Trucking Optimism Grows

This story appears in the April 4 print edition of Transport Topics.

LOUISVILLE, Ky. — Activity in the U.S. truck market is accelerating as the nation’s economy grows and manufacturers ramp up production to meet growing demand, several truck maker and supplier officials said.

Speaking at the Mid-America Trucking Show here last week, executives said the need of carriers to replace vehicles and expand will support a stronger truck equipment market this year and for the next couple of years, at least.

Daimler Trucks bumped up its 2011 projection for overall North American sales to a 30%-to-35% increase to 286,000 for Classes 6-8, compared with 2010, from its previous estimate of a 20%-to-25% gain, said Andreas Renschler, head of Daimler’s global truck division.

“We’re in a ‘go-go’ period now, said Joe McAleese, president and chief executive officer of Bendix Commercial Vehicle Systems. He predicted that truck sales would be up 35% in 2011 over last year, roughly matching Daimler’s projection, and said they would be continue growing for the next two to three years.

Renschler, who spoke March 31, said Daimler’s projection for Class 8 sales is for a 42% industrywide increase from last year, to 153,000 trucks.

Volvo Trucks North America forecast a gain in the North American heavy-truck market to 220,000 trucks in 2011 from 142,000 in 2010.

During a press conference here, Jack Allen, president of North American truck operations for Navistar, predicted that total sales will be up 35% to 40%.

After several years of “challenging market conditions,” the heavy-duty truck manufacturing business is growing, Bill Jackson, general manager of Peterbilt Motors Co., said at a March 30 press briefing.

Jackson said that fleets are beginning to replace vehicles they held onto during the recession. He said the industry “has not seen age like this in the history of the industry.” He estimated the heavy-duty market this year would be 210,000 vehicles, and that Peterbilt already has added a shift and is ready to ramp up production through the year.

Meanwhile, Volvo announced March 30 that it is increasing output and is recalling 700 production workers to its New River Valley factory in Dublin, Va. Daimler Trucks North America is recalling during the second quarter 800 factory workers that it laid off during the recession, said Martin Daum, president and chief executive officer. The company already has added 2,000 factory workers since March 2010, he said.

The head of engine business for Cummins Inc. said he expects a sharp boost in truck sales to start within a matter of months and is running two shifts a day at the company’s heavy-duty plant in Jamestown, N.Y., and stockpiling inventory of parts and components.

Richard Freeland, president of the Columbus, Ind., company’s engine business, marked his first year in that job, saying he started out pessimistically, but after charting order and sales figures, he thinks orders will translate into much larger sales at some point this year, although he would not pinpoint a month.

“There’s no place left to squeeze the balloon,” Freeland said, indicating that sales cannot remain constrained much longer. He is building up inventory,

he said, because he worries that, at some point, his suppliers will not be able to produce what is needed on a timely basis.

Freeland succeeded James Kelly as Cummins’ engines president last year.

Capacity logjams among the supplier community are a potential source of coming truck manufacturing problems, said Andreea Raaber,Bendix’s vice president for business development.

Truck-build is “significantly up,” and “we may be having some shortages” of parts as the expansion proceeds, Raaber told Transport Topics. “There’s a lot of pent-up demand.”

However, Daimler executives Daum and Renschler said they did not expect component shortages to be a problem at the forecast production levels. Daum said DTNA had notified suppliers last fall of the potential for a 35% production increase this year, “to be sure we have all the material for that ramp-up.”

Increasing demand for new trucks also is causing component manufacturers to ramp up production.

Grede Holdings LLC, Southfield, Mich., which manufactures cast-iron parts, such as suspension and engine mounting brackets, turbocharger housings and exhaust manifolds, said it is seeing demand rise across many segments, including Class 8 trucks.

Daimler, Navistar and Volvo are some of its customers. Grede supplies parts that go into truck weight classes 4 through 8.

“Demand in the heavy truck, construction and automotive segments is up significantly,” said Anthony Lovell, the company’s vice president for sales and marketing, “but we’ve seen a good ramp-up across all of our markets.”

Lovell said the company has increased its staff by 15% in the past year and is near to closing a deal to acquire two plants in Mexico that will help it streamline the supply chain to its truck OEM customers with manufacturing plants in that country.

Associate News Editor Jonathan Reiskin and Staff Writers Joe Howard and Frederick Kiel contributed to this report.