Cummins Engine and Wartsila Diesel finalize joint venture to produce high-speed diesel and natural gas engines up to 6,000 horsepower (4.5 megawatts).

LONDON--(BUSINESS WIRE)--March 16, 1995--

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Start of Production, Targeting Power Generation

and Marine Markets, Scheduled for May

Cummins Engine Co. Inc. of the United States and Wartsila Diesel International Ltd Oy of Finland today formally signed a 50/50 joint venture agreement here to produce two new families of diesel and natural gas engines. The joint venture, named Cummins Wartsila Engine Co., will begin production of one of the families, for power generation and marine markets, in May. Cummins is the world's largest producer of high-speed diesel engines above 200 horsepower, with 1994 sales of $4.7 billion. Wartsila is the world's leading producer of medium-speed diesels and an important producer of high-speed engines ranging from 400 to 24,000 horsepower. Wartsila Diesel, with 1994 sales of $1.4 billion, is the largest subsidiary of the Metra Corporation of Finland. The joint venture will cover the lower engine range of Wartsila Diesel's product portfolio and the largest engine range of Cummins.

``We are excited about the prospects for this important new joint venture,'' said Cummins President and Chief Operating Officer Tim Solso. ``This new joint venture will significantly expand our horsepower range, enhance our global diversification efforts and increase our worldwide market share in several key product areas.''

Pentti-Juhani Hintikka, President and Chief Executive Officer of Wartsila Diesel Group, said, ``Joining forces with Cummins for the development and production of these two new families will lead to engine volumes far beyond our original expectations, which in turn will guarantee a more competitive cost structure for our new products.''

A letter of intent to form the joint venture was signed by the two companies in December.

It also was announced today that Iain M. Barrowman has been named president of the joint venture. Barrowman, formerly director of manufacturing for Cummins in the United Kingdom, has been with the company for eight years. He is a native of Scotland and holds a degree in production and management as well as an M.B.A. in business studies, both from Strathclyde University.

The joint venture will design, develop and manufacture two new families of heavy-duty, high-speed diesel and natural gas engines aimed at the power generation, marine propulsion and auxiliary power, mining, rail, oil and gas markets. Wartsila will continue to market the first engine family under the brand name Wartsila 200 and the second under the name Wartsila 170. Cummins will market both families under its new QUANTUM System. The first family will be designated QSZ and the second family, QSW.

The first of the two new families, ranging from 3,000 to 6,000 horsepower (2.2 to 4.5 megawatts), is based upon the recently launched Wartsila 200 engine and will be produced by the joint venture in Mulhouse, France. The present production facilities of Wartsila Sacm Diesel will be transferred to the joint venture.

The second engine family, which will range from 750 to 3,600 horsepower (550 kilowatts to 2.7 megawatts and 4.5 litre displacement per cylinder), is scheduled for production in early 1997 at Daventry, England. The engine will be designed for continuous heavy-duty use and employ full-authority electronic controls and the latest in fuel system technology.

The diesel and natural gas engines that the new venture will produce offer the advantages of high-speed operation, durability and low operating costs. In addition, they are designed to meet all present and foreseeable emission regulations.

``The fact that the leading producer of high-speed diesel engines has decided to enter into cooperation with Wartsila Diesel shows their confidence in the product development efforts that have been taken during the last years to modernize our high-speed engine portfolio,'' said Hintikka.

Engines produced by the joint venture will be distributed and serviced through Cummins' global distribution network as well as Wartsila's worldwide network of sales and service operations.

The strengths of the two partners are complementary. Wartsila is known for the highly reliable and durable medium- and high-speed engines it produces for customized turn-key deliveries in the power generation and marine fields. Wartsila is a technology leader, utilizing a broad range of fuel qualities from diesel to natural gas applications. Wartsila offers the newest product portfolio in the industry for both gas and diesel engines. Cummins is the leading producer of high-speed diesel engines for automotive, power generation, bus and light commercial, industrial, marine and government markets. Cummins' and Wartsila's market and global distribution strengths will create the high volume necessary for low-cost manufacturing.

Cummins' marketing efforts will focus on the engines produced by the joint venture in the range of 2,500 horsepower to 6,000 horsepower (1.5 to 4.5 megawatts) as part of its new QUANTUM system of high-horsepower products. The QUANTUM system delivers exceptional value by meeting customer needs for the lowest possible operating costs over the life of the product. This has been accomplished by improvements in reliability, durability and fuel efficiency, integrated with electronic controls and information systems which assist customers in effectively managing their businesses.

Available in diesel or alternate fuel versions, the QUANTUM system is targeted for power generation, mining, marine propulsion and auxiliary power, rail and locomotive applications. Utilizing the next generation of full-authority high-horsepower electronic fuel systems, the QUANTUM system will extend below 2,500 horsepower with the QSK, the next generation of Cummins' highly successful K engine family. The first engine of this family will be introduced this year.

Cummins, headquartered in Columbus, Ind., U.S.A., is a leading worldwide designer and manufacturer of diesel engines and related products. In 1994, 43 percent of Cummins' sales were to markets outside the United States. Cummins employs 25,600 persons in its manufacturing, assembly and research facilities in more than a dozen countries and has distributors in 110 countries.

The Wartsila Diesel Group is the world's leading producer of medium-speed diesel engines in the power ranges from 400 to 24,000 horsepower. Wartsila Diesel's strength lies in custom-made solutions and provides whole systems: marine propulsion packages including gearbox, remote control, shaft and propellers, and turn-key power stations up to 200 megawatts. Through its French subsidiary, Wartsila SACM Diesel, it is an important producer of high-speed engines. The company employs 6,000 persons in 40 countries.

For further information, please contact:

Ann C. Smith, Public Relations Director Cummins Engine Co., Inc. Columbus, IN U.S.A. 812-377-3524

Matti Tulkki, President Wartsila SACM Diesel tel. [phone]

Karin Roeleveld, Communications Manager Wartsila Diesel International Ltd Oy (France) tel. [phone]

CONTACT: Cummins Engine Co., Inc.

Ann C. Smith, 812/377-3524

Wartsila SACM Diesel

Matti Tulkki, 33-89-66-68-02

Wartsila Diesel International Ltd Oy (France)

Karin Roeleveld, 33-88-52-20-66