Truck Builds May Not Be as High as Expected, Says Accuride CEO
May 1, 2005
Truck builds in 2005 and 2006 will be lower than many projections, according to Terry Keating, CEO of Accuride Corporation, and a keynote speaker at the Heavy Duty Distributor Council's 21st annual bu...
Truck builds in 2005 and 2006 will be lower than many projections, according to Terry Keating, CEO of Accuride Corporation, and a keynote speaker at the Heavy Duty Distributor Council’s 21st annual business conference held in Markham, Ont. this June.
For 2005, Keating forecasted 307,000 builds vs. the 326,000 predicted by other industry analysts. In 2006, he sees numbers coming in more around 315,000 versus the 346,000 predicted. Keating noted that the average fleet age in the U.S. has reached 5.9 years but said that despite talk of a pre-buy ahead of 2007 emissions regulations (and new engines), he did not expect a big change to this figure in 2005.
What OEMs are scheduling in terms of build levels and what they will actually produce will be lower, he explained, due to some customers delay-buying versus pre-buying. There is also increased life and reliability in many heavy-duty parts and components, which naturally affects demand for parts.
Heavy-duty truck production in 2004 was up 49% from 2003, and 2005 builds are expected to be up an additional 17% beyond 2004 numbers.
Although he did expect some drop-off in 2007, he added that the North American truck industry is at a 98% capacity utilization rate for equipment, which spells out good news for truck and parts production in general.
Keating said it’s important to know the market well to prepare for the eventual downturns inherent in such a cyclical market as trucking.
“It takes a tough management style to stay with the cyclicality,” he said. He added that he believes there will be another good three to five years before a serious downturn in the market.
Trailer production, meanwhile, saw 2004 builds 29% greater than 2003, while 2005 builds are expected to be up 15% above 2004.
On the subject of commodity increases, such as aluminum, scrap, and hot rolled coil, (which saw price increases of 75% in 2004), Keating said that China, for the past several years an increasing consumer of these, is starting to become a steel exporter. This may lead to a cooling off in demand for the commodity.
The trucking industry is still facing tremendous cost pressures because of rising diesel fuel costs, but Keating said he believes that the industry will handle the current fuel costs better than the last fuel crisis in 2001.
“Now (the trucking industry) is passing through some of the costs so they are better able to weather fuel price increases.”
Keating also spoke about Accuride’s recent acquisition of truck component manufacturer Transportation Technologies Industries, Inc., which created a USD $ 1.3 billion dollar company and afforded a 25% growth in the wheels business.
“We’re a much more impactful supplier on the industry with greater market presence,” he said.