Fleetowner 2096 Cash2
Fleetowner 2096 Cash2
Fleetowner 2096 Cash2
Fleetowner 2096 Cash2
Fleetowner 2096 Cash2

Tough times still ahead for truck markets

Feb. 17, 2009
ORLANDO. Truck manufacturers and parts suppliers are in for a rough year as truck fleets struggle with weak freight markets and tight credit, according to economists, top industry executives and other observers at a one-day, high-level industry meeting yesterday

ORLANDO. Truck manufacturers and parts suppliers are in for a rough year as truck fleets struggle with weak freight markets and tight credit, according to economists, top industry executives and other observers at a one-day, high-level industry meeting yesterday.

“There’s a lot more pain before any gain.” Eli Lustgarten, senior research analyst at Longbow Securities, told the audience here at the 2009 Heavy Duty Dialog. “Companies buy trucks to move freight, and freight movement has continued to fall as the recession takes its toll.”

Lustgarten forecasted a NAFTA truck production rate of 160,000 Class 8 tractors in 2009, down from 205,000 in 2008 and 212,000 in 2007. “If the credit markets loosen in the next few quarters, we’ll see Class 8 (production) rebound to 2008 levels,” he told the group. “But if they don’t, then all bets are off.”

Read entire article ...

ORLANDO. Truck manufacturers and parts suppliers are in for a rough year as truck fleets struggle with weak freight markets and tight credit, according to economists, top industry executives and other observers at a one-day, high-level industry meeting yesterday.

“There’s a lot more pain before any gain.” Eli Lustgarten, senior research analyst at Longbow Securities, told the audience here at the 2009 Heavy Duty Dialog. “Companies buy trucks to move freight, and freight movement has continued to fall as the recession takes its toll.”

Lustgarten forecasted a NAFTA truck production rate of 160,000 Class 8 tractors in 2009, down from 205,000 in 2008 and 212,000 in 2007. “If the credit markets loosen in the next few quarters, we’ll see Class 8 (production) rebound to 2008 levels,” he told the group. “But if they don’t, then all bets are off.”

Lustgarten’s production forecast for Classes 5 through 7 for 2009 was 140,000 units, rising to 160 to 175,000 in 2010 if returning credit markets get freight flowing. Trailer production in the NAFTA market will total 105,000 units this year, growing to 140 to 165,000 in 2010 under the same scenario, Lustgarten predicted.

The current downward cycle “will be deep and long, but we will come out of it,” said William Strauss, senior economist and economic advisor for the Federal Reserve Bank of Chicago. Citing what he called the “Blue Chip Financial Forecasts,” Strauss said U.S. gross domestic production (GDP) will contract by -0.9% this year following -0.2% negative growth in 2008. A recovery in 2010 will return GDP growth to about 2.9%, he predicted.

“We’re looking at an 18-month duration (for a downturn), and we’re already in the 13th month,” Strauss told the HD Dialog audience.

Despite the depth and length of the current recession, Strauss said he sees a number of positives. Dropping oil prices have greatly decreased inflation pressures, and core inflation, which removes food and energy components from the calculation, is expected to remain below 2% for some time.

“Productivity growth remains solid,” Strauss said. “Manufacturers reacted quickly [to the downturn] and production numbers dropped, which means inventories are also in good shape. We’ve probably already seen the worst in industrial production declines.”

“It’s tough to be optimistic when the industry you serve appears to be collapsing around you, but … I remain positive about our future,” ArvinMeritor chairman, president & CEO Chip McClure told the group of trucking suppliers. “The one thing the trucking industry has always had to deal with is cycles, and we’ve proven over the years that we’re pretty good at it.”

Calling current economic conditions “an opportunity to restructure, take costs out, improve our operations and productivity,” McClure outlined the component manufacturer’s strategies for cutting costs and diversification in global markets.

Looking at the North American commercial vehicle market, McClure said: “I’m also upbeat … I believe some markets could potentially rebound quicker than the general economy. The commercial vehicle market in North America has been down 30 to 50% since March 2007, and owners have to renew their fleets sometime. But, of course, this won’t happen until consumer confidence and freight tonnage improves.”

Offering a similar message of encouragement for the assembled truck parts manufacturers, Dennis Slagle, president & CEO of Mack Trucks Inc., said “As tough as today’s times are, it is a temporary solution. Market conditions will improve.”

And when they do, Slagle predicted, longer term industry concerns will still be there. “The need to realize economies of scale, to be vertically integrated, and to respond to society’s growing concern for the environment are not going away,” he said.

About the Author

Jim Mele

Nationally recognized journalist, author and editor, Jim Mele joined Fleet Owner in 1986 with over a dozen years’ experience covering transportation as a newspaper reporter and magazine staff writer. Fleet Owner Magazine has won over 45 national editorial awards since his appointment as editor-in-chief in 1999.

Sponsored Recommendations

Stop Sweating Temperature Excursions

Advanced chemical indicators give you the peace of mind that comes from reliable insights into your supply chains. Compromised shipments can be identified the moment they arrive...

How Electric Vehicles Help You Prolong the Life of Your Fleet

Before adopting electric vehicles for commercial/government fleets, prioritize cost inquiries. Maintenance is essential; understand the upkeep of EV fleets. Here’s what you need...

How to Choose the Right Route Planning Solution

This free buyer's guide will help equip you with the knowledge and insights needed to analyze route planning software and vendors in the market and, ultimately, make an informed...

How to Put Your Trucking Data to Work

How fleets can overcome data overload to optimize operations and get ahead.

Voice your opinion!

To join the conversation, and become an exclusive member of FleetOwner, create an account today!