1.3 Operating Costs and Procurement Strategy
MTU's philosophy is to machine all core components in-house. This includes crankshafts, camshafts, rods, liners etc. The company does not however undertake any casting or forging which are carried out on its behalf by suppliers. All testing and assembly is carried out by MTU.
The diesel engine industry is generally characterised by quite a high proportion of components being sourced externally - usually around 50 per cent. At MTU there has traditionally been a higher degree of vertical integration than at many of its competitors, with only around 40 per cent of components being sourced externally. MTU seeks out the best and most competitive suppliers all over the world Quality audits of suppliers are conducted in accordance with the company's ISO 9001 procedures.
1.4 Competition Aspects
MTU reports high levels of success in the markets for yachts and high speed ferries as well as naval and public authority vessels. It believes that the launch of the "Edition 1500" (January 1999), which is part of the 2000 Series, will consolidate its position in the yachts market where in 1999 the 183 Series recorded sales of 500 engines. Demand from public authority vessels is mainly met by the 2000 Series, but with the 4000 Series often used in patrol boats.
In the market for large fast ferries MTU claims a worldwide market share of 60 per cent and also claims to be the market leader in supplying propulsion units for large yachts (about 25-30 per cent of the market).
The new 8000 Series engine is designed to penetrate new commercial markets (high speed ferries and yachts) and to sustain the high level of sales in naval markets.
MTU has sold marine propulsion systems with gas turbines and gas turbine/diesel combinations since the 1970s. The main applications are naval ships and fast ferries.
Worldwide, MTU considers its main rivals to be the US companies Caterpillar and Cummins and from Europe Deutz MWM and Paxman. Japanese competitors include MHI, Niigata Engineering and Yanmar.
MTU's clients in Japan include MHI, IHI, MES and Sumidagawa. The Japanese market is considered to be amongst the toughest. Customers are said to consider purchasing decisions very carefully and require provision of a large amount of detailed information to assist their decision making. However, once a decision has been made it tends to be implemented more quickly than in most market areas.
