Allison Looks to Future with Eye on Past Century

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Today's Trucking / August 24, 2015

Officials at Allison Transmission are in a celebratory mood – after all, it isn’t every day a company has their centennial anniversary – but a visit to the company’s headquarters also reveals new excitement when it comes to selling truck transmissions in the future, especially in the over-the-road market.

During a gathering of reporters on Friday, company officials outlined their history and vision.

Allison traces its corporate linage back to the founding of the Indianapolis Speedway Team Co. on Sept. 14, 1915, by James A. Allison, co-founder of the Indianapolis Motor Speedway and owner of several racing teams. The prominent entrepreneur and businessman established a precision machine shop and experimental firm in the Town of Speedway called Allison Experimental Co. to support his endeavors.

Since those days, Allison Transmission has grown into the world’s largest manufacturer of fully automatic commercial-duty transmissions, with approximately 2,700 employees, and last year had revenue of more than $2 billion. Today it produces transmissions not only for trucks, but also for the military, buses, construction equipment and even for hydraulic fracturing equipment.

“The company that grew out of the humble machine shop has served as an economic and community anchor for the Town of Speedway and greater Indianapolis,” said Lawrence Dewey, chairman, president and CEO. “By celebrating our centennial, we are honoring generations of Hoosiers who have devoted their careers of manufacturing excellence under the Allison name.”

The past few years have seen some of the greatest changes for Allison. After General Motors purchased the company in 1929 after James Allison’s death, it sold it off to two private investment firms in 2007. It became a publicly traded company in 2012, with the Carlyle Group and Onex Partners shedding their majority interests in September 2014.

At the center of its over the road trucking effort today is the TC10, a ten-speed, fully automatic transmission for the Class 8 metro market, currently available on select Navistar models. However, Dewey, said there is an effort to bring the transmission to other OEMs.

“I can say we are in very active negotiations with a couple of OEMs in North America,” he said. “We do have some prototype vehicles working in other parts of the world.”

While Dewey gave no indication as to what truck OEMs Allison has been in discussions with to give it a bigger presence in the over-the-road market, he said the company currently has about 7% to 10% of the North American Class 8 tractor market.

Dewey said one of the toughest things the company will have to overcome is the perception that automatics transmissions, at least for over-the-road use, don’t get fuel mileage as high as manuals or automated manual transmissions. He said the TC10 transmission is competitive with manuals and AMTs, with fleets operating it consistently reporting getting up to 3% to 5% better fuel economy over their previous specs.

While the TC10 in the beginning was suited ideally for about 40% stop and go operations and 60% over the road, Dewey explained, it now is suited for operations operating as much as 80% on the road, opening up the market up to more customers.

He conceded that getting more over-the-road trucking operations to open up to automatic transmissions isn’t an easy task, but emphasized concerns about loss of power have been eliminated with the TC10. However, there is still the problem of the premium price, as much as about US$5,000 more when compared to a manual and up to around US$2,000 more versus an AMT.

“I understand it’s hard to get your head around the idea that automatic doesn’t use more fuel, and I respect that,” he said. “I tell my sales guys to ask their customers, ‘What does it take to get one or two into your fleet?’ As much as people want to see evidence of other operations, in some way everybody is unique, and so the trick is to get them to get it in, run it and see for themselves. If they don’t then we haven’t earned their business. If they see it, hopefully, they will see a value in it.”