Components Suppliers Riding High

As trucking companies continue to buy new Class 8 tractors at a record pace in order to meet the heavy demand for freight transportation, companies that sell components to truck makers have seen their sales and earnings lifted to new heights.

Engine makers Detroit Diesel Corp. and Cummins Engine Co.; transmission manufacturer Eaton Corp.; Dana Corp., which makes chassis systems; and Meritor Automotive, with its drive-line business, reported record sales or earnings — or both — for the second quarter of 1999.

David Wys, an analyst with Standard & Poor’s DRI consulting unit, explained the success of component suppliers by observing that “there are a lot of cars and trucks beings sold.”

New Class 8 trucks are moving off the lots at a clip that is nearly 30% faster than the record year of 1998. At the current pace, more than 255,000 units would be sold in 1999, beating last year’s all-time high by more than 45,000 units (7-19, p.18).

Wys said truck manufacturers have pressured suppliers to hold down prices in recent years, but the makers of the components that go into the final vehicle “have gotten productivity improvements to increase their profits.”

That explains the numerous reports of record earnings, he said.

For the full story, see the July 26 print edition of Transport Topics. Subscribe today.