2: which country definitely causes uncertainty and I think has caused 247 00:14:58,560 --> 00:15:02,040 Speaker 2: a general pause in the end industrial markets where people 248 00:15:02,080 --> 00:15:05,600 Speaker 2: are worried about how they're allocating capital. So the more 249 00:15:05,680 --> 00:15:08,360 Speaker 2: certain we can have on those and what would be 250 00:15:08,440 --> 00:15:11,200 Speaker 2: long term trade agreements is really important for both commings 251 00:15:11,240 --> 00:15:12,160 Speaker 2: and the industry alike. 252 00:15:13,000 --> 00:15:16,400 Speaker 1: So as crazy as it sounds, well, most people don't like, 253 00:15:16,680 --> 00:15:21,640 Speaker 1: you know, regulations. I'm assuming Cummings in your industry groups 254 00:15:21,720 --> 00:15:26,320 Speaker 1: are lobbying to keep the EPA twenty twenty seven as is. 255 00:15:28,080 --> 00:15:33,280 Speaker 2: Yeah, what we would say is we always want tough, clear, enforceable, 256 00:15:34,640 --> 00:15:37,960 Speaker 2: and regulations that are affordable for the end truck user. 257 00:15:38,600 --> 00:15:42,280 Speaker 2: We think that those generally four things are very good 258 00:15:43,120 --> 00:15:45,520 Speaker 2: for the industry, and then we want the time in 259 00:15:45,640 --> 00:15:49,840 Speaker 2: order to hit them. So there are changes that we 260 00:15:49,840 --> 00:15:54,600 Speaker 2: could make to a variety of regulations. For instance, I 261 00:15:54,600 --> 00:15:57,240 Speaker 2: think we're openly advocating that we could change some of 262 00:15:57,280 --> 00:16:00,000 Speaker 2: the Phase three rules, but again, we believe they should 263 00:16:00,080 --> 00:16:01,840 Speaker 2: be tough. We believe they should be clear, and we 264 00:16:01,880 --> 00:16:05,000 Speaker 2: believe they should be enforceable with the appropriate warning, and 265 00:16:05,000 --> 00:16:10,600 Speaker 2: if so, then we will like those regulations. And just 266 00:16:10,760 --> 00:16:11,160 Speaker 2: for our. 267 00:16:11,040 --> 00:16:13,400 Speaker 1: Listeners, can you tell us what when you say phase three, 268 00:16:13,880 --> 00:16:15,000 Speaker 1: you what are you talking about? 269 00:16:15,160 --> 00:16:17,600 Speaker 2: So Phase three would be a set of greenhouse gas 270 00:16:17,640 --> 00:16:23,240 Speaker 2: regulations in the twenty thirty timeframe, and that's openly under discussion, 271 00:16:23,840 --> 00:16:28,080 Speaker 2: I think, And then the twenty seven regulation is really 272 00:16:28,120 --> 00:16:32,840 Speaker 2: around one. There's a phase two greenhouse gas regulation that 273 00:16:32,880 --> 00:16:35,320 Speaker 2: comes in at twenty twenty seven, and then there is 274 00:16:35,360 --> 00:16:39,760 Speaker 2: a Knox regulation that also hits at twenty seven for 275 00:16:39,840 --> 00:16:42,560 Speaker 2: a fifty state regulation. So you're gonna hear us talk 276 00:16:42,600 --> 00:16:45,600 Speaker 2: a lot about that. It's clear, it's enforceable, it's affordable, 277 00:16:45,880 --> 00:16:50,040 Speaker 2: and also we advocate for fifty state regulation. Having multiple 278 00:16:50,080 --> 00:16:53,320 Speaker 2: states with different regulation definitely causes issues for business. 279 00:16:54,600 --> 00:16:58,280 Speaker 3: Yeah, so, I guess speaking of that, the administration also 280 00:16:58,360 --> 00:17:01,480 Speaker 3: seems to have taken steps to repute CARB waivers, which 281 00:17:01,560 --> 00:17:06,280 Speaker 3: essentially permitted CARB or the California Air Resource Board to 282 00:17:06,359 --> 00:17:11,199 Speaker 3: set stricter standards than the federal regulations. How do you 283 00:17:11,240 --> 00:17:14,320 Speaker 3: see this kind of impacting your business and really the 284 00:17:14,359 --> 00:17:17,520 Speaker 3: broader truck market overall. 285 00:17:17,680 --> 00:17:21,359 Speaker 2: Yeah, So, again, you'll hear me kind of harp on 286 00:17:21,880 --> 00:17:24,680 Speaker 2: a couple different things. What we would want to make 287 00:17:24,720 --> 00:17:29,240 Speaker 2: sure is we do advocate for fifty state regulations. Absolutely, 288 00:17:29,760 --> 00:17:33,960 Speaker 2: we want them to be clear. Any sudden movement regarding 289 00:17:34,040 --> 00:17:38,720 Speaker 2: regulation generally causes uncertainty. So the more that we can 290 00:17:39,000 --> 00:17:42,480 Speaker 2: set back figure out what are those regulations and what 291 00:17:42,520 --> 00:17:45,160 Speaker 2: are those waivers, that is the important thing for us. 292 00:17:46,840 --> 00:17:49,520 Speaker 2: But openly, we're trying to educate, We're trying to advocate. 293 00:17:49,560 --> 00:17:53,800 Speaker 2: We're meeting with all regulators, OEMs and customers alike to 294 00:17:53,880 --> 00:17:55,840 Speaker 2: figure out what are the ways that we can help 295 00:17:56,240 --> 00:17:59,800 Speaker 2: provide those answers. But every time you'll hear me talk 296 00:18:00,040 --> 00:18:03,560 Speaker 2: about fifty state, it's clear it's affordable. Right. 297 00:18:04,160 --> 00:18:05,879 Speaker 3: I want to circle back on some of your comments 298 00:18:05,960 --> 00:18:10,080 Speaker 3: made earlier about Cummins and partnerships. You guys have announced 299 00:18:10,080 --> 00:18:14,440 Speaker 3: a number of wins over the past several years with Hino, Zuzu, Daimler, 300 00:18:15,119 --> 00:18:18,440 Speaker 3: where the OEMs are essentially outsourcing some of their diesel 301 00:18:18,480 --> 00:18:22,639 Speaker 3: engine business too Commins. These partnerships, I think have mostly 302 00:18:22,680 --> 00:18:25,400 Speaker 3: been on the medium duty truck side. I guess are 303 00:18:25,400 --> 00:18:28,199 Speaker 3: you seeing any interest for these type of partnerships on 304 00:18:28,280 --> 00:18:31,600 Speaker 3: the heavy truck side, and how has the new administration's 305 00:18:31,640 --> 00:18:34,720 Speaker 3: approach around EVS impacted those conversations. 306 00:18:35,320 --> 00:18:39,520 Speaker 2: Ah, yeah, great question. You know, we've long had this 307 00:18:39,680 --> 00:18:43,359 Speaker 2: dynamic in the industry where we sell to OEMs, all 308 00:18:43,440 --> 00:18:46,920 Speaker 2: of whom make their own diesel engines, and so we're 309 00:18:46,960 --> 00:18:50,280 Speaker 2: quite familiar with this idea, and the base idea of 310 00:18:50,520 --> 00:18:54,040 Speaker 2: why we sell to those OEMs is a variety of reasons. One, 311 00:18:54,200 --> 00:18:58,120 Speaker 2: we have some more technological breadth, so we offer more 312 00:18:58,119 --> 00:19:01,960 Speaker 2: engines in a wider range. Twof we could offer just 313 00:19:02,080 --> 00:19:06,080 Speaker 2: sheer scale and a particular technological area. Take natural gas engines, 314 00:19:06,440 --> 00:19:10,960 Speaker 2: where we can provide scales across a variety of OEMs. Three, 315 00:19:11,160 --> 00:19:15,040 Speaker 2: in some of our China and India joint ventures, just 316 00:19:15,119 --> 00:19:18,440 Speaker 2: the sheer need for technology that we believe commons provides. 317 00:19:18,800 --> 00:19:21,800 Speaker 2: But then ultimately in some of the ones you're talking about, Uh, 318 00:19:22,240 --> 00:19:25,159 Speaker 2: it's really trust. The OEMs have to pull off so 319 00:19:25,320 --> 00:19:30,840 Speaker 2: many things right now, new cabs, autonomous connectivity, as well 320 00:19:30,880 --> 00:19:34,600 Speaker 2: as all the various power needs. But what parts of 321 00:19:34,640 --> 00:19:36,960 Speaker 2: the of the truck could they trust someone else to deliver? 322 00:19:37,280 --> 00:19:39,959 Speaker 2: And that's where our large scale and medium duty engines 323 00:19:39,960 --> 00:19:42,399 Speaker 2: provides that opportunity. So that's been able to give us 324 00:19:42,400 --> 00:19:45,000 Speaker 2: those partnerships that you mentioned of diam Ler and Suzu 325 00:19:45,080 --> 00:19:48,520 Speaker 2: and Heo. We do anticipate that this will continue both 326 00:19:48,560 --> 00:19:50,560 Speaker 2: in off highway. We also think we'll continue in some 327 00:19:50,600 --> 00:19:53,200 Speaker 2: heavy duty areas. Where you've seen us win in heavy 328 00:19:53,280 --> 00:19:56,760 Speaker 2: duty is typically outside the United States, and we've had 329 00:19:56,800 --> 00:20:00,560 Speaker 2: a few wins in China with dong Fong and and Photon, 330 00:20:01,000 --> 00:20:04,399 Speaker 2: but also with our new natural gas fifteen leader natural 331 00:20:04,440 --> 00:20:07,360 Speaker 2: Gas Engine, where we believe a wide variety of OEMs 332 00:20:07,359 --> 00:20:09,600 Speaker 2: and the North American market will take this because we 333 00:20:09,640 --> 00:20:15,120 Speaker 2: can provide something to scale that many others cannot. It's 334 00:20:15,200 --> 00:20:19,000 Speaker 2: launched currently with Peter Belton Kenworth, and I think you'll 335 00:20:19,000 --> 00:20:21,840 Speaker 2: hear more OEMs bring that to market over the next 336 00:20:21,880 --> 00:20:22,840 Speaker 2: couple of years. 337 00:20:24,240 --> 00:20:28,040 Speaker 3: And given this de emphasizing of pro EV policies under 338 00:20:28,040 --> 00:20:33,840 Speaker 3: the Trump administration, how has your thinking around the future 339 00:20:34,119 --> 00:20:39,720 Speaker 3: investments of internal combustion engines versus battery electric How do 340 00:20:39,760 --> 00:20:43,040 Speaker 3: you see like the ROI of those investments and has 341 00:20:43,080 --> 00:20:46,320 Speaker 3: it changed at all given the new administration's policies. 342 00:20:46,800 --> 00:20:50,520 Speaker 2: Yeah, great question, and I'll kind of step back because 343 00:20:50,520 --> 00:20:52,960 Speaker 2: I didn't answer the end of your last question, which 344 00:20:53,000 --> 00:20:55,800 Speaker 2: was you know how do we view in the commercial 345 00:20:55,840 --> 00:21:03,119 Speaker 2: vehicle market. Evs have partarticular niches, But in order for 346 00:21:03,160 --> 00:21:06,119 Speaker 2: someone to buy an EV and commercial vehicle, you really 347 00:21:06,160 --> 00:21:08,439 Speaker 2: have to have three things. One, it has to be 348 00:21:08,480 --> 00:21:12,320 Speaker 2: available in the truck itself. Is it available that you 349 00:21:12,320 --> 00:21:15,879 Speaker 2: could buy that? And I'd say the OEMs and we 350 00:21:16,080 --> 00:21:19,800 Speaker 2: as EV makers have done a pretty good job with that. 351 00:21:20,680 --> 00:21:23,160 Speaker 2: Second is does it meet the total cost of ownership 352 00:21:23,240 --> 00:21:26,159 Speaker 2: model that we know works in commercial vehicle You're going 353 00:21:26,200 --> 00:21:28,320 Speaker 2: to have to do your business and make money, and 354 00:21:28,359 --> 00:21:31,000 Speaker 2: that's really where there are only a particular number of 355 00:21:31,000 --> 00:21:34,040 Speaker 2: applications where that meets that need, a lot of them 356 00:21:34,080 --> 00:21:36,879 Speaker 2: line haul trucking across the United States. It just doesn't 357 00:21:36,920 --> 00:21:40,280 Speaker 2: meet the TCO model. And then finally is infrastructure, And 358 00:21:40,440 --> 00:21:44,080 Speaker 2: infrastructure is a huge challenge, and so I'd say the 359 00:21:44,119 --> 00:21:47,040 Speaker 2: long pole in the tent right now is infrastructure, quickly 360 00:21:47,080 --> 00:21:52,480 Speaker 2: followed by TCO, which meant that EV was not gaining 361 00:21:52,560 --> 00:21:56,679 Speaker 2: huge traction in the commercial vehicle market already, and so 362 00:21:56,960 --> 00:22:00,280 Speaker 2: I don't think some of the Trump administration's policy will 363 00:22:00,359 --> 00:22:03,719 Speaker 2: change that that much other than than it's bringing it 364 00:22:03,760 --> 00:22:07,399 Speaker 2: to light. And so we think it opens up a 365 00:22:07,440 --> 00:22:12,520 Speaker 2: wider conversation to really think through and develop good regulations 366 00:22:12,560 --> 00:22:16,400 Speaker 2: regarding well to wheel emissions, and so you really need 367 00:22:16,440 --> 00:22:21,359 Speaker 2: to think about how are we taking advantage of zero emissions, 368 00:22:21,359 --> 00:22:25,200 Speaker 2: renewable natural gas, low carbon fuels, and a variety of 369 00:22:25,240 --> 00:22:29,040 Speaker 2: other technologies, because we believe the regulations should be technology agnostic, 370 00:22:29,800 --> 00:22:33,399 Speaker 2: not specific to one individual technology. And so some of 371 00:22:33,400 --> 00:22:37,159 Speaker 2: the regulations were really calling out ev rather than calling 372 00:22:37,200 --> 00:22:41,439 Speaker 2: out what is a wheel to well emissions calculation? And 373 00:22:41,520 --> 00:22:44,880 Speaker 2: so that does bring to question with incomings in many 374 00:22:44,920 --> 00:22:48,920 Speaker 2: other places, how are you how are you actively spending 375 00:22:48,960 --> 00:22:51,600 Speaker 2: in each And I think you know we've we've announced 376 00:22:51,640 --> 00:22:57,000 Speaker 2: a partnership with pacarn diaem Layer regarding bringing a battery 377 00:22:57,040 --> 00:23:01,320 Speaker 2: manufacturing to the United States. We'll continue with that. We 378 00:23:01,359 --> 00:23:03,800 Speaker 2: think it's the right play, we think it's a great strategy. 379 00:23:04,200 --> 00:23:06,480 Speaker 2: But we actually think some of the regulations and some 380 00:23:06,520 --> 00:23:08,480 Speaker 2: of the discussion has brought it back to what Cummins 381 00:23:08,480 --> 00:23:11,800 Speaker 2: has always been saying, which is its region specific, it's 382 00:23:11,840 --> 00:23:16,359 Speaker 2: customer specific, and its application specific. And that's how we 383 00:23:16,440 --> 00:23:18,240 Speaker 2: need to think about it. And we need to think 384 00:23:18,240 --> 00:23:20,480 Speaker 2: about it from a well to wheels perspective. 385 00:23:21,240 --> 00:23:25,360 Speaker 1: Yeah, and so from an application standpoint, where has Cummins 386 00:23:25,359 --> 00:23:26,920 Speaker 1: had success in the EV market. 387 00:23:27,720 --> 00:23:31,520 Speaker 2: Right now, you'd say transit bus, school bus, and then 388 00:23:31,600 --> 00:23:35,919 Speaker 2: in some areas like yard spotters, again lower volume, but 389 00:23:36,000 --> 00:23:39,640 Speaker 2: it's a good application for EV. It's not return it's 390 00:23:39,720 --> 00:23:41,800 Speaker 2: not a return to base. It is at the base. 391 00:23:42,760 --> 00:23:47,800 Speaker 2: You can figure it out. It's something where you don't 392 00:23:47,800 --> 00:23:51,600 Speaker 2: have to put large infrastructure spend. And then in school 393 00:23:51,600 --> 00:23:54,520 Speaker 2: bus and transit bus is really because they are return 394 00:23:54,560 --> 00:23:58,159 Speaker 2: to base. You know what the route is, you know 395 00:23:58,240 --> 00:24:02,159 Speaker 2: how to allocate your chur arging infrastructure. You're making a 396 00:24:02,200 --> 00:24:04,960 Speaker 2: set investment and then you're usually holding that investment for 397 00:24:05,040 --> 00:24:08,119 Speaker 2: a long period of time. You know, the average transit 398 00:24:08,160 --> 00:24:10,000 Speaker 2: bus in the United States is going to go fifteen 399 00:24:10,000 --> 00:24:13,200 Speaker 2: to twenty years, and so you can start to think 400 00:24:13,240 --> 00:24:16,800 Speaker 2: about your investment spend different. That's a much different scenario 401 00:24:16,920 --> 00:24:19,520 Speaker 2: than the example I gave earlier of line haul trucking 402 00:24:19,560 --> 00:24:24,240 Speaker 2: across both sets of mountains, team driver and doesn't ever 403 00:24:24,280 --> 00:24:27,280 Speaker 2: return to any base. That then becomes very much a 404 00:24:27,359 --> 00:24:30,720 Speaker 2: tco an infrastructure problem. And so we really need to 405 00:24:30,720 --> 00:24:32,600 Speaker 2: think application by application. 406 00:24:32,800 --> 00:24:35,239 Speaker 1: Right and then you know, I know Cummins, you know, 407 00:24:36,080 --> 00:24:40,240 Speaker 1: is pretty agnostic when it comes to what the fuel 408 00:24:40,280 --> 00:24:44,359 Speaker 1: will eventually be what the alternative fuel eventually becomes. But 409 00:24:44,480 --> 00:24:46,760 Speaker 1: from your advantage point, you know what has the most 410 00:24:47,080 --> 00:24:49,919 Speaker 1: promise to reduce emission something that you know we all 411 00:24:49,920 --> 00:24:50,760 Speaker 1: would like to see. 412 00:24:51,320 --> 00:24:54,800 Speaker 2: Yeah, it's a great question. There's a lot of advancements 413 00:24:54,800 --> 00:24:57,240 Speaker 2: in some low carbon fuels, and as much as we 414 00:24:57,320 --> 00:25:00,400 Speaker 2: can continue to think about what are the those low 415 00:25:00,440 --> 00:25:04,040 Speaker 2: carbon fuels that work, is the work ahead of our industry. 416 00:25:04,880 --> 00:25:10,320 Speaker 2: Renewable diesel is a real thing today four million gallons 417 00:25:10,359 --> 00:25:14,640 Speaker 2: plus of renewable diesel is out there. It obviously needs 418 00:25:14,640 --> 00:25:17,360 Speaker 2: to be more to take over the entire trucking industry. 419 00:25:17,960 --> 00:25:20,880 Speaker 2: And then the one I'll give you is renewable natural gas. 420 00:25:21,160 --> 00:25:25,159 Speaker 2: Well over ninety five percent of the natural gas in 421 00:25:25,200 --> 00:25:30,040 Speaker 2: California is actually renewable natural gas. So this is a 422 00:25:30,240 --> 00:25:34,600 Speaker 2: very good GHG fuel that if today you needed the 423 00:25:34,640 --> 00:25:39,280 Speaker 2: ports of LA to begin operating at a lower GHG footprint, 424 00:25:40,080 --> 00:25:43,800 Speaker 2: use today's renewable natural gas engines that are on the market. 425 00:25:44,040 --> 00:25:47,679 Speaker 2: They're already low knocks and they could meet well to 426 00:25:47,720 --> 00:25:52,920 Speaker 2: wheel emission standards that will greatly improve our overall GHG footprint. 427 00:25:53,040 --> 00:25:55,359 Speaker 2: So we would say, by the way, there is no 428 00:25:55,640 --> 00:25:58,120 Speaker 2: like we do on all technologies. There is no silver bullet. 429 00:25:58,520 --> 00:26:01,240 Speaker 2: It's going to take a myriad of these because they're 430 00:26:01,240 --> 00:26:03,720 Speaker 2: probably going to start in niches at the start and 431 00:26:03,760 --> 00:26:06,840 Speaker 2: then continue to progress. And we still see diesel as 432 00:26:06,880 --> 00:26:09,880 Speaker 2: the primary power of choice for the foreseeable future. 433 00:26:10,240 --> 00:26:13,600 Speaker 3: Maybe shifting to something a little more near term. North 434 00:26:13,640 --> 00:26:17,640 Speaker 3: American Class States orders slipped a little in January and February, 435 00:26:17,680 --> 00:26:20,640 Speaker 3: but we're still running at a generally healthy rate over 436 00:26:20,640 --> 00:26:23,639 Speaker 3: the last six months. I guess how we're twenty twenty 437 00:26:23,640 --> 00:26:27,159 Speaker 3: five orders tracking relative to your expectations and are you 438 00:26:27,359 --> 00:26:29,760 Speaker 3: are you beginning to see any evidence of a pre 439 00:26:29,840 --> 00:26:31,040 Speaker 3: buy starting to trickle in? 440 00:26:32,119 --> 00:26:36,720 Speaker 2: Yeah, great question. I think they're progressing as we somewhat 441 00:26:36,760 --> 00:26:39,439 Speaker 2: openly said. We said this year would be kind of 442 00:26:39,440 --> 00:26:42,560 Speaker 2: flat to down ten percent, and if you look at 443 00:26:42,600 --> 00:26:46,560 Speaker 2: the orders, that's generally where they're tracking, and we see 444 00:26:46,600 --> 00:26:50,199 Speaker 2: that both in public orders registrations, but also in the 445 00:26:50,200 --> 00:26:54,160 Speaker 2: engines we're building. And so what I'd say is that's 446 00:26:54,240 --> 00:26:56,600 Speaker 2: not a terrible market, right, depending on how you count 447 00:26:56,600 --> 00:26:59,040 Speaker 2: the market. This is two sixty to two hundred ninety 448 00:26:59,040 --> 00:27:04,399 Speaker 2: thousand vehicles. This is not nine, you know, absolute crash. 449 00:27:04,440 --> 00:27:06,480 Speaker 2: At the same time, it's not at its peak, and 450 00:27:06,520 --> 00:27:09,399 Speaker 2: that's pretty much how we called it. We're not seeing 451 00:27:09,600 --> 00:27:12,480 Speaker 2: huge areas of strength. There was some vocational strength. I 452 00:27:12,480 --> 00:27:15,639 Speaker 2: think it's a little weaker in over the road or 453 00:27:15,840 --> 00:27:19,520 Speaker 2: or or tractor, but we have yet to see what 454 00:27:19,640 --> 00:27:23,640 Speaker 2: would be an uptick for a pre buy. 455 00:27:24,240 --> 00:27:26,960 Speaker 1: So you know, this is just maybe taking a couple 456 00:27:27,000 --> 00:27:29,760 Speaker 1: of steps back because you know people might not be 457 00:27:29,840 --> 00:27:31,520 Speaker 1: that familiar with Cummins engine. 458 00:27:31,600 --> 00:27:34,000 Speaker 2: So are your customers the OEMs or. 459 00:27:33,920 --> 00:27:36,320 Speaker 1: Do fleets come to you and say we want these 460 00:27:36,359 --> 00:27:40,160 Speaker 1: engines because we're going to buy these trucks. Who who 461 00:27:40,240 --> 00:27:42,280 Speaker 1: ultimately is your customer? 462 00:27:42,760 --> 00:27:45,480 Speaker 2: Yeah, our customer is definitely the OEM. So how we 463 00:27:45,520 --> 00:27:48,080 Speaker 2: go to market as we sell through OEMs the likes 464 00:27:48,119 --> 00:27:55,000 Speaker 2: of pac Our, freight Liner, International, Volvo Mac, many many 465 00:27:55,880 --> 00:28:00,840 Speaker 2: OEMs actually and many that are your listeners are familiar with. 466 00:28:01,280 --> 00:28:04,679 Speaker 2: But we do have relationship with end users. So our 467 00:28:04,760 --> 00:28:07,959 Speaker 2: goal within users is continue to support commings in the 468 00:28:08,000 --> 00:28:11,280 Speaker 2: field because at the end of the day, we do 469 00:28:11,400 --> 00:28:15,240 Speaker 2: and actively want end users to say I want Cummins 470 00:28:15,440 --> 00:28:20,159 Speaker 2: in my freightliner, which allows that poll effect through the 471 00:28:20,200 --> 00:28:23,760 Speaker 2: OEMs themselves. And so I think we're the only branded 472 00:28:23,880 --> 00:28:27,800 Speaker 2: tier one with our own distribution and service network, and 473 00:28:27,840 --> 00:28:30,359 Speaker 2: so whether it be through service, whether it be through parts, 474 00:28:30,440 --> 00:28:34,119 Speaker 2: whether it be through relationship. We do actively have relationships 475 00:28:34,400 --> 00:28:37,560 Speaker 2: with many operators and fleets all around the nation, in 476 00:28:37,600 --> 00:28:43,200 Speaker 2: Canada and Mexico for that matter, which which allows that relationship. 477 00:28:43,440 --> 00:28:46,760 Speaker 2: But we're never confused. The engine is sold through the OEM. 478 00:28:48,040 --> 00:28:52,240 Speaker 1: Gotcha. And then I guess you know we were talking 479 00:28:52,280 --> 00:28:55,240 Speaker 1: earlier because you know, supply chains are kind of close 480 00:28:55,280 --> 00:28:58,080 Speaker 1: to my heart and you mentioned, you know, you would 481 00:28:58,120 --> 00:29:00,720 Speaker 1: need more than three or four years kind of change 482 00:29:00,720 --> 00:29:06,440 Speaker 1: supply chains. Are you guys trying to I guess de 483 00:29:06,600 --> 00:29:10,959 Speaker 1: risk yourself from not only the tariffs that are happening 484 00:29:11,040 --> 00:29:14,560 Speaker 1: today that could last forever, or you know, future tariffs. 485 00:29:16,280 --> 00:29:19,080 Speaker 2: Yeah, that is the question of the day. And what 486 00:29:19,120 --> 00:29:23,000 Speaker 2: I'd say is we've been an active program to dual 487 00:29:23,080 --> 00:29:27,880 Speaker 2: sourcing or try and create flexibility in supply chain for 488 00:29:27,920 --> 00:29:30,760 Speaker 2: some time, I thinkcause you know, in this kind of world, 489 00:29:30,800 --> 00:29:33,520 Speaker 2: we're as global as they come. We have very strong 490 00:29:33,560 --> 00:29:35,880 Speaker 2: businesses all around the world, and that generally means we 491 00:29:35,960 --> 00:29:40,720 Speaker 2: do have some dual sourcing. However, under the current environment, 492 00:29:40,760 --> 00:29:44,680 Speaker 2: it's very difficult to put a concrete plan down because 493 00:29:44,760 --> 00:29:47,080 Speaker 2: I'm not sure you or anybody else could tell me 494 00:29:47,120 --> 00:29:52,680 Speaker 2: exactly what country would have a tariff next, right, And therefore, 495 00:29:53,080 --> 00:29:55,560 Speaker 2: when people, when you think about this, if you started 496 00:29:55,640 --> 00:30:01,360 Speaker 2: a green field supply plant, you're a few years and 497 00:30:01,440 --> 00:30:05,440 Speaker 2: potentially billions of dollars away. And so if you're going 498 00:30:05,480 --> 00:30:08,440 Speaker 2: to place billions of dollars, where do you place them? 499 00:30:08,880 --> 00:30:12,200 Speaker 2: You sure want to know that with certainty, that's not 500 00:30:12,280 --> 00:30:14,640 Speaker 2: going to get into the same situation of what we 501 00:30:14,720 --> 00:30:17,800 Speaker 2: have today. So I think we always have some little 502 00:30:17,800 --> 00:30:21,680 Speaker 2: bit of short term options. We have flexibility on the margins, 503 00:30:22,040 --> 00:30:25,560 Speaker 2: but in the mass, the global supply chain has been 504 00:30:25,560 --> 00:30:28,200 Speaker 2: there for some time, and to change that does take 505 00:30:28,360 --> 00:30:32,400 Speaker 2: those I'm just guessing three to five years of major changes, 506 00:30:32,640 --> 00:30:35,280 Speaker 2: and in order to enact those changes, you need some 507 00:30:35,320 --> 00:30:36,320 Speaker 2: certainty to get there. 508 00:30:38,200 --> 00:30:41,040 Speaker 3: And because of this tariff uncertainty, I mean, have you 509 00:30:41,160 --> 00:30:44,520 Speaker 3: seen any indication that fleets are you know, jumping in 510 00:30:44,520 --> 00:30:47,720 Speaker 3: to place orders ahead of some of these tariffs or 511 00:30:47,800 --> 00:30:50,680 Speaker 3: is it just the uncertainty just create It creates so 512 00:30:50,720 --> 00:30:53,400 Speaker 3: much uncertainty that fleets just you know, pumped the brakes. 513 00:30:53,760 --> 00:30:55,560 Speaker 2: Yeah, that that is really good. I was with a 514 00:30:55,560 --> 00:30:57,440 Speaker 2: lot of our customers over the last two weeks asking 515 00:30:57,520 --> 00:31:02,000 Speaker 2: that exact question, and you don't really get a clear answer. 516 00:31:02,400 --> 00:31:06,000 Speaker 2: I believe those who are in the industry, who are sophisticated, 517 00:31:06,000 --> 00:31:09,400 Speaker 2: who have base buy plans, are somewhat sticking with their byplans. 518 00:31:09,800 --> 00:31:12,800 Speaker 2: This is replacement value, This is doing the right thing. 519 00:31:13,320 --> 00:31:16,200 Speaker 2: I don't think many people are putting in growth capital, 520 00:31:17,160 --> 00:31:20,479 Speaker 2: so they're not expanding their fleets right now. It doesn't 521 00:31:20,520 --> 00:31:23,040 Speaker 2: seem I'm sure there are some out there. It's it's 522 00:31:23,160 --> 00:31:25,520 Speaker 2: very difficult to talk about the North American market as 523 00:31:25,560 --> 00:31:28,080 Speaker 2: like one monolith. We always do, but there's so many 524 00:31:28,120 --> 00:31:31,040 Speaker 2: different sub markets that I'm undoubtedly there are places that 525 00:31:31,080 --> 00:31:33,440 Speaker 2: are making some but it just doesn't seem like many 526 00:31:33,480 --> 00:31:35,840 Speaker 2: people are doing anything that would say, hey, I'm doing 527 00:31:35,880 --> 00:31:38,440 Speaker 2: something for growth capital or as you are kind of 528 00:31:38,480 --> 00:31:41,760 Speaker 2: mentioning take advantage of maybe just before tariffs, do I 529 00:31:41,800 --> 00:31:44,040 Speaker 2: get a little bit better deal. It doesn't seem like 530 00:31:44,160 --> 00:31:46,720 Speaker 2: large movements. It seems a bit more steady, as you said, 531 00:31:47,440 --> 00:31:50,240 Speaker 2: from the order base and activity in the end market. 532 00:31:50,960 --> 00:31:54,120 Speaker 1: And roughly, you know what percentage of your businesses US. 533 00:31:55,480 --> 00:31:58,320 Speaker 2: Yeah, from a rough percentage point, we're about half United 534 00:31:58,360 --> 00:32:00,680 Speaker 2: States out of the thirty four billion and of cummings. 535 00:32:02,200 --> 00:32:03,600 Speaker 2: You know important market. 536 00:32:04,040 --> 00:32:07,400 Speaker 3: Right, you know truck fundamentals. I guess they're still somewhat 537 00:32:07,440 --> 00:32:12,120 Speaker 3: mixed right now. Inventory levels remain quite elevated. Used equipment 538 00:32:12,200 --> 00:32:16,440 Speaker 3: values are soft, albeit improving. I guess, outside of the 539 00:32:16,880 --> 00:32:19,320 Speaker 3: tariff and trade uncertainty, what do you think are some 540 00:32:19,400 --> 00:32:21,520 Speaker 3: of the biggest risks to the truck market over these 541 00:32:21,560 --> 00:32:22,640 Speaker 3: next two years? 542 00:32:23,080 --> 00:32:26,480 Speaker 2: Yeah? Great, great question. I was getting pretty hopeful right 543 00:32:26,560 --> 00:32:29,600 Speaker 2: at the start of the new year one. We'd all 544 00:32:29,720 --> 00:32:32,120 Speaker 2: somewhat weathered a touch of a downturn in the second 545 00:32:32,160 --> 00:32:36,200 Speaker 2: half in heavy duty truck North America. Felt like truckload 546 00:32:36,240 --> 00:32:38,440 Speaker 2: carriers and a variety of others were starting to reach 547 00:32:39,000 --> 00:32:43,640 Speaker 2: profitability or better profitability with increasing freight rates. Right, those 548 00:32:43,680 --> 00:32:45,440 Speaker 2: are really the couple signs that you start to see. 549 00:32:45,440 --> 00:32:48,000 Speaker 2: You see those two and use truck values starting to 550 00:32:48,040 --> 00:32:50,720 Speaker 2: come off. We say, hey, okay, inventory will start to 551 00:32:50,720 --> 00:32:52,600 Speaker 2: come down. We know how to, we know how these 552 00:32:52,640 --> 00:32:56,320 Speaker 2: cycles progress. We've been in the industry a while. Unfortunately, 553 00:32:56,400 --> 00:32:58,960 Speaker 2: it seems like some of this uncertainty has just caused 554 00:32:59,040 --> 00:33:01,640 Speaker 2: some unknown to that. So I thought some of the 555 00:33:01,640 --> 00:33:04,600 Speaker 2: fundamentals were starting to improve. But you've seen a bit 556 00:33:04,640 --> 00:33:08,200 Speaker 2: of a pausing of those fundamentals and at the you know, 557 00:33:08,360 --> 00:33:10,520 Speaker 2: core to you hate to put it to one value, 558 00:33:10,560 --> 00:33:14,800 Speaker 2: But until freight rates really come up and those truckload 559 00:33:14,840 --> 00:33:18,000 Speaker 2: carriers start making more money, I don't think you'll see 560 00:33:18,520 --> 00:33:23,120 Speaker 2: large large changes in the overall dynamics of the market. Yeah. 561 00:33:23,160 --> 00:33:25,440 Speaker 1: You know, we actually just put out a note this 562 00:33:25,480 --> 00:33:28,280 Speaker 1: morning on the Bloomberg Terminal about freight rates, which we 563 00:33:28,280 --> 00:33:32,760 Speaker 1: write about pretty consistently, and the risk of our probability 564 00:33:32,960 --> 00:33:35,640 Speaker 1: of a recession is inched up to twenty five percent 565 00:33:35,960 --> 00:33:39,160 Speaker 1: according to consensus on the Bloomberg Terminal. That's up from 566 00:33:39,600 --> 00:33:44,120 Speaker 1: a low of twenty percent since the pandemic. So, you know, 567 00:33:44,200 --> 00:33:46,920 Speaker 1: it's it's it's pretty interesting because you know, when the 568 00:33:46,960 --> 00:33:50,080 Speaker 1: election happened, the presidential election happened, there were all these 569 00:33:50,120 --> 00:33:53,040 Speaker 1: animal spirits that low regulation, low tax is going to 570 00:33:53,040 --> 00:33:56,440 Speaker 1: be great for freight rates, freight demand, and you know, 571 00:33:57,000 --> 00:33:58,680 Speaker 1: going back in the beginning of the year, we thought 572 00:33:58,720 --> 00:34:02,320 Speaker 1: contractual rates be up by mid single digits. You know, 573 00:34:02,400 --> 00:34:06,000 Speaker 1: our expectations are probably going to be moderated given the 574 00:34:06,120 --> 00:34:11,600 Speaker 1: uncertainty that we're seeing in the macroeconomy and the freight economy. 575 00:34:11,719 --> 00:34:14,480 Speaker 1: So you know, that's kind of how we're looking at 576 00:34:14,480 --> 00:34:15,040 Speaker 1: things right now. 577 00:34:16,000 --> 00:34:18,480 Speaker 2: That's that's good to hear. And interestingly, the three of 578 00:34:18,480 --> 00:34:21,080 Speaker 2: our jobs are somewhat the similar on on one area. 579 00:34:21,120 --> 00:34:23,680 Speaker 2: We questioned fleets a lot on these types of things, 580 00:34:23,719 --> 00:34:26,480 Speaker 2: so I do the same thing. And it felt like 581 00:34:26,480 --> 00:34:30,640 Speaker 2: people paused for the election, and then you were anticipating 582 00:34:30,719 --> 00:34:34,080 Speaker 2: some movement this and now that pause has just continued 583 00:34:34,719 --> 00:34:36,719 Speaker 2: with some of the uncertainty. So I hope we get 584 00:34:36,760 --> 00:34:37,799 Speaker 2: some clarity on some of those. 585 00:34:38,320 --> 00:34:40,560 Speaker 3: I'd be remiss if I didn't ask about data centers 586 00:34:41,400 --> 00:34:44,120 Speaker 3: have what's what's the trajectory look like there? Are you 587 00:34:44,120 --> 00:34:48,080 Speaker 3: seeing any of that momentum start to subside? What are 588 00:34:48,120 --> 00:34:50,520 Speaker 3: you seeing from a data center customer perspective? 589 00:34:51,000 --> 00:34:54,319 Speaker 2: Yeah, one disclaimer, I am definitely not And Jenny Bush, 590 00:34:54,320 --> 00:34:56,680 Speaker 2: who runs Who's My Peer, runs that business, she'd say 591 00:34:56,680 --> 00:34:59,520 Speaker 2: Brett is the least capable person to answer that inner 592 00:34:59,600 --> 00:35:02,680 Speaker 2: question in the world. That said, no, we don't see 593 00:35:02,680 --> 00:35:04,840 Speaker 2: any slow down. And that is one where we're seeing 594 00:35:05,200 --> 00:35:07,600 Speaker 2: a real macro trend. And as I talked about, when 595 00:35:07,600 --> 00:35:09,640 Speaker 2: you have some certainty in a macro trend, you'll see 596 00:35:09,640 --> 00:35:13,359 Speaker 2: companies invests. So we're investing we're investing in the supply chain, 597 00:35:13,520 --> 00:35:16,080 Speaker 2: We're investing in our assembly in order to be able 598 00:35:16,080 --> 00:35:18,919 Speaker 2: to make more and I believe we feel really good 599 00:35:18,960 --> 00:35:23,080 Speaker 2: about some of our in customer relationships there with growth 600 00:35:23,120 --> 00:35:25,040 Speaker 2: and being able to service that growth. And that's a 601 00:35:25,080 --> 00:35:28,880 Speaker 2: global growth that's just not a United States phenomenon, because 602 00:35:28,880 --> 00:35:31,520 Speaker 2: you're seeing the need for data, AI, search, all those 603 00:35:31,560 --> 00:35:34,120 Speaker 2: types of things go all around the world, and we 604 00:35:34,120 --> 00:35:35,400 Speaker 2: think that's pretty sustainable. 605 00:35:35,880 --> 00:35:37,760 Speaker 3: And I guess, going back to some of these comments 606 00:35:37,760 --> 00:35:41,399 Speaker 3: earlier about EVS and this whole energy transition, I guess 607 00:35:41,480 --> 00:35:46,120 Speaker 3: where do you see the hydrogen combustion engine fitting into 608 00:35:46,239 --> 00:35:52,840 Speaker 3: the whole evolving landscape around alternative vehicles and technologies. 609 00:35:53,840 --> 00:35:56,600 Speaker 2: Yeah, this is where I like having interviews with people 610 00:35:56,640 --> 00:35:59,640 Speaker 2: who know this industry. That's exactly these are the hitting 611 00:35:59,680 --> 00:36:02,479 Speaker 2: question if you went to my staff meeting later this week. 612 00:36:02,600 --> 00:36:08,400 Speaker 2: So we still believe in line haul trucking that hydrogen 613 00:36:08,480 --> 00:36:12,799 Speaker 2: remains a better long term solution than what EV would be. 614 00:36:13,760 --> 00:36:17,280 Speaker 2: It's just physics regarding the amount of batteries you could carry, 615 00:36:17,719 --> 00:36:21,280 Speaker 2: charge time, infrastructure, and a variety of other things versus 616 00:36:21,280 --> 00:36:26,600 Speaker 2: how hydrogen could be. And if you thought what would 617 00:36:26,600 --> 00:36:34,399 Speaker 2: be the earlier adopter. Between hydrogen ice versus a fuel cell, 618 00:36:34,440 --> 00:36:37,480 Speaker 2: you'd definitely say the hydrogen ice. We know how to 619 00:36:37,520 --> 00:36:39,799 Speaker 2: make it. I have them running across the street in 620 00:36:39,920 --> 00:36:44,640 Speaker 2: test cells. This is technology that we can figure out. 621 00:36:45,120 --> 00:36:49,120 Speaker 2: Will it be an increase in price and cost and technology, yes? 622 00:36:49,640 --> 00:36:53,280 Speaker 2: Is it something that we can bring to market. Yes. 623 00:36:54,200 --> 00:36:56,520 Speaker 2: Now the question we'll go back to a little bit 624 00:36:56,560 --> 00:36:59,759 Speaker 2: analogous to the ev discussion of is the infrastructure there, 625 00:37:00,360 --> 00:37:03,400 Speaker 2: is the hydrogen there, and can you afford the hydrogen? 626 00:37:04,120 --> 00:37:06,760 Speaker 2: And what I'd say is we'll need some infrastructure investment 627 00:37:07,080 --> 00:37:09,480 Speaker 2: in that, and we'll need hydrogen to go down to 628 00:37:09,520 --> 00:37:11,960 Speaker 2: this kind of four dollars a gallon. I'm just making 629 00:37:11,960 --> 00:37:15,840 Speaker 2: the number up equivalency that you see on other fuel 630 00:37:15,880 --> 00:37:19,799 Speaker 2: markets in order to really begin to gain traction. So 631 00:37:19,800 --> 00:37:22,200 Speaker 2: that's a long, long question to say, we're continuing to 632 00:37:22,200 --> 00:37:25,480 Speaker 2: invest in the technology. We'll have that technology ready when 633 00:37:25,480 --> 00:37:29,080 Speaker 2: we think the market is ready. That's generally our way 634 00:37:29,080 --> 00:37:31,600 Speaker 2: to enter the market, and it will utilize some of 635 00:37:31,640 --> 00:37:34,160 Speaker 2: this base platform that we've done on our helm engines. 636 00:37:34,239 --> 00:37:39,120 Speaker 2: So we've introduced what is an octane engine, which is 637 00:37:39,160 --> 00:37:43,080 Speaker 2: gasoline and a diesel architecture. We've introduced diesel, we've introduced 638 00:37:43,120 --> 00:37:46,239 Speaker 2: natural gas, and then we'll have hydrogen versions of our 639 00:37:46,280 --> 00:37:49,040 Speaker 2: engines as the future goes. But you're talking later in 640 00:37:49,080 --> 00:37:52,160 Speaker 2: the decade, and these are not systems that you're going 641 00:37:52,200 --> 00:37:54,680 Speaker 2: to buy in the next week or two. That said, 642 00:37:54,760 --> 00:37:59,200 Speaker 2: I did drive in a hydrogen truck hydrogen ice truck 643 00:37:59,719 --> 00:38:03,640 Speaker 2: just four weeks ago, so it's possible. Were you driving it? 644 00:38:03,640 --> 00:38:06,279 Speaker 2: Do you have your cdo? I was writing in it, 645 00:38:06,960 --> 00:38:09,719 Speaker 2: I can drive on test tracks, but they did not 646 00:38:09,800 --> 00:38:12,759 Speaker 2: want me to drive the hydrogen ICEE on the test track. 647 00:38:12,840 --> 00:38:15,959 Speaker 4: So yeah, And then on the hydrogen is it more 648 00:38:16,040 --> 00:38:18,840 Speaker 4: about the price or is it more about the infrastructure 649 00:38:18,920 --> 00:38:22,359 Speaker 4: that it's going to take this to be a kind 650 00:38:22,360 --> 00:38:25,560 Speaker 4: of a long term solution for. 651 00:38:25,400 --> 00:38:30,880 Speaker 2: Emissions, great question. I think it's and rather than or. 652 00:38:31,800 --> 00:38:37,520 Speaker 2: So there are areas that have hydrogen infrastructure, think large 653 00:38:37,560 --> 00:38:40,160 Speaker 2: industry where they're starting to power off of hydrogen some 654 00:38:40,200 --> 00:38:42,960 Speaker 2: other things. And so you'll get a point to point 655 00:38:43,080 --> 00:38:46,440 Speaker 2: a little bit. How we started in natural gas. Remember 656 00:38:46,440 --> 00:38:49,000 Speaker 2: in those we invested just in two different points and 657 00:38:49,000 --> 00:38:51,120 Speaker 2: then the things went point to point. Now it's becoming 658 00:38:51,320 --> 00:38:54,319 Speaker 2: more pervasive. So I think it'll start as point to 659 00:38:54,320 --> 00:38:56,960 Speaker 2: point where hydrogen investment is going in for large industry. 660 00:38:58,680 --> 00:39:03,760 Speaker 2: But then also for sure you'll you'll need the cost 661 00:39:03,800 --> 00:39:06,520 Speaker 2: of hydrogen to then go down. So if someone was 662 00:39:06,600 --> 00:39:09,160 Speaker 2: already running hydrogen or had renewable hydrogen at a very 663 00:39:09,200 --> 00:39:12,000 Speaker 2: good rate, you could start that at a point to 664 00:39:12,040 --> 00:39:14,799 Speaker 2: point action, but before it to become large market, you're 665 00:39:14,800 --> 00:39:17,040 Speaker 2: going to need the price of hydrogen to go down. 666 00:39:19,000 --> 00:39:20,920 Speaker 3: And maybe just to put a finer point on the 667 00:39:21,840 --> 00:39:25,120 Speaker 3: new administration and a lot of the uncertainty around policies 668 00:39:25,160 --> 00:39:29,399 Speaker 3: moving forward, I guess outside of Phase three greenhouse gas 669 00:39:29,520 --> 00:39:34,239 Speaker 3: rules that you mentioned earlier, are there other regulations in 670 00:39:34,280 --> 00:39:37,759 Speaker 3: the trucking industry that you think are maybe at risk 671 00:39:37,920 --> 00:39:41,080 Speaker 3: under the Trump administration that that could have a meaningful 672 00:39:41,120 --> 00:39:42,880 Speaker 3: impact on demand moving forward? 673 00:39:43,520 --> 00:39:47,440 Speaker 2: What else is on your radar? Yeah, I would say 674 00:39:47,480 --> 00:39:50,440 Speaker 2: the big things on our radar is this whole greenhouse 675 00:39:50,480 --> 00:39:54,440 Speaker 2: GASKNOX ruling and infrastructure and how do we get some certainty. 676 00:39:54,560 --> 00:39:58,719 Speaker 2: We hope well to wheels we help technology agnostic, Yet 677 00:39:58,840 --> 00:40:02,719 Speaker 2: something we can plan to We think some of the 678 00:40:02,760 --> 00:40:05,960 Speaker 2: modernization of the tax system would be UH. The truck 679 00:40:05,960 --> 00:40:08,879 Speaker 2: industry would would would benefit from UH if we can 680 00:40:08,920 --> 00:40:12,879 Speaker 2: make progress there. But we really have to figure out 681 00:40:13,040 --> 00:40:17,520 Speaker 2: some clarity regarding the tariff side of our supply chain. 682 00:40:17,760 --> 00:40:19,520 Speaker 2: Those are probably the big three we're tracking. 683 00:40:20,560 --> 00:40:23,120 Speaker 1: So so, Brett, how did you get into the uh, 684 00:40:23,160 --> 00:40:26,239 Speaker 1: the transportation world? You know, how did how did you 685 00:40:26,480 --> 00:40:28,040 Speaker 1: how did you kind of get. 686 00:40:27,840 --> 00:40:31,680 Speaker 2: Into the engine business? Yeah? I uh, it's a very 687 00:40:31,760 --> 00:40:34,080 Speaker 2: very long story because I was an early admit to 688 00:40:34,200 --> 00:40:37,239 Speaker 2: medical school out of Indiana University and then called my 689 00:40:37,360 --> 00:40:39,080 Speaker 2: parents and said, I'm going to get in the sexy 690 00:40:39,080 --> 00:40:42,960 Speaker 2: world of commercial vehicle rather than the medical school. But uh, 691 00:40:43,080 --> 00:40:47,560 Speaker 2: I grew up in Columbus, Indiana, where Cummins is headquartered, 692 00:40:48,160 --> 00:40:50,719 Speaker 2: and so I've long had some exposure to this, but 693 00:40:50,760 --> 00:40:54,440 Speaker 2: actually started Arvin, Arvin Meritor. Now we strangely enough on 694 00:40:55,000 --> 00:40:58,400 Speaker 2: Maritor and and and parts of Arvin, and so a 695 00:40:58,400 --> 00:41:00,720 Speaker 2: little bit of it maybe was just in my blood, 696 00:41:00,760 --> 00:41:03,719 Speaker 2: I guess, but it was quite happenstance, and got some 697 00:41:03,760 --> 00:41:08,719 Speaker 2: great opportunities and then have interestingly had the great opportunity 698 00:41:08,760 --> 00:41:11,399 Speaker 2: to live in this small town again, which I never 699 00:41:11,440 --> 00:41:14,280 Speaker 2: thought I would, but yet travel the globe and develop 700 00:41:14,320 --> 00:41:17,160 Speaker 2: these great relationships with the people in trucking. 701 00:41:18,520 --> 00:41:20,960 Speaker 1: Guy and I and I always like to ask our 702 00:41:21,000 --> 00:41:23,759 Speaker 1: guests this next question, is there a book either on 703 00:41:23,880 --> 00:41:26,680 Speaker 1: leadership or your industry that's kind of close to home 704 00:41:27,320 --> 00:41:30,920 Speaker 1: that that you know you kind of think about often 705 00:41:31,120 --> 00:41:31,879 Speaker 1: or reflect upon. 706 00:41:33,840 --> 00:41:40,320 Speaker 2: I I I should, I like the the books on Cummins, 707 00:41:41,400 --> 00:41:44,840 Speaker 2: but but I I hate to sell that to you. 708 00:41:44,840 --> 00:41:51,160 Speaker 2: You know. Interestingly, I don't have an awesome recommendation. So 709 00:41:51,200 --> 00:41:54,960 Speaker 2: this is probably uh not the best question because I 710 00:41:55,040 --> 00:41:58,000 Speaker 2: read and you'll probably cut this. I read all historical now, 711 00:41:58,400 --> 00:42:00,839 Speaker 2: so I read enough business on the day time that 712 00:42:01,040 --> 00:42:02,799 Speaker 2: I just read all history now. 713 00:42:03,400 --> 00:42:06,080 Speaker 1: So no, I get that, is there is there a 714 00:42:06,080 --> 00:42:09,080 Speaker 1: point in history that you kind of like reading about 715 00:42:09,080 --> 00:42:09,759 Speaker 1: the most. 716 00:42:09,880 --> 00:42:15,160 Speaker 2: World War two and then Revolutionary war area, but it's 717 00:42:15,200 --> 00:42:20,600 Speaker 2: a wide variety. Yeah. Yeah, so voracious reader in that area. 718 00:42:20,880 --> 00:42:24,759 Speaker 2: And I've almost given up my business reading. Unfortunately, I 719 00:42:24,760 --> 00:42:25,320 Speaker 2: don't blame you. 720 00:42:25,520 --> 00:42:28,719 Speaker 1: We as analysts, we read all day and uh it's 721 00:42:28,760 --> 00:42:31,560 Speaker 1: it's tough to find time for for pleasure reading. 722 00:42:31,840 --> 00:42:34,799 Speaker 2: That's exactly right. And I saw that question on there 723 00:42:34,800 --> 00:42:36,800 Speaker 2: and I was like, I come up with a better answer, 724 00:42:36,880 --> 00:42:40,200 Speaker 2: but I'll just be honest. So yeah, I'm I'm in 725 00:42:40,280 --> 00:42:43,680 Speaker 2: my latest World War two book right now, so well, 726 00:42:43,800 --> 00:42:44,319 Speaker 2: I don't worry. 727 00:42:44,280 --> 00:42:47,520 Speaker 1: I want to tell you who won. Well, Brett, I 728 00:42:47,520 --> 00:42:49,239 Speaker 1: really want to thank you for your time. This is 729 00:42:49,280 --> 00:42:53,080 Speaker 1: a great discussion and really found it insightful. I actually 730 00:42:53,160 --> 00:42:56,400 Speaker 1: really liked talking to you guys because for a brief 731 00:42:56,480 --> 00:43:01,280 Speaker 1: like Lee Clasgow history, one of a I helped launch 732 00:43:01,320 --> 00:43:03,000 Speaker 1: on when I was an associate when I worked a 733 00:43:03,040 --> 00:43:05,520 Speaker 1: crudential back and I think that was like two thousand 734 00:43:05,520 --> 00:43:06,319 Speaker 1: and six, two thousand and. 735 00:43:06,320 --> 00:43:07,319 Speaker 2: Seven, so a long time ago. 736 00:43:07,480 --> 00:43:09,680 Speaker 1: So it was great to talk to somebody from comments 737 00:43:09,840 --> 00:43:11,120 Speaker 1: and learn more about your business. 738 00:43:12,160 --> 00:43:14,120 Speaker 2: Happy to do it. I really appreciate what you do 739 00:43:14,200 --> 00:43:17,440 Speaker 2: for the industry. It's a great discussion out there. Anytime 740 00:43:17,440 --> 00:43:19,480 Speaker 2: we can help, we'd be glad to come back. 741 00:43:20,040 --> 00:43:23,239 Speaker 1: All right, great, and we probably will. We'll go back 742 00:43:23,239 --> 00:43:25,839 Speaker 1: to that. Well maybe maybe next year we'll follow up 743 00:43:25,880 --> 00:43:27,440 Speaker 1: and see how things are going. 744 00:43:28,200 --> 00:43:30,200 Speaker 2: Perfect, that'd be great. Yeah, let's hope it's a lot 745 00:43:30,239 --> 00:43:30,680 Speaker 2: more clear. 746 00:43:31,120 --> 00:43:33,560 Speaker 1: Yeah, let's hope. All right, Chris, and I also want 747 00:43:33,600 --> 00:43:36,000 Speaker 1: to thank you for coming on to the Talking Transports podcast. 748 00:43:36,000 --> 00:43:37,520 Speaker 2: It's a lot of fun. It sure was. 749 00:43:37,560 --> 00:43:39,959 Speaker 1: Thank you Lee, and thank you Brent. All Right, great, 750 00:43:40,000 --> 00:43:41,920 Speaker 1: and I want to thank you for tuning in. If 751 00:43:41,960 --> 00:43:44,520 Speaker 1: you liked the episode, please subscribe and leave a review. 752 00:43:44,880 --> 00:43:47,280 Speaker 1: We've lined up a number of great guests for the podcast, 753 00:43:47,360 --> 00:43:52,000 Speaker 1: so please check back to here conversations with C suite executives, shippers, regulators, 754 00:43:52,040 --> 00:43:54,960 Speaker 1: and decision makers within the freight markets. Also, if you 755 00:43:55,000 --> 00:43:57,799 Speaker 1: want to learn more about the freight transportation markets, check 756 00:43:57,800 --> 00:43:59,880 Speaker 1: out our work on the Bloomberg Terminal, at be. 757 00:44:00,120 --> 00:44:03,440 Speaker 2: I go and on social media. Thank you and take care.