DTNA overcoming supply chain challenges

AUSTIN, Texas – Daimler Trucks North America (DTNA) is projecting NAFTA Classes 6-8 deliveries to surpass 440,000 units this year, exceeding its initial ambitious projection of 420,000.

Year to date, deliveries have totaled 330,000 units, which DTNA chief executive officer Roger Nielsen said in and of itself would be a good year. DTNA itself has sold 128,000 units, but its market share has slipped slightly compared to last year. Its overall market share is now about 38%; it owns 39% of the Canadian Classes 6-8 market, and 32% of the U.S. Class 8 market.

Roger Nielsen

Supply chain challenges have been the only thing holding the company back from completing more deliveries, Nielsen said.

“We had a lot of lingering effects from the instability of the supply chain that has hounded us all year and continues to be a daily challenge for our supply chain management staff,” Nielsen said during a media roundtable at the American Trucking Associations’ Management Conference & Exhibition. “We have seen a stabilization over the past two to three months and our factories are once again running at stable rates.”

It also lost some production days before and after hurricanes rolled through the Carolinas.

Nielsen said DTNA has been diligent about ensuring its order board is filled with real – not speculative – orders. This should protect the company from mass cancellations in the event of a sudden downturn.

“There has been a lot of discussion about speculative orders populating the backlog,” Nielsen said. “You will not see that at DTNA. We were very diligent about weeding out speculative orders. If you send an order in that looks speculative, we will cancel it.”

He hopes other OEMs are being equally vigilant.

“I hope the industry is doing a good job,” he said. “I don’t think it’s good for the industry to take on speculative orders. It sends the wrong signals through everybody’s supply chain.”

Nielsen is expecting 2019 to be equally strong. Within DTNA, the goal is to become more customer-centric. The company recently hosted 30 top customers at its Portland, Ore., headquarters to expose them to its electric vehicles early in the design process. Nielsen dubs this process as “co-creation.”

“It’s a way to bring products and features to market quicker, by getting customers signed up earlier rather than jumping up and surprising them two to three years into development. Instead they’re with us for the whole journey,” Nielsen explained.

Another way DTNA is improving its customer service is by relaunching its one-stop warranty program, which simplifies the warranty claims process on components from third-party suppliers. In 2018 DTNA has seen the penetration of its own medium-duty engines grow to 33%, while the Detroit Assurance 4.0 suite of active safety systems is now being spec’d on 75% of Detroit-powered vehicles.

Daimler continues to grow its parts business, by rolling out more Alliance Truck Parts lines and incorporating retail stores into dealerships. New parts distribution centers are ensuring parts are delivered more quickly to dealers.

The truck maker also continues investing into automated driving research and development.

“We do believe Level 4 automation is going to be a positive business case in the future,” Nielsen said. “I don’t see a time in the future where you’ll be able to get rid of the driver in the truck. We definitely believe that by increasing levels of automation in the vehicle, we will improve the safety of the vehicle, and the safety of the driver.”

Asked what impact tariffs and the new trade agreement with Mexico and Canada will have on its business, Nielsen said Daimler is well positioned to comply. The agreement, if approved, will require truck makers to have regional value content of 70% in seven years. Because it produces its Detroit engines, axles and transmissions in Redford, Mich., Nielsen didn’t anticipate any difficulties in complying.

“It’s nothing that’s going to disrupt us,” he said of the new agreement.

Inbound tariffs, however, are proving to be more disruptive, with steel prices up as much as 50%.

“Inbound tariffs have been tough,” he said. “Steel and aluminum prices went up. They went up higher than the tariffs would lead to you believe they should…and have stayed at high levels.”

Asked about Western Star’s prospects, Nielsen glowed as he recalled being part of the management group that did the acquisition, before he moved to Kelowna, B.C., to assist with the integration.

“I have Western Star in my blood,” he said. He noted the 5700 will be getting more features to help it penetrate the on-highway market, while the 4700 and 4900 should benefit from increased infrastructure spending.

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James Menzies is editor of Today's Trucking. He has been covering the Canadian trucking industry for more than 20 years and holds a CDL. Reach him at james@newcom.ca or follow him on Twitter at @JamesMenzies.

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