I met the sales manager for a manufacturer of cooling system components recently. His company is Canadian, and the product he sells is put under the hood by nearly every heavy-truck manufacturer in North America. “My job is great,” he told me. “These days I’m an order-taker. I walk in and my customers ask, ‘How many can you get to us by such-and-such a date?’ They’re ready to sign deals.”

The problem, he says, is his margin. “They’re prepared to pay more,” he says. “I just can’t tell them how much more. And then our conversation gets complicated.”

With truck sales chugging along and builders boosting production to meet the higher demand (see our lead In Gear story for a full report), the rising cost of steel, aluminum, and other raw commodities is an ominous cloud at a time when truck and trailer component manufacturers should be happily making hay.

The sales manager I talked to peddles a product that’s mainly aluminum, the price of which is 15-per-cent higher than it was in December. His company actively hedges, but that didn’t stop it from being hit with a 28-per-cent surcharge from its aluminum supplier. In other words, the supplier is determining the price of an order at shipment.

“We think we know what our raw materials costs are, we have a contract with the supplier, and then they pile on the surcharge,” he says. “Relatively speaking, we’re a small player. We could pretend we’re General Motors and not pay it, but what happens when there’s a short supply?

“We go to the bottom of the list and then we’re screwed.”

Some estimates show the cost of aluminum has risen 10 to 15 per cent since the start of the year. Copper and rubber are up 30 to 50 per cent, as is steel. The weak U.S. dollar, changes in steel tariffs, and more demand from China are reasons why prices are higher here. There’s not much on a truck–from the tires to the tip of the CB antenna–that’s unaffected. The pricing turbulence is expected to continue through the summer, especially in the steel market, so here’s hoping it won’t kill the buzz on a year when truck makers and their major suppliers believe class-8 production in North America will hit 230,000 to 245,000 units.

One option is to pass increases on to you. Last month, resurgent trailer maker Wabash National hiked prices 4.5 to 6 per cent, citing higher costs from suppliers of major raw materials including steel, aluminum, and wood.

“This is a challenging environment,” says the company’s president and CEO, Bill Greubel. “We’ve worked very, very hard recently to create a highly efficient manufacturing process–to take control of our production costs at every possible turn. With raw materials, there’s only so much you can do (to control costs) and you can only absorb increases for so long.

“Many of our customers have been in a similar situation themselves, dealing with suddenly higher fuel prices and higher insurance prices, or labour costs because of hours-of-service rules,” he says. “They’ve found ways to justify passing them on to customers. We have to do the same.”

s s s
When truckers get involved with a cause, they do it in a big way, and Special Olympics is no exception. On Saturday, Sept. 18, the World’s Largest Truck Convoy will take to the road in 27 states and Alberta raising money to support athletes. Local law enforcement officers proudly escort trucks snaking along a predetermined route to a destination like a raceway, fairgrounds, or truck stop. There, convoy members are greeted by Special Olympics athletes, families, friends, colleagues, and anyone else who wants to be involved in a great event and a deserving cause. Last year’s event made a powerful, positive, very public statement about truckers and their sense of camaraderie and compassion. This year will be no different.

To learn more about joining the convoy or becoming an event sponsor, contact Kirk Miles at 202/628-3630 or kmiles@specialolympics.org. Or visit www.specialolympics.org for local contact and registration information. S