AUSTIN, Texas — Truck orders have experienced a steep drop over the past seven months but vocational orders are strengthening relative to on-highway. And that’s good news for Mack Trucks.
Dennis Slagle, group executive vice-president and president, Mack Trucks, said Mack enjoyed a strong first quarter. However, he also noted the entire industry is struggling to reduce inventory levels and truck production is being reduced.
“We’re talking about the hangover effect of inventory in North America. The over-exuberance, you might say, at the end of 2014 produced a lot of orders into the system for all the OEMs and then around September of last year we started getting a lot of inventory built up,” Slagle said today during a business update in Austin, Texas. “Things turned pretty quickly there. You could say since September all the OEMs have been into a correction mode, trying to drain excess inventory out. I’d say we’re making progress but we still have a ways to go. There are still too many trucks out there and production levels from all the OEMs have been adjusted.”
Still, Slagle said the US economy is strong and growth of 2-2.5% will support a healthy truck market.
Mack’s US retail sales were up 10% in the first quarter. Slagle expects overall North American Class 8 retail sales to total about 250,000 units this year. Mack is seeing an increase in demand for its vehicles as vocational truck demand grows relative to on-highway.
“Most of the pain is in the on-highway – and particularly the long-haul truckload – side, where people are almost stopping ordering trucks to get their fleets right-sized,” Slagle explained.
Last year through February, long-haul truck orders represented 49% of total orders. This year through the same time period that has decreased to 46.9%, while construction truck orders have grown from 17.5% of all orders in the first two months of 2015 to 20.5% of all orders during the same period this year.
Mack is also set to benefit from a corporate restructuring at Volvo Group, which gives Slagle a seat on the Board of what is now a more brand-focused organization.
Mack is implementing a new order management and customer relationship management platform across its dealer networks, which will help them better manage inventories and predict delivery times.
“This will help everything, including predictability of deliveries, the amount of information available to dealers and customers and lead time accuracy,” Slagle said.
Mack has recently pumped US$70 million into its Lehigh Valley truck plant and another $38 million into its Hagerstown powertrain plant. It is also rolling out its Certified Uptime Centers program across its dealer network. The dealers that have become certified by implementing processes to improve uptime have seen a 17% improvement in throughput, Mack officials said.
James Menzies is editor of Truck News and Truck West magazines. He has been covering the Canadian trucking industry for more than 15 years and holds a CDL. Reach him at email@example.com or follow him on Twitter at @JamesMenzies. All posts by James Menzies