1. Product Description: As power generating units, diesel engines have multiple purposes. Motor vehicles, agricultural machineries, irrigation pumps, electric power generators, etc, use diesel engines to receive power for doing certain functions.
2. Rationale: All types of diesel generators are imported into the country, and this import will increase as the economy expands requiring more power. Diesel engines come in different sizes, and each engine is composed of many parts and components. Due to economies of scale, many diesel engine parts are manufactured by specialized manufacturing units and they are supplied to manufacturing-cum-assembling units. Considering the importance of diesel engines, there is a strong need at the national and regional level to start; at least, assembling the engines from imported parts and components. Through assembling, we can learn manufacturing and fabrication of parts. This is how the development of basic industries in any country takes place --- assemble-fabricate-manufacture.
3. Market Potential: Diesel engines- small and large are needed in the various sectors of the country’s economy. As the economy expands the need for diesel engines expands. During the last three years, average annual import of diesel engines was 7500 units. The purpose of this project is to substitute imports by assembling diesel engines at home. The existing demand can justify the establishment of a diesel engine assembly and fabrication plant.
4. Source of Raw Material: Parts and components will be imported.
5. Production Process & Technology: Major components of a diesel engine include engine blocks, cylinders and fixing liners, crankshaft, piston, piston rod, valves, valve grinder, etc. All these are manufactured by foreign suppliers for the first phase. Gradually, some components especially the engine blocks can be manufactured at the plant. Engine blocks are made by casting in a simple foundry. During the first phase of operation, assembly of all components and parts will be done at the plant. Another activity of the plant will be repair and maintenance of diesel engines.
6. Estimated Investment: For a plant that will assemble between 250-300 units of diesel engines, estimated investment will be as follows.
§ Building 200 m2 at Birr 2000/m2= Birr 400,000
§ Plant and machinery Birr 260,000
§ Working capital Birr 160,000
Birr 820,000
7. Benefits: saves foreign exchange, saves regional financial resources, possibility of export, and supports other economic sectors, new technology and skill.
8. Location: Combolcha