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Partnering: The New Buzzword

February 11, 2000

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Everyone wants to be a partner these days. Fleets want to partner with truck and trailer manufacturers. Truck and trailer OEMs want to partner with suppliers. Suppliers with fleets. And so on.
But as speakers at the recent Heavy Duty Dialogue 2000 in Atlanta astutely noted, partnerships only work under certain conditions.

"Long-term, partnerships are the only way we want to do business," said Don Schneider, Schneider National president/CEO. He said partnerships should:
1. Be long term.
2. Have clearly understood objectives.

3. Be limited in numbers.
4. Should have a level of trust to the point of looking out for each other's interests.
The nation's largest trailer maker Wabash National has 14 partners who operate trucks and use its trailers, said Jerry Erlich, chairman/ceo. He said a partnership provides benefits such as cost-based pricing; competitive advantages through technology; a single source of supply; guaranteed on-time delivery; reduced sales/administrative costs since no time is spent selling or soliciting bids; a database (from the partner fleet) that helps bring down costs & improve equipment; and more time and money for equipment development.

Daniel Murphy, Caterpillar vp, said partnerships can help to grow a business, maximize financial performance, establish technology leadership and improve customer focus and satisfaction.
"A partnership means leverage," said Sandy Cutler, Eaton Corp. president/coo. "The keys are communications and trust...it's not rocket science. Forget not-invented-here...there must be give-and-take. You've got to agree on basic ways you run your businesses or you'll have problems down the road."
Kit Hammond, Great Dane Trailers president, advised suppliers to establish long-term relationships with trailer OEs because the latter's number is dwindling. About eight years ago, he said, nobody had over 12% of the U.S. trailer market. Today the two largest--Wabash and Great Dane limited partnership, build 43% and, he added, if Trailmobile & Strick merge, the
three largest will account for 60%. He predicted that U.S. trailer builders won't enter the European market, which demands "labor-intensive custom trailers."
Demand for speeding new designs to market while reducing costs will mean more OEM reliance on suppliers, who will do more component modulization and take on more value-added responsibilities such as warranty administration, said Joe Magliochetti, Dana president/ceo.
"Our suppliers will be more involved with product development than ever before...and integrate them into our overall strategy," said Michel Gigou, Mack president/ceo, adding that bigger isn't always better. "We want suppliers who are world-class, not necessarily world-size. The end result for us is what the supplier does for the end user."
Consolidation in the aftermarket distribution system is needed, a panel of experts generally agreed, because some dealers and independent distributors were undercapitalized. "There are more (dealer) locations now than three years ago, but fewer owners," said Harry Howard, Volvo Trucks N. America executive director, marketing & sales.
But suppliers and OEMs don't seem too keen to break their long-standing partnerships with dealers and distributors. Rick Clayton, Dana Corp. Heavy Truck Group president said his company had no intention of selling parts direct to fleets and bypassing the traditional distribution channels.
"E-commerce will make the current distribution channels more efficient," he said. "The biggest Internet benefits to companies will be internal."
Added Volvo's Howard: "The distribution channels are in place; we'll sell through dealers."

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