LLC president and CEO Rainer Schmueckle talked with FLEET OWNER editors about the 2007 emissions standards and other issues during the recent ATA meeting in Las Vegas.
FO: Do you expect 2007 to be like 2002/04?
Schmueckle: I'm not so concerned about the technical solution to achieving the 2007 engine emission standards. In 2002, we had no engines to test until three months before the compliance deadline. This time, we'll have engines to begin testing in a few weeks and customers will have engines for on-road testing in 2005-2006 as well. This will give them an opportunity to get more comfortable with the technology, with the performance of the new engines. 2007 may actually be a minor issue if the economy holds its own and if we get some incentives for early adopters.
FO: How severe are the materials shortages facing manufacturers?
Schmueckle: The supply is the tightest I have ever seen it in my 20 years in this industry. China and India, in particular, are putting huge new demands on the world's supply of materials, like steel, aluminum and copper — all metals really. We have had to grant some pretty substantial cost increases to our suppliers as a result. Fleets are very tied into this, of course. They aren't pleased about the cost increases either, but they understand what is driving them.
FO: Is there a place for the owner-operator today?
Schmueckle: There's a place for owner-operators in this market, but they've changed. Today's owner-operators understand that reducing fuel consumption is good for the bottom line and, especially if they want to support a family by trucking, they are spec'ing equipment that can help them reduce their operating costs. They are also keeping an eye on cash flow and profit.
FO: Are all industry segments participating in the recovery?
Schmueckle: The school bus market was the most impacted and is still 20% under where it can be. As far as medium-duty vehicles go, we are seeing growth there now and believe there is quite a bit of pent-up demand.
Generally speaking, the market is the strongest it's been since 1999. Output capacity has really been the primary constraint.