ST PAUL, Minn. – The demand for commercial trucks remains strong, buoyed by factors including a strong construction sector, and Mack Trucks now forecasts a North American market for 325,000 Class 8 units this year.
“July was strong. Our retail [sales] were very good for NAFTA, I think about 30,000 trucks,” said Jonathan Randall, senior vice-president North American sales and marketing, referring sales figures that recovered after a slower June.
While order intakes have dropped, that is to be expected given the industry’s existing backlog, he said. “You can’t fill an already-full cup.”
Mack Trucks has a few openings on its assembly line for late 2019, but most of the orders taken today involve trucks to be manufactured in 2020.
“Order intake will be good — but it’s not going to be what we’ve seen a year ago at this time,” Randall stressed. “We still believe, historically, it’s going to be a good market.”
The market challenges
Robust demand presents challenges of its own, and that was especially apparent in 2018 as OEMs scrambled to address an unexpected surge in truck orders.
“We did not forecast a 300,000 market it turned into,” Randall said.
Component suppliers struggled to keep up as a result. And while issues in the supply chain have largely been resolved, a tight labor market continues to be a challenge, he said, responding to a question from Today’s Trucking. This year Mack Trucks has added more than 500 employees at its Lehigh Valley Operations (LVO), where two shifts are running to produce conventional trucks, and one shift is devoted to producing cabovers.
Price pressures also continue despite the removal of metal tariffs on steel and aluminum.
“We still see inflationary pressure as the results of not only tariffs, but threats of tariffs,” Randall said.
The nature of the demand for trucks, meanwhile, is shifting. Longhaul trucks account for about 49% of registrations this year, but Mack expects that share to drop to 44% in 2020. Straight trucks, while currently flat in terms of equipment counts, are expected to account for a bigger share of business next year.
That bodes well for Mack, which has a strong presence in the construction segment. Housing starts, traditionally one of the “canaries in the coal mine” when it comes to economic indicators, still continues to be robust south of the border and are up 6.2% year over year, Randall said. Construction spending is down just 2.1% year over year.
Public construction spending, meanwhile, is up 6.12% year over year.
For its part, the OEM is actively lobbying the U.S. government to invest in ailing infrastructure. The American Road and Transportation Builders Association has identified 47,000 bridges in need of repair.
“We support user fees, and we support raising as part of that fuel taxes in targeted ways,” Randall said. However, Mack doesn’t support the 12% Federal Excise Tax or the tolling of existing highways to collect the funds.
Concrete business opportunities
Randall made the comments during a visit to the headquarters of Schwing America, the largest concrete pump manufacturing facility in North America. Much of the equipment that it produces is mounted on Mack trucks including Granite and TerraPro models.
The business – a subsidiary of the Germany-headquartered Schwing Group — makes concrete pumps, truck mixers, and truck-mounted loop conveyors, as well as batch plants, reclaimers, and parts. It also has a presence in China’s Xuzhou Construction Machinery Group (XCMG). And it has seven manufacturing facilities globally.
One unit on site, incorporating a 61-meter boom, is destined for Montreal. The eight-axle truck weighs in at 113,000-lb., making it the largest configuration of its kind allowed in Quebec.
That’s not the company’s only Canadian work. It has been involved in projects as diverse as producing an articulating boom for a fracking operation in Western Canada, and construction of the McGill University Health Centre.
Other high-profile Schwing projects included New York City’s Freedom Tower, which used a pair of high-pressure stationary pumps to push concrete over 1,600 vertical feet, as well as U.S. Bank Stadium and San Francisco’s Bay Bridge.
“Our business is really chained to housing. Not tied. Chained,” said Tom O’Malley, Schwing’s senior vice-president of sales and marketing.
Construction-related business has admittedly been slower in Canada than the U.S. One early indicator of that came in a slowdown in the market for towable pumps, which tend to be linked to smaller construction companies, O’Malley said. But Schwing also faces extra competition from competitors based in Korea, who have entered the Canadian market through Vancouver.
The exchange rate presents a challenge of its own. A 58-meter concrete pump can cost about US $1 million, he said.
But the pumping equipment in general is proving its worth as a tool to boost productivity on job sites. A load of ready-mix concrete has a shelf life of just 90 minutes, O’Malley noted. With equipment like this, teams are able to turn their trucks around more quickly.
While 45% of concrete is placed through tailgating, pumping now accounts for 34% of the work, with 9% moved by wheelbarrows, and 2% by cranes and buckets, Concrete Pumping Holdings reports.
It’s a significant shift. Just 20% of the U.S. concrete was pumped as recently as 2000.
The concrete pumping business is now worth about $1.75 billion in the U.S., and that’s expected to grow to $2.3 billion by 2021.
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