TORONTO, Ont. — Teamwork between manufacturers, vendors and fleets could be the deciding factor that will pull both through possible rougher economic times.
John Rice, executive vice-president of Michelin North America, elaborated on this theme during his speech to delegates at the 38th Annual Canadian Fleet Maintenance Seminar (CFMS) in Toronto. He speech was timely as theme of this year’s CFMS, which ran from Apr. 30 to May 2, was built around the topic, “Manufacturers and Fleets: Teamwork and Motion”.
Rice began his presentation with an overview of the history of tire giant Michelin, and showed an ad from the company’s early days that included the expression, “nunc est bibendum.” Roughly translated this means, “now is the time to drink”.
Today, said Rice, that phrase could very well equate to ‘now is the time for partnerships and teamwork,’ especially with the threat of an economic slowdown hanging over the country.
“The year 2001 will be tough compared to 1999 and 2000, but compared to the rest of the world Canada won’t be so badly off. Canada is expected to have a softer landing and may even be able to experience a better recovery,” he says. Rice explains that the U.S. will have experienced the most significant fall, but it’s more a case of the higher they climb, the harder they fall, reflecting that country’s already overheated economy finally cooling off to more ‘normal’ levels.
Consumer confidence today, he adds, only appears lower in relation to history, and is still at a healthy level, and the Canadian dollar’s record low of US$0.64 should actually be positive for exports.
But on the transportation side, there will be growth, he insists, but there is some question as to whether it will be positive. Especially considering that for each one cent rise in diesel costs, a fleet’s profitability goes down by one half cent, he says echoing the concerns of the Ontario Trucking Association.
“But the trucking industry has never been profitable compared to some other industries. Truck OEM’s now are seeing orders down by 75 per cent and cancellations have tripled. Only the fleets that are certain are ordering trucks now,” says Rice. The OE tire market also went down some 20 per cent in one year, said Rice, largely because of soaring raw materials prices.
“The good news is that tires are built to be more and more specific to the needs of fleets than ever before, and proper tire selection is the key to lower operational costs for fleets. So to avoid becoming a casualty, fleets should develop teamwork and partnerships with your key suppliers,” says Rice.
The partnerships that do develop, he said, must be of mutual benefit with the most important criteria being integrity and natural fit. Michelin, adds Rice, has developed the “PSI” solution-products, services and value-added information, as part of its manufacturer-fleet partnership initiative. Fleets should be demanding high levels of quality and value-added services from their manufacturers and vendors, but shouldn’t look necessarily at the cheapest price on the bottom line, said Rice.
“Can you depend on the company’s products and services? The vendor must also understand your business. The lowest initial price products are not the answer. The key is the lowest overall cycle and system costs. It’s easier to go it alone otherwise,” he says. “The onus is also on the vendor.”
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