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Higher Wages, Price Competition Squeeze Dorsey Profits

April 21, 2000

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Dorsey Trailers posted a first quarter 2000 net profit of $94,000 on sales of $45.1 million. Net income for the same period last year was $512,000 on sales of $44.8 million.
John Pugh, CEO, said new trailer sales for the quarter were basically level with the previous year but income was hurt by increased in wages and benefit costs that couldn't be recaptured in price increases.
"The wage and benefit increase mainly resulted from a new labor agreement that commenced in the second quarter of 1999," he said. "In addition, the company experienced pricing and margin pressure in the first quarter signaling softness in what has been a very robust trailer market."
Pugh said they expect the downward pressure on pricing and margins to continue and to have an impact on near-term profitability.
He noted, however, that profits were up from fourth quarter when the company reported a loss attributed mainly to disruptions caused by a manufacturing system changeover.

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