LOUISVILLE, KY -- Kenworth (along with sister company Peterbilt) returned to the Mid-America Trucking Show this year, highlighting the driver, its flagship T680 linehaul model, its strong vocational lineup, and a made-in-America message for show attendees, while talking to the press about behind-the-scenes advances ongoing and in the works.
We sat down after the pre-show press conference with Mike Dozier, who took the reins as general manager less than a year ago, and Patrick Dean, Kenworth’s chief engineer, for a wide-ranging discussion on the show, the health of the industry, and the road to autonomous vehicles.
HDT: Recap for our readers your comments on the economy and where you see truck sales going for this year.
Dozier: In the heavy-duty market, our estimate for 2017 is a 190,000 to 220,000 unit market. We’d like to think in the context of the other economic and market indicators that there’s some real upside to that. We’re seeing more activity. If you backed up three to six months, I think there wasn’t quite the level of optimism that there is now.
Our Class 8 market share of 15.1% last year is a record. We always look to grow that, but we’ll grow profitably and not go out there just for the sake of market share.
In the medium duty market, we’ve seen since 2010 just steady growth. Our forecast for 2017 is 85,000, which is consistent with last year, but again I think there’s opportunity for upside to that — I think 85,000 is a conservative estimate.
HDT: Where do you think that positive feeling among customers is coming from?
Dozier: If you look at the fundamentals… [economic] growth, it’s not 4%, but it’s 2 to 3%; that’s not bad growth. The sound market fundamentals [such as retail sales, construction, consumer confidence, low unemployment, truck tonnage] are there. There are some areas, with line haul there is still a mix of those challenges with rates. But on the vocational side, with housing starts and new construction in general, growth is absolutely accelerating.
About 40% of Kenworth’s business is on the vocational side. [In addition to construction], activity has certainly picked up in the oil/gas industry side, and we’re on the verge of that accelerating even more quickly. (Kenworth showed off three vocational trucks at its booth, including the newest version of the T880, the T880S set-forward axle version.)
HDT: You announced you have a 47% penetration of the Paccar MX engines in Kenworth trucks — is that where you expected to be? What do you think is driving that?
Dozier: We’re certainly happy with it, and with the introduction of the MX-11 this year, it increased the portfolio of applications the MX can serve.
HDT: And the increased ratings you announced. An 11L for on-highway… at one time that would have been unthinkable.
Dean: The 13L at one time was dominant in the industry. It’s only in recent history that the 15L product has been to the forefront. With the horsepower and torque available today, especially in weight conscious applications, an 11L product can really serve the needs of a lot of people — probably a lot more people than currently think about it today.
Dozier: As we look forward, just as you see in automotive, regulations, particularly the greenhouse gas regs, will drive the move to lower displacement engines. At the same time the regulations will increase the use of smaller displacement engines, technology is allowing greater power density. So I think it’s a natural progression.
HDT: Speaking of those GHG regs, there has been some speculation that with the Trump administration’s focus on cutting regulation, that the future of some of those regulations is in question.
Dozier: At this point, regardless of speculation, we’re going to continue to work with the rules as they’re laid out. They’re providing a benefit to customers, and we certainly want to be aware of what might happen, but we focus on developing products based on what is happening. So at this point is wouldn’t want to speculate on what might happen; it has no real bearing on our activities. I think it’ll be interesting to see how federal and states, in particular California, how the two mesh together. At this point in time we have our strategy laid out based on the rules currently defined.
HDT: Tell us about your strategy for the Mid-America show this year. You and other OEs skipped the show last year; Paccar was the first to announce it would be back this year.
Dozier: I’m a firm supporter of an every-other-year approach to shows. So on that schedule, we’re here, and we think it goes to Mid-America kind of having a core element that is an important part of our customer base, whether it be the owner-operator or the small fleet. We have served and continue to grow our fleet business, but an important part of what Kenworth is, historically and now, are customers that run their own trucks have kind of small to mid size fleets, and this is a great place for that.
Dean: It’s also not necessarily about who buys the truck, but the person who’s driving the truck – and that’s what MATS is about. That was represented in our comments on the T680 Driver Studio [interior] and driver centric features and make sure that message is out there.
HDT: You’re also highlighting a made-in-America message here. Does that have anything to do with the current presidential administration, or are there other factors behind it?
Dozier: We manufacture in the U.S., around the globe, Canada and Mexico, but this is the Mid-America Trucking Show, a very important element of our customer base. This is their show. For 94 years Kenworth has been producing product in the U.S., and it’s just important at this show to highlight that. There’s amazing people in Chillicothe, Ohio, and Renton, Washington, every day they get up and they're focused on making these (he gestures to the Kenworth trucks around him) to the best of their ability. It might be called highlighting the obvious, but I don’t think we can say it enough.
HDT: Will you be at the new North American Commercial Vehicle show in Atlanta in September?
Dozier: We have no plans to attend it.
HDT: Up to this point, we’ve not seen Kenworth involved in some of the types of platooning or autonomous truck demos other OEs have. What are your thoughts on this technology?
Dozier: It will not be too surprising that we won’t publish a lot; we never have been and never will be big and flashy.
The autonomous vehicle at some point will be a reality. The key question is, what does autonomous mean? And there’s a long road to autonomous. Technologies that allow for autonomous operations, most of them are in the truck now. There are a few that are still being developed. A real key will be costs. Some like lidar, positional GPS, are still very expensive. But if we talk about the autonomous piece, regulation, legislation and public perception will be a much more significant hurdle than technology development.
Dean: Talking about why we’re here at Mid-America, we’re here because of the driver. Kenworth sees a place for the driver in trucks, full stop. Sometimes, especially when we talk about startup type of companies focused on taking the driver completely out, there’s so many things the driver does besides pointing the truck down the road. Our focus is, how do we make the driver safer, more efficient, and what do we do to allow us to take the next step, which is when the driver needs to do something else, do some paperwork, what have you, the truck is completely capable of providing the driving operation. What I’m really getting at are those levels of autonomy SAE came out with that midpoint where the truck or the car gives you the perception of being in control – but in those situations where things are outside of how it was programmed so the driver has to reengage quickly, [taking the driver out of the cab entirely is] a worrisome position.
Dozier: If you look down the road, talking about regulation, legislation, that will support or goes along with autonomous operation, along the way to that there will be continued big gains in safety and efficiency. And that’s where I think the true near term benefits, the next five years, will serve our customers and really provide them the benefits.
HDT: Last week, Paccar announced a partnership with Nvidia for the develoment of autonomous vehicles. Nvidia is known for making graphics processing units for the PC gaming market and as a chip maker for mobile computing. What will this new partnership with Nvidia do?
Dozier: When you’re doing the research on it, a lot of the autonomous operations, the vehicle has to understand the surroundings. That requires enormous processing capabilities. It happens the most significant advances have come out of the gaming industry. The fact is that those very capable technical geniuses have build processors that are the best at being able to look at the world and turn it into the data these system need to operate at the highest level.
Dean: You can’t program every situation. and you can’t rely on a connection to a cloud service someplace to react quickly enough. So the processing power needs to be on board the truck.
Dozier: And that brings in the artificial intelligence, the deep learning capability that’s already in those processors to varying levels, so the system or vehicle has the ability to take the data and do a better job the next time it experiences the same thing.
Dean: I think we’ll be talking about this for many years.