Trucking Growth Will Continue, Analyst Says

March 1, 2001
Despite the overall economic downturn in recent months, Deutsche Banc Alex Brown (DBAB) analyst John Barnes is predicting that the trucking industry will

Despite the overall economic downturn in recent months, Deutsche Banc Alex Brown (DBAB) analyst John Barnes is predicting that the trucking industry will continue to grow although not as fast.

Barnes, who officially launched DBAB coverage of the truckload and less-than-truckload sectors today, believes several key trends are fueling growth in the trucking industry, which is projected to grow 3% per year from 2000 to 2008. These include the growth of outsourcing and the increasing importance of time-specific deliveries, he said.

As shippers realize that there are more appropriate uses of their free cash flow, we believe outsourcing of the trucking function will accelerate and may provide upside to the projected growth rate, said Barnes.

For the truckload carriers, Barnes predicts the failures of smaller trucking companies will create a stronger pricing environment and more attractive acquisition opportunities for the largest carriers.

On the other hand, Barnes believes the LTL carriers are now in a position to outperform their truckload counterparts due to union agreements that are favorable in a down economy and the even stronger pricing environment created from several years of capacity rationalization.

Despite the sizeable growth prospects facing TL and LTL carriers, Barnes remains cautious, stemming from concerns he has about the impact of the slowing United States economy and rising operating costs.

Hyundai Precision America Gets New Name

Effective March 1, 2001, Hyundai Precision America Inc has changed the company name to Hyundai Translead. This change is being made to align the name with the global freight transportation marketplace served by the company.

Hyundai Translead produces ISO and domestic containers and chassis, including both dry freight and refrigerated containers manufactured to ISO 9002 certification standards. The firm also manufactures both dry freight and refrigerated semi-trailers for United States, Canadian, and Mexican motor carriers.

Based in the Mission Valley of San Diego CA, Hyundai Translead is a wholly owned subsidiary of Hyundai Motor Co of Korea and a sister company of Hyundai Motor America.

Kemlite Acquires Assets of FRP Producer

Kemlite Co, a subsidiary of Crane Co, has acquired the assets of Lampro (Laminated Profiles Ltd), an Alton, England-based manufacturer of fiberglass-reinforced panels.

Headquartered in Joliet IL, Kemlite has formed a new company called Kemlite Ltd, registered in the United Kingdom. David Pickett, formerly Lampro's director of sales and marketing, has been appointed managing director of Kemlite Ltd and will report directly to Rich Schueller, Kemlite Co president. Steve Greene, Kemlite's current European sales manager, has been named European sales manager of Kemlite Ltd.

International, Ford to Form Joint Venture

Ford Motor Co and Navistar International Corp are planning to form a joint venture to build commercial trucks, as well as to boost use of Navistar's diesel engines within Ford Motor's truck products. The companies said the yet-to-be named company will produce Class 6 and 7 medium-duty trucks that will be marketed separately under the Ford brand and Navistar's International brand. The joint venture will produce a common chassis for Class 6 and 7 commercial trucks for sale in North America.

John Horne, Navistar president, chairman, and chief executive officer, said the chassis will be the same one used in International's new medium-duty truck. Navistar will provide product design and engineering, vehicle assembly operations and expanded diesel engine programs. The trucks will be built in Navistar's facility in Escobedo, Mexico.

The joint venture also will include a joint North American commercial truck service parts program that will provide enhanced efficiency and streamlined customer service.

Ford and Navistar also said it will be a 50-50 joint venture. Both companies will have equal representation on the venture's board of directors, and neither company will have an equity stake in the other's parent company.

Technician Supply Lagging Behind Demand

Demand for qualified truck technicians continues to outstrip supply, and the problem is not going away anytime soon. This is according to Jim Uffer, president of New Jersey-based truck dealership Truck Tech Inc and a board member of the National Institute for Automotive Service Excellence.

The Bureau of Labor Statistics tells us that, as of 1998, there were 254,820 people employed as truck, bus, and diesel engine technicians, said Uffer. The bureau also projects that by the year 2008, the number of jobs will increase to 279,790.

Uffer said what he finds alarming is that the protected job increase is over and above the attrition that the industry is experiencing. The average age of the technician workforce has also been rising, he said. This means that fewer people are entering our industry than are leaving.

The Technology and Maintenance Council (TMC) of the American Trucking Associations believes the technician shortage is even worse than the bureau's data indicates. According to its research, TMC believes the automotive and trucking industries combined will need 600,000 new maintenance personnel in the next four years.

FleetPride Salutes Haldex as Vendor of Year

At FleetPride's national sales meeting and trade show in Dallas TX recently, Haldex Brake Systems was recognized as vendor of the year. Accepting this award for Haldex were Jeff Barr, vice-president of sales; Sherilyn Henshaw, director of marketing; Jeff McKeown, Canadian national sales manager; and Mike Gould, national account manager.

More than 250 FleetPride managers and most of its vendors attended the meeting.

Penske Completes Offer to Acquire Rollins

Reading PA-based Penske Truck Leasing Co has successfully completed its tender offer for the outstanding shares of common stock of Delaware-based Rollins Truck Leasing Corp.

Rollins shareholders validly tendered about 54,982,000 shares or 94.8% of outstanding shares of Rollins, which have been accepted for payment at a price of $13 per share in cash. In addition, Penske received notices of guaranteed delivery with respect to some 915,000 shares about 1.6% of outstanding shares that have not yet been validly tendered.

Under terms of the tender offer, shares of common stock listed in a notice of guaranteed delivery must be validly tendered within three trading days after delivery of the notice in order for Penske to accept the shares for payment, the company said. Penske intends to complete the transaction by acquiring the remaining outstanding shares of common stock of Rollins through a merger.

Penske will merge its fleet of 144,000 heavy-, medium-, and light-duty trucks and network of 750 locations worldwide with Rollins' 53,000 vehicle fleet and 270 US and Canadian locations.

Dana Spicer Division to Supply International

Dana Corp's Spicer Driveshaft and Heavy Axle and Brake Group have been selected by International Truck and Engine Corp to supply driveshafts, steering shafts, steer axles, and drive axles as standard equipment on the new International 4000 Series medium-duty truck.

International's 4000 Series will incorporate Spicer Life 70, 100, and 140 Series assemblies. The vehicles also will include Spicer I-Series steer axles, 15,000- to 26,000-pound single-drive axles, and 40,000-lb tandem-drive axles.

Wabash National Corporation Sales Soften

Wabash National Corp announced sales of $274 million in fourth-quarter 2000, down from $358 million for the same period in 1999. Net income for the quarter was $83,000 before restructuring and other nonrecurring charges, compared with $11.8 million for the same period in 1999.

For all of 2000, Wabash had net sales of $1.3 billion, compared with $1.5 billion for 1999. Net income for 2000 totaled $21.7 million, compared with $38.8 million in 1999.

Results for the fourth quarter were approximately break-even before restructuring charges and other nonrecurring charges that we previously announced, said Jerry Ehrlich, chairman, president, and chief executive officer. The quarter's results were impacted by lower production rates and the costs associated with the startup of our new manufacturing processes in our Tennessee plant. The balance of our manufacturing operations maintained their margin levels despite the lower production rate.

Crawford Machine Produces Air Brake Parts

Crawford Machine Inc (CMI) of Galion OH has begun manufacturing air brake components for the truck, trailer, and aftermarket transportation industry.

Products offered include coiled air assemblies for tractor-trailer connection, air brake hose assemblies, J844 nylon brake tubing, and various pipe and air brake fittings.

General offices will be in Galion adjacent to the company's 35,000-square-foot machining and assembly facility.

Used Truck Association, Industry Players Huddle to Find Solutions to Several Issues

The Used Truck Association (UTA) held a meeting in Indianapolis IN with key used-truck industry officials recently to find additional solutions to the current used-truck problem that is plaguing our industry, according to UTA President Steve Bear Nadolson. Among the issues identified:

  • Credit worthiness of used-truck buyers is often too marginal.

  • New-truck pricing is very competitive, and heavy discounts are driving down late-model used-truck values.

  • New-truck levels of supply (1999, 2000, 2001) are still high, raising the question: Do OEMs need to build 2002 models?

  • Used-truck financing has tightened up as a result of the huge losses and repossessions held by financial institutions.

  • Wholesale and retail truck prices are being driven by supply economics, as well as the impact of auctions and used-truck worth as determined by used-equipment valuation guides.

  • The market is being driven by all these influences, plus high fuel and insurance costs, a cooling economy, and high used-truck interest rates.

To address these issues, the UTA meeting participants agreed upon these actions:

  • Since used-truck valuation guides reflect the market, dealers can help enhance the value of used trucks by accurately reporting their sales of used equipment.

  • Finance representatives said they would be more conscientious in training underwriters to be aware that reconditioning adds value to used trucks and thus increased loan values may be warranted. The UTA leadership volunteered to compile warranty data into a manual form for use by lenders.

  • Because poor business skills have contributed to a lot of used-truck loan failures, lending criteria needs to be changed to include business training. The financial representatives said they would consider this action.

  • Finance representatives want dealers to provide more accurate information. To this end, the representatives, working in conjunction with the UTA, will compose a list of the desired information and distribute it to dealers.

  • Create a think tank and a standing advisory committee to the UTA board and general membership.

  • Follow-up meetings should be expanded to include delegates from American Truck Dealers, National Trailer Dealers Association, National Automobile Dealers Association, American Trucking Associations, all truck manufacturers, all financial organizations, and dealers from every franchise.

Volvo Trucks Cutting Jobs at Virginia Plant

Changes in production strategy at Volvo Trucks North America Inc will result in the elimination of about 400 jobs at its New River Valley VA plant, said Karl-Erling Trogen, interim president and chief executive officer.

Both hourly and salaried employees will be affected, and outplacement services will assist affected employees, who were scheduled to be laid off Feb 26, 2001. Volvo employs about 2,000 workers at the Virginia plant.

Trogen said Volvo is refocusing its production to manufacture more daycabs because of a glut of used sleeper cabs on the market. Daycabs require less man-hours to produce than sleepers, and the adoption of a common heavy-duty truck platform for the VN and VHD model series also gives Volvo flexibility in production.

Trailmobile Canada Ltd Sustains Quarterly Loss

Trailmobile Canada Ltd has announced its fiscal results for the fiscal first quarter ended Dec 29, 2000. The company realized a loss of $968,031 for the quarter. For the same period in fiscal 2000, Trailmobile Canada reported a profit of $270,657.

Continued weakness in demand for trailers has resulted in lower revenues of $21.3 million for the first quarter of fiscal 2001. This represents a decrease of 35% when compared with the same quarter in fiscal 2000, when the corporation reported revenues of $32.8 million. Current backlog levels have fallen about 75% when compared with levels for the same period in 2000. The current backlog represents about one month of production.

Gross profits of $563,069 in the first quarter of fiscal 2001 represented 2.6% of revenues, compared with $1.8 million and 5.5%, respectively, for the first quarter of fiscal 2000.

Aero Industries Acquires OCA

Aero Industries Inc, manufacturer of tarping systems and accessories for the truck and transportation industries, has acquired OCA, a Streetsboro OH-based installer and servicer of tarps, tarping systems, and other accessories.

The acquisition was complete in spring 2000. Terms of the agreement have not been disclosed. OCA's employees have all been retained as Aero employees.

An installer of tarps and tarping systems, OCA is also a specialist in dump bed liners. Aero products, including the company's Conestoga 2000 tarping system, already are being installed at OCA.

Based in Indianapolis IN, Aero also has locations in Streetsboro, Hamburg PA, Omaha NE, and Burlington, Ontario, Canada.

Stellar Purchases Gamotech

Stellar Industries Inc has completed purchase of assets and technology of the Gamotech Co. Gamotech, based in Roberval, Quebec, Canada, produced the CanadArc underhood welding system.

Manufacturing and sales of the welding system will continue from the Stellar headquarters in Garner IA and will be done so under the name Stellarc smart welding system.

The Stellarc system, a 225-amp welder with synchronized speed controls, can remotely change heat settings during a weld. The Stellarc also can serve as a battery charger and a booster, providing up to 48 volts of power.

Money Sought for Wheel-End Research

A Society of Automotive Engineers subcommittee is seeking money to research ways to reduce the incidence of spindle nut failure.

The United States has no standards or recommendations for spindle-nut systems, nor do we have a database of wheel failures, says Leslie Weinstein, manager of True Lock LLC and chairman of the SAE Subcommittee for Data, Research and Funding. He points out that Canada recently passed legislation that makes recording of wheel failures mandatory and imposes fines when wheel failures occur.

The purpose of the project is to develop a standardized test and a standardized testing mechanism to ensure safety of spindle-nut system designs. It will establish and maintain a standardized test and a lead testing facility to evaluate spindle-nut systems and to ensure that new and existing designs meet a minimum standard for safety.

The budget for the project is estimated at $225,000.

Participants in the project include Okabe, Dana, Holland Axle Products, Stemco, Rather Engineering, Metform, ArvinMeritor, Hi-Shear, Timken, and True Lock.

For additional information, phone Leslie Weinstein at 208-375-4846 or e-mail at [email protected].

Dina Defaults on Interest Payment

The Mexican Stock Exchange temporarily suspended trading in shares of Consorcio G Grupo Dina SA after the bus and truck maker said it would miss a $6.5-million interest payment. The payment originally was due Jan 16, 2001.

Shares of the Mexican truck maker will be suspended for no more than 60 days, the Mexican Stock Exchange said.

Dina said it would default on the interest payment of the $164-million bond. Gamaliel Garcia, chief executive officer of Dina, said the company had scheduled a meeting with bondholders to start debt restructuring talks.

Dina is currently in litigation with Western Star Trucks, suing for breach of contract, in the Paris-based International Arbitration Court of the International Chamber of Commerce.

Freightliner Corp, upon buying Western Star Trucks, canceled a contract for delivery of 9,000 Class 7 trucks that Dina has with Western Star. Dina had already delivered 600 trucks under the contract.

Kenworth Names Dealer Council Members

Kenworth Truck Co has selected its Kenworth Dealer Council members for 2001. The council consists of executives from dealerships in the United States and Canada. Its goal is to promote communication between Kenworth and its dealer network.

New council members are:

  • Chairman Cooper Sykes, Cooper Kenworth, Durham NC.

  • Ken Hoffman, Midwest Kenworth, Kansas City MO.

  • Gary King, Edmonton Kenworth, Edmonton, Alberta, Canada.

  • Erick Miner, Central Illinois Trucks, Normal IL.

  • Jim Hartman, Truck Enterprises, Harrisonburg VA.

  • Kyle Treadway, Kenworth Sales Co, Salt Lake City UT.

  • Robert Sorrentino, Wisconsin Kenworth, Madison WI, who serves as the Kenworth ATD line representative.

NTEA Market Data Resource Helps Identify Vehicle Aftermarket Sales Opportunities

The National Truck Equipment Association (NTEA) has published a new market data resource geared to the commercial and vocational vehicle aftermarket industry. Using federal government vehicle registration survey data, the Work and Vocational Truck Data Source: Truck Registrations by State, Class and Body Type publication provides the most recent count of commercial vehicles on the road in each state, by vehicle body type and gross vehicle weight (class). The publication comprises data from the 2000 United States Census Bureau's Vehicle Inventory and Use Survey (VIUS) that counts all private and commercial trucks registered in the United States in 1997.

For manufacturers writing their marketing plans, this data will be useful in helping them establish the installed base for their product. For distributors, individual state data will help them establish relative importance of each body type in their local market.

Work and Vocational Truck Data Source breaks down vehicle registration data into these body types: panel, multistop (step van), platform, livestock, pole or logging, service, yard tractor, oilfield, grain body, garbage, insulated nonrefrigerated van, insulated refrigerated van, drop-frame van, open-top van, dump, tank (liquids), tank (dry bulk), concrete mixer, basic enclosed van, beverage, utility, wrecker, and other.

This publication is available for $145 (NTEA members) and $199 (nonmembers) and includes the original VIUS spreadsheet on computer diskette. Individual state reports can be purchased for $10 per state (NTEA members) and $20 per state (nonmembers). To order, phone 800-441-6832. to Help Market International's Used Trucks

International Truck and Engine Corp's Used Truck Division, has signed an agreement with an online truck, trailer, and equipment marketplace offering 24/7 auctions and marketing to develop and maintain an e-commerce site to help market a portion of International's used trucks online.

As a part of the agreement, has developed an online storefront at to market a group of 1995 GMC TopKick vans to retail and wholesale markets. In addition, has listed the equipment in its online auctions and assisted in marketing efforts with existing advertising and marketing channels.

Buyers can view the TopKick vans from all angles with a 360-degree Spin Cam showing both interior and exterior views. Specifications can be viewed on both dock-height and low-pro vans. Cat and System One warranty purchase options, coupon incentives, and financing incentive packages are available.

For more details, visit the web site; phone Jim Clarke at 312-836-3260 or e-mail [email protected]; or phone Leslie White at 800-241-6195 or e-mail [email protected].

Camless Engine Technology Tested on Nationwide Proving Ground

International Truck and Engine Corp has completed the first cross-continental test of its camless engine technology in an International 530E diesel engine. This journey allowed engineers to test the technology's reliability, durability, and performance characteristics across terrain and temperatures that cannot be simulated in a lab. The 7,600-mile trip added five times more miles on the camless engine than all previous tests combined.

The trek began with a test run to the top of Pike's Peak. From there, engineers from International and partner Sturman Industries drove the International 8100 truck with 32,000-lb International Eagle Tour 2000 trailer in tow west to San Francisco and down the Pacific Coast Highway to Los Angeles before going east to cross the nation.

Expected benefits of this technology include a 40% increase in torque at clutch engagement speeds for smoother acceleration and faster starts, and increased parts reliability and less noise because the rate of closing is controlled with hydraulic actuation and the valves compress gently.

Thermo King to Supply Units to US Air Force

Thermo King Corp has announced a five-year purchase agreement with AAR Cadillac Manufacturing, a division of AAR Mfg Group Inc, in support of AAR's contract to provide transport refrigeration systems to the United States Air Force. AAR Cadillac, a military container and shelter supplier, has agreed to a multiyear program with Thermo King to provide V-280 transport refrigeration units for the next five years for the Air Force.

The Air Force order is for a modified V-280 one-piece truck refrigeration unit. Thermo King V-280 units will be mounted on internal airlift/helicopter slingable containers manufactured by AAR Cadillac. The refrigerated containers will be used to transport temperature-sensitive items including food, plasma, and medical supplies.

Thermo King is completing the prototype of the modified unit. Testing was to have begun in January 2001 at AAR Cadillac. The Air Force expects to begin to take delivery of the first 150 units by third-quarter 2001.

Grumman Olson ISO-Certified

Grumman Olson, manufacturer of custom-engineered transportation products, has received ISO 9001 certification. In addition to this certification received by the Sturgis MI manufacturing facility, Grumman Olson's three other manufacturing facilities in Pennsylvania, Georgia, and California are in the process of implementing the standards and expect to receive certification soon.

Kenworth Selects Medium-Duty Dealer of Year

Kenworth of Indianapolis was named Medium-Duty Dealer of the Year for the United States and Canada at Kenworth Truck Co's recent dealer meeting in Tucson AZ. This award recognizes the top-performing Kenworth dealership that has excelled well beyond industry expectations in many areas, including customer service and sales.

Jim Roemer, vice-president of Kenworth of Indianapolis, accepted the award along with fellow company vice-president John Nichols.

Kenworth Northwest Chosen Dealer of Year

Kenworth Northwest in Seattle/Tacoma WA was named Dealer of the Year for the United States and Canada during the company's annual dealer meeting in Tucson AZ.

Marshall Cymbaluk, Kenworth Northwest president and general manager, accepted the award. His organization also captured Kenworth's West Region award at last year's dealer meeting. Kenworth Northwest has locations in SeaTac, Aberdeen, Marysville, Bellingham, and Yakima. It also operates the Kenworth Alaska stores in Anchorage and Fairbanks.

Also announced at the meeting were Regional Dealers of the Year for 2000. Winners were:

  • Canada: Edmonton Kenworth; Edmonton, Alberta.
  • Central: French-Ellison Truck Centers, Pharr TX.
  • Northeast: Kenworth Truck of Upstate New York, Buffalo NY.
  • Southeast: Truck Enterprises, Harrisonburg VA.

FedEx Will Help Deliver Green Trucks

The Alliance for Environmental Innovation is working with Federal Express to develop a new generation of pick-up and delivery trucks by 2005. The project's goal is to have a truck that will work as well as FedEx's current delivery trucks and cost about the same over the vehicle's lifetime.

The Future Vehicle Project will invite proposals in early 2001 for a green (environmentally friendly) truck that would reduce emissions by 90% and increase fuel efficiency by 50%.

The Alliance-FedEx project will be conducted in four phases. The first phase is development of a performance specification for a new truck, followed by a second phase involving development and testing of one or more prototypes. Several pre-production trucks will be produced and tested in the third phase. Finally, FedEx aims to begin purchasing full-production-level vehicles that meet environmental and business targets.

Manac Confirms Purpose of Fabrex Plant

When Manac acquired the Fabrex brand name and a plant with about 100,000 square feet in Trois-Rivires Quebec, Canada recently, Manac widened its line of products and ensured the services of Fabrex to manufacture Manac's new aluminum platform trailer.

Trois-Rivires-based Fabrex has manufactured aluminum dump trailers and specialized waste disposal units for 20 years. Manac expects to increase production and marketing of current Fabrex products and intensify research and development.

Fabrex will benefit from production of the new Manac aluminum platform via assembly technology. Production of this new platform should reach 500 units during the year, and the number of employees is expected gradually to reach 75.

To mark this new beginning, Fabrex has a new corporate signature that includes its old logo in that of Manac. In addition, Fabrex semitrailers will show the flying moose, Manac's mascot.

Phillips Is QS9000-Certified

After a process of more than 5 years, Phillips Industries has become fully QS9000-certified. The company now has more than 2,000 inspection instructions receiving and in-process, and has process and assembly instructions for each section of the manufacturing areas.

After initial certification was received, the firm was rechecked every six months via surveillance audits to assure continued compliance.

Energy Mfg Is ISO-Certified

Energy Manufacturing has received ISO 9001 certification, which applies to its cylinder and valve design, production, and distribution operations.

This certification, issued by Smithers Quality Assessments Inc, was based on standards developed by the International Organization for Standardization (ISO).