A Newport Communications
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| June 2001 A Newport Communications Service since 1970 |
DaimlerChrysler financial wizard Rainer Schmückle to Freightliner president, following Jim Hebe's departure. Schmückle, former Freightliner cfo (1994-97), has been DCX sr. vp-corporate controlling since Sept. Roger Nielsen, Freightliner vp-business segment specialized vehicles, named COO. Schmückle appointment parallels that of Dieter Zetsche, named by DCX late last year to turn beleaguered Chrysler Group around. "They are two guys with proven track records," says one source. Schmückle was instrumental in financial recovery of Adtranz Group (DCX Rail Systems), & gained respect of many at Freightliner during earlier time there.
Hebe is the only American to head Freightliner since Daimler Benz acquired it from Consolidated Freightways in 1981. He succeeded Zetsche in 1992 & took Freightliner to market share leadership with aggressive, oft-criticized buyback fleet deals and numerous acquisitions (Sterling, Western Star, American LaFrance, Thomas Built & Orion Buses & others). Freightliner, according to DCX, found itself in 1st quarter red ink in addition to being overloaded with used trucks. Company says cost & production capacity reduction programs to continue.
Paccar issues statement that it doesn't respond to requests about individual competitors & adds: "For over a decade there has been a concern that the North American trucking industry was vulnerable due to disruptive pricing & unrealistic residual valuations. Looking forward, it is envisioned that pricing stability will return to the marketplace."
Overall fleet utilization is strong, despite decline in demand for owner-operator & for-hire equipment, says latest survey by MacKay & Co. Class 6-8 utilization in March averaged 83.9% of capacity, up 0.4 point from 1st quarter 2000 & strongest 1st quarter since '88. Class 6 utilization was 75.6, about same as year ago; Class 7, 86.7%, up 3.4 points; Class 8, 83.6%, down 0.3 point; trailer, 86.6%, up 2.2 points.
"Private fleets, construction companies & local governments are operating their fleets at very high utilization rates," MacKay says. "Fleets may be postponing vehicle purchases, but are leasing added capacity. Lease/rental fleet utilization is up and lease/rental fleets are expanding." Contact: MacKay & Co., (630) 916-6110.
The general economy will be "tight" next two quarters, but snap back with steady growth in 2002 beyond, Economic Planning Associates President Peter Toja tells Truck Trailer Mfrs. Assn. annual convention. He predicts 175,000-185,000 trailer shipments in 2001, down from 268,000 in 2000, but says deliveries over next 5 years will average nearly 250,000 annually — close to past 5-year average.
Positive signs he sees: drawdown of product inventories nearly compete, which will stimulate 4% growth in 2002 manufacturing; aggressive Fed rate cuts; increase in construction; stronger import/export activity. "We're still in positive (economic growth) territory," he said. "It's just far slower growth. We should bottom out late second quarter or in the third."
North American factory Class 8 truck sales should be 160,000-170,000, & rebound to 175,000-180,000 in 2002, says Peterbilt GM Nick Panza. He told TTMA used truck inventory dispersal is key to recovery of truck manufacturing & said Pete's used truck inventory is in best shape since summer of '98. He predicted technology/communications will take transportation from just-in-time delivery to new level: real-time delivery, in which manufacturers order components to arrive for next day assembly instead of 3 weeks ahead. As for selling trucks on the Internet, he said dealers remain the future of truck sales.
FREIGHT TRENDSSurprise 2% GDP gain in 1st quarter didn't boost freight volume as much as first thought, says Newport economist Jim Haughey. Early data had volume at 2.6% annual growth rate this winter, but after data adjustments, rate will likely be 2%. Volume isn't expected to expand in 2nd quarter as inventory draw downs continue, but should return to 3-4% range in 2nd half as GDP rises & restocking begins.
Better inventory management has kept this economic downturn short & mild compared to past. Haughey gives supply managers A+ for their ability to measure and locate their inventory & quickly respond to changes in customer orders. "But most of them get a failing grade in demand forecasting," he says. "They ignored common sense & relied blindly on bloated forecasts from customers."
By year-end inventory/sales ratio will be back to 1.30 from current 1.37 & will decline gradually over next few years. "This means an even larger share of the economy's inventory will be in trailers or short-term terminal storage," Haughey says. Downside: freight volume will be even more vulnerable to sudden changes in economic growth.
Less-than-truckload rates rose 0.1% in March; truckload rates fell 0.1%. Haughey says there is too much surplus freight capacity now to expect any significant rate gains through summer, not counting fuel cost adjustments. LTL & TL rates expected to rise at 1.5-2% annual pace in 2nd half.
March increase in load volumes continued through April, says DAT Services. "True to past seasonal trends, April showed continuing growth in availability of loads nationwide," says Jeanne Danielson, sales mgr. Texas, Ohio, Illinois, Georgia, N. Carolina had highest load volumes. Illinois & Georgia had best outbound/inbound ratios.
SALES TRENDSApril U.S. Class 8 retail sales totaled 12,782, highest this year, but Class 6&7 sales were sharply lower, says Haughey. Overall, Class 6-8 sales were 23,781, off 7.5% seasonally adjusted from March. Class 3-5 sales fell to 13,967, about same as Feb, after a 4,000-unit surge in March.
April sales suggest market for freight hauling trucks has stabilized after shrinking nearly 50%, while market for vocational trucks will feel impact of slower economy through summer, Haughey says. After allowing for seasonality, he expects Class 6-8 sales to decline again in 2nd quarter then rise sharply to about 85,000 units in 4th quarter. Slower recovery outlook is due to lower expectations for growth in exports & goods spending, plus a larger than first reported inventory surplus. 2001 forecast: 306,000, down 20% from 2000.
U.S. trailer shipments were 42,000 in 1st quarter vs. 81,250 same period last year, according to Economic Planning Associates' manufacturer survey. Dry van trailer sales totaled only 23,000, down from 54,500 a year earlier. Sales expected to pick up some in 2nd half when freight volume rises slowly & margins start to improve.
April heavy truck prices rose to 1% above last Sept., despite depressed sales, Haughey notes. Trailer prices were unchanged but further small declines are likely.
EXECUTIVE VIEWSTruck manufacturer consolidation & alliances with suppliers will continue, according to OEM executive panel at American Truck Dealers annual convention. Truck makers worldwide are seeking partnerships to share cost of research, product development & emissions regs compliance, said James Underwood, president/COO GM Isuzu Commercial Trucks. Alliances also enable manufacturers & dealers to offer broader portfolio of products to cover more markets.
Benefits of consolidation & globalization: economies of scale, improved product quality & performance, faster product development time, more competitive pricing, said Mack Trucks President/CEO Michel Gigou. Consolidation should also mean stronger dealer/manufacturer relationships, improved distribution networks & greater focus on customers.
Developing integrated vehicles vs. assembled components "will require different relationships with suppliers," said Navistar International Chairman & CEO John Horne. "If we turn the engineers loose to develop the total vehicle — vs. an assembled truck, a mishmash of vendor components — and link that to world-class manufacturing processes, the innovation and product performance will be incredible."
FINANCIALSPaccar posts $44.3 million 1st quarter 2001 profit on sales of $1.5 billion vs. $154.9 million on $2.3 billion 1st quarter 2000. Company's U.S. & Canadian Class 8 production was 20% below 1st quarter 2000. In Europe, where Paccar builds DAF & Foden trucks, slowing global economy blamed for 10% decline in truck production. Paccar Financial revenue was up 11% for the quarter; increased repossessions & lower used truck prices drove pre-tax income down 39%. Company to offer financial services in W. Europe starting this summer.
Volvo posts SEK 801 million ($77 million) 1st quarter loss on sales of SEK 43.7 billion ($4.2 billion) vs. SEK 1.27 billion profit on sales of SEK 28.3 billion 1st quarter 2000. Worldwide truck deliveries — including Volvo, Mack, Renault — totaled 42,139, down 11% from year ago. N. American deliveries fell 38%, European deliveries rose 1%. Worldwide order bookings down 15%, including 26% drop in N. America & 10% decline in Europe. Financial Services' volume was about the same as 1st quarter 2000 but operating income fell some 48% due to credit losses in N. American truck financing.
DaimlerChrysler posts EUR 3.8 billion ($3.4 billion) 1st quarter operating loss (EUR 610 million excluding one-time charges) vs. EUR 2.5 billion profit 1st quarter 2000. Revenues were EUR 35.5 billion ($32 billion), down 13% from last year. Commercial Vehicle unit sales fell 12% to 119,300, revenue was off 7%. Company said 10% gain in Europe was offset by 31% drop in U.S. sales. EUR 100 million operating loss blamed mainly on soft N. American truck market.
Caterpillar posts $162 million 1st quarter profit on $4.81 billion sales vs. $258 million on $4.92 billion 1st quarter 2000. Engine sales were $1.5 billion, down 10% from year ago. Sharp drop in sales to N. American truck manufacturers partially offset by strong sales of power generation products & increasing sales to petroleum industry. Company expects full year sales & revenues to be about same as 2000. Profit will be down 5-10%.
ArvinMeritor posts $21 million income, after special items, for its 2nd fiscal quarter vs. $74 million 2nd quarter 2000. Sales were $1.8 billion, down 13%. Commercial Vehicle Systems sales were $583 million, down 27% last year. CVS operating margin was 1.7%, down from 8.8% year ago and 2.2% previous quarter. Company dropped its forecast for N. American Class 8 production from 160,000 to 135,000. Estimate for light trucks unchanged at 15.9 million.
Eaton reports $50 million 1st quarter income, after unusual items, vs. $113 million 1st quarter 2000. Sales were $1.98 million, down 9% from last year. Truck segment sales totaled $281 million in 1st quarter, down 37% from last year. Company said NAFTA Class 8 truck production in 1st quarter was down 54% and medium duty truck sales were off 30%. European truck output was up 3%; S. American commercial vehicle production rose 22%. Before restructuring charges, the truck unit operated at breakeven for quarter.
Dana posts $27 million 1st quarter loss, including $28 million in one-time charges, on $2.7 billion revenue. 1st quarter 2000 income was $245 million on sales of $3.5 billion. Commercial Vehicle Systems sales totaled $319 million vs. $514 year ago. Operating profit was $5 million vs. $35 million. Company predicts that OE markets will "continue to be erratic" in 2nd quarter, with no signs of near-term recovery in aftermarket.
Wabash posts $10.4 million 1st quarter loss, before non-recurring charges, on sales of $242.6 million vs. $9.1 million income on $352.8 million 1st quarter 2000. Company took $9 million inventory charge on new & used trailers in its retail network in 1st quarter. It remains cautious but recent "signs of encouragement" prompted increased production of DuraPlate trailers.
NEW BUSINESSContinental Teves to offer medium truck version of its MK-series 4-wheel anti-lock brake systems. Transportation.com to provide domestic & international transportation services to Used Equipment Network. Haldex Brake Systems to market Altra Technologies' collision avoidance system.
Sterling & Western Star get 5-year contract to supply Class 8 trucks & equipment to Canadian federal agencies. Brenner Tank gets order for 130 stainless steel tank trailers — its largest ever — from Indian River Transport.
ArvinMeritor to make commercial truck wheels at San Luis Potosi, Mexico, plant. Facility now produces wheels for passenger vehicles & light trucks. Recaro N. America opens new headquarters & manufacturing plant in Auburn Hills, MI.
ACQUISITIONS & ALLIANCESCummins & International Truck & Engine end talks regarding heavy duty engine development/manufacturing joint venture. No reason given. Cummins has reportedly asked New York state to guarantee loans that would help finance the venture & made a similar request to Indiana for loan guarantees to help fund development of next-generation engines.
Cummins says it will set pricing through OE customers (Paccar, Volvo, International) & stop discounting to dealers & end users. New policy is part of strategy to cut duplicated engineering, marketing, distribution costs through long-term partnerships with manufacturers.
DaimlerChrysler to go ahead with the Hyundai Motor commercial vehicle joint venture, countering reports that deal was off since Volvo gave up its interest in Mitsubishi Motors, clearing way for joint DaimlerChrysler/Mitsubishi truck operations in Asia.
Detroit Diesel & International Truck & Engine renew worldwide distribution agreement, giving DDC rights to 7.6L & 8.7L Series 40 diesel engines through 2003. Transport International Pool buys Paragon Leasing. Internet Truckstop buys AmericanLoadLink.com and USALoadLink.com from Studio Sixty Six. CFI Mortgage buys Trandata intermodal information technology developer.
Williams Express sells its Williams Travel Centers to Delek-The Israel Fuel Corp. Williams had agreed to sell its 198 stops to Convenience USA until Delek exercised purchase option from earlier agreement. Qualcomm Wireless Business Solutions & Komatsu American Intn'l to jointly develop construction equipment tracking systems.
Transportation Technologies Industries parent TMB Industries buys Fuel Systems business of BorgWarner, names Frank Mayer president & CEO. International Lubricants buys Squeak Relief products from Aurora Industries. Nexterna buys Cummins' FreightQuest.
Dana Spicer LMS bearing & seal package to be standard on front steering axles for Kenworth Class 8 & medium conventionals. Core Materials to supply composite hood moldings for Peterbilt model 387. Cummins named exclusive diesel engine supplier for next-generation Dodge Ram 2500/3500 pickup.
Long-time overnight trucking radio personality Dave Nemo says contrary to rumors, he's still on the air nationwide & in fact has never missed a night. He & partner Micki McIntyre now operate Studio 18 Productions, LLC, which airs the Dave Nemo Radio Network.
HONORSNewport's Heavy Duty Trucking named one of country's top 50 business-to-business advertising venues by Crain Communications' BtoB magazine. No other trucking publications made the list, which includes Wall Street Journal, The Economist, Business Week.
PEOPLEMitsuo Kikuchi to president, Hino Diesel Trucks (USA) from senior exec. officer, overseas operations, Hino Motors Ltd. He succeeds Eddie Ishizu, who retires. Nicholas Matich to operations vp, International Truck & Engine. William Mohr to service operations director, Mitsubishi Fuso Truck of America, from national service mgr.
Brian Burnett to president, Jacobs Vehicle Systems, from operations vp & petroleum products gen. mgr., Veeder-Root. Dana's Commercial Vehicle Service Parts Div. names Todd Kindem sales director, Dianne Shaw-Wooddell director, service parts operations, Tom Huetteman, purchasing & logistics director.
James Sweetnam to senior vp & group executive, Eaton Truck Group, from vp-Heavy Duty Transmission, Clutch & Aftermarket Operations. He succeeds Thomas O'Boyle who retires June 30. Gottfried "Guff" Muench to president & CEO, Cummins-Westport.
Kurt Burmeister to director, N. American field operations, ArvinMeritor Commercial Vehicle Systems. He succeeds Bill Walther who left the company. Tom Doyle to vp-OEM business development, Qualcomm, from vp marketing, Terion Inc.
Bob Helms to chairman, Pegasus Transtech, from president, TruckersB2B. Jack Neinken to vp-sales, CarrierPointSM. John Boyko to transportation unit director, Arch Wireless Business Solutions Group, from business development director, Exel Direct. Ron Wells to vp-business development, RubberNetwork.com.
Newport Communications names David A. Kolman eastern sales director, succeeding Marty McClellan, who left the company. Kolman remains publisher of Truck Sales & Leasing magazine. Jack Thiessen to TS&L editor, succeeding Kolman. Newport appoints Brad Poulos director, information technology advertising. Formerly with Maple Communications, he will also handle advertising sales for all Newport properties in Texas, Oklahoma & San Francisco Bay area.
Correction: Norm Boisvert is vp/gen. mgr. of Dana Corp's Commercial Vehicle Axle Div., not the Ride & Control Systems Div. as previously reported. Greg DiMarco heads Ride & Control Systems. Dana's European & S. American Heavy Axle and Brake divisions remain separate, but will do business as Commercial Vehicle Systems Div.- Europe and the Commercial Vehicle Systems Div.- S. America.
U.S. RETAIL TRUCK SALES REPORT
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