Big Changes Ahead for Diesel Powered Turf Equipment (25-74 horsepower)
Environment Canada and the US Environmental Protection Agency’s Tier 4 diesel engine emission reduction mandate will soon have an impact on your business. The good news is that all Tier 4 compliant Turf Equipment manufactured after January 1st, 2013 will be better for the environment and healthier for everyone. The more difficult message to deliver is that all Tier 4 compliant diesel powered turf maintenance equipment - greater than 25 horsepower (hp) – from any manufacturer - will cost more.
This document will provide you with a basic understanding of what Tier 4 means and provide you with enough information to help you lead a meaningful business discussion within your organization regarding the possible implications to your bottom line as it relates to capital spending / ROI. If nothing else, we hope this information will provide you with a better understanding of the pending Tier 4 regulation, it’s impact on the turf equipment business, and direct you to additional resources to learn more.
The EPA Tier 4 Standard is about cleaner air! All US regulated emission standards, including Tier 4, are extensions of the “Clean Air Act” (1963) which was enacted to reduce air pollution. The Environmental Protection Agency (EPA), which is the Federal organization responsible for managing and regulating the Clean Air Act, put forth a multi-year plan in the mid 1990’s with “tiered” mandates to reduce the level of harmful emissions such as particulate matter (PM) and Nitrogen Oxides (NOx) that enter the air via diesel engine exhaust. The "final" and most technologically challenging implementation stage, whereby engine and turf equipment manufacturers are required to produce products that comply with these most stringent emission reductions, is called “Tier 4”.
The Tier 4 emission standard will reduce already reduced emissions of PM by 90%. To give you a sense for how stringent the Tier 4 standard is, consider the fact that in many parts of the United States, the air leaving Tier 4 compliant machines will actually be cleaner than the incoming air! The EPA Tier 4 specification was first applied to industries with large on-road vehicles (such as Semi Trailers and other diesel powered Trucks) and followed shortly thereafter by large off-road equipment categories (such as Agricultural and Construction Equipment). In each case, vehicles or equipment with diesel engines greater than 75 horsepower (hp) were required to comply by specified dates. In the Turf Industry, most of the commercially available diesel powered products are in the 25 to 74 hp range and the Tier 4 mandate requires compliance for any products produced in this horsepower/performance category by January 1st, 2013. End users in other industries that have already lived through the transition to Tier 4 have taken a few different strategic approaches when developing their capital spending plans for related equipment:
• Go "Green" - Some end-user companies embraced the new Tier 4 product and wanted to position themselves as leaders in the "green"space. They got in line for the new products early, despite the higher prices, to lead the charge toward cleaner air.
• Business as Usual - Other companies chose to simply pay the market price (even if it was forecasted to go up substantially) when their current captial plan called for new equipment or when their equipment simply reached the end of its useful life.
• Buy Used - Equipment manufactured prior to 2013 is "grandfathered-in" and does not need to be retrofitted to Tier 4 standards.
• Pre-Buy - Many companies decided to buy equipment in advance of the mandatory Tier 4 changeover (at lower prices) to defer the need for higher priced products as long as possible and to give them more time to adjust to the new market pricing. Eventually, the only option for customers purchasing diesel powered product in the 25 to 74 hp range will be to buy a Tier 4 compliant product. Therefore, the purpose of learning about this issue now is so that all customers can develop and implement an acquisition strategy that meets their specific needs – particularly in the near to mid-term planning horizons.
As you review your own needs and options for capital spending on turf equipment, you may also want to consider researching how other end-user customers in other industries dealt with Tier 4 compliance. • Other industries experienced significant pre-buy behaviors.
• Increased pre-buy demand created availability issues for lower priced equipment.
o Equipment manufacturers were unable to meet the unforecasted demand.
o Engine manufactures capacity became constrained as they converted existing manufacturing lines to the new Tier 4 product.
The past is not always a good predictor of the future. However, we encourage customers to plan early, so they can evaluate multiple options to maximize their ROI. What can or should you do? Act now to learn more and share what you know!
• Become knowledgeable about the coming EPA Tier 4 Standard.
• Educate your leadership team and financial stakeholders about Tier 4 and the possible impact it may have on your equipment purchasing plans.
• Understand the availability for both existing and new Tier 4 technology solutions and how it may influence your options and decisions starting in 2013.
How will Tier 4 Compliant Turf Equipment be different? The new Tier 4 Compliant solutions will have:
1. all new engine and exhaust systems
2. more sophisticated electronic controls
3. additional – after-treatment for removal of NOx and Particulate Matter
4. redesigned frames and engine compartments to accommodate physically larger engine/exhaust system modules
5. updated cooling systems.
The areas above represent the major areas where changes are required to meet the Tier 4 emission reduction mandate, but it is by no means an exhaustive list.
Toro. “EPA Tier 4 Information”. Toro Customer Support. http://www.toro.com/en-us/customer-support/Pages/tier-4/Tier-4.aspx (24 July, 2012)