Steel crazy after all these years

May 1, 2004
WHEN one of our readers asks us to write a story about a particular topic, it's unusual. When multiple readers ask us to write a story about a topic,

WHEN one of our readers asks us to write a story about a particular topic, it's unusual.

When multiple readers ask us to write a story about a topic, it's unprecedented.

In almost 30 years of writing for Trailer/Body Builders, we have had countless readers approach us about doing stories on their companies. The readers who do so generally recognize the value that the publicity provides them. These requests are always welcome, because our best interviews (and the stories that result from them) tend to come from people who have done something innovative and are proud to talk about it.

Much more unusual are the times readers have felt so strongly about something occurring in the industry that they have asked us to write about it. When that happens, the suggested topic invariably is one that dramatically impacts our readers.

Never before have we received multiple requests for a topical story. But that was before steel prices began going crazy.

We thought that we had addressed the topic in our February issue, shortly after prices began to escalate. Like many in the industry, we thought (or maybe merely hoped) it was a temporary spike that would begin to resolve itself by mid-year.

But everywhere we have gone so far this year, steel prices were at the forefront of everyone's thinking. Manufacturers of light-duty trailers were talking about it at the National Association of Trailer Manufacturers convention. Their counterparts were doing the same thing at the recent Truck Trailer Manufacturers Association convention. Complaints about steel prices also were common among truck body and truck equipment manufacturers at The Work Truck Show.

We have talked to a lot of people in most segments of our industry during the past few months and have found only two people that do not consider escalating steel prices a problem. One is a business consultant who was trying to minimize the impact of steel price hikes. His theory was that material expenses are a minor component of the overall cost of producing a body or trailer. A dump body manufacturer who heard the comment wasn't buying it — at any price.

“Our dump bodies are made of steel. Our hoists are steel,” he said. “There is not much that we put into our products that isn't steel. There's no way that rising steel prices are not going to have a major effect on our profits — especially when we have long-term contracts that we were awarded because we were the low bidder.”

The other person we found who was laid-back about steel prices is a trailer manufacturer. Demand for his products has increased sharply in recent months.

“We see this as a blessing in disguise,” he told us. “When demand for trailers first began to increase, our pipeline was so dry that it was difficult for us to ramp up. The price increases have reduced demand, but they haven't squelched it. I would hate to think how long our backlog would be without the increase in steel prices.”

ACT Research, the Columbus, Indiana, company that tracks the truck and trailer industry, reports that trailer customers are beginning to balk as manufacturers pass along the higher costs.

“There was a sticker-shock-driven pullback in orders in March as the industry raised prices to cover rising commodity costs,” ACT Research's Kenny Vieth told us in early May. “Slower orders in March followed a strong six-month order run from September to February. Early indications from April suggest the order pullback is likely to be short-lived as the need for trailers is outstripping pricing concerns.”

While everyone agrees the price increases were a problem, there seems to be little agreement on what to do about it or how long it will be before prices stabilize. We wish we had better news to deliver.

Sincere thanks to those of you who requested more on the subject of steel prices and for those who gave their perspectives on this story (see Page 24). Your input is appreciated, and it helps us at Trailer/Body Builders do a better job of serving you.

About the Author

Bruce Sauer | Editor

Bruce Sauer has been writing about the truck trailer, truck body and truck equipment industries since joining Trailer/Body Builders as an associate editor in 1974. During his career at Trailer/Body Builders, he has served as the magazine's managing editor and executive editor before being named editor of the magazine in 1999. He holds a Bachelor of Journalism degree from the University of Texas at Austin.