The expiration of Alcoa’s contract with the United Steelworkers Union (USW) and the failure to come to a mutually agreeable contract could send ripples in the trailer and truck equipment industry, according to Bear Stearns.
“The greatest supply chain risk appears to be with aluminum extrusions, for which several of our companies are sole-sourced with Alcoa,” Bear Stearns said in a release. “To this end, our sense is that trailers (Wabash National) are probably more at risk than trucks. Flatbed trailers would also be at some risk, as such equipment is increasingly spec’ed with aluminum construction. WNC’s Transcraft division is a leading OEM in this area, although in total the division only represents about 10% of WNC’s revenue.
“Class 8 trucks have very little aluminum content. Ditto with Class 5-7 straight trucks — however, medium-duty trucks could be indirectly impacted, as truck bodies (both dry freight and dumps) and step vans are frequently made from aluminum. If body builder lines are shutdown temporarily, medium-duty truck OEMs (Navistar, Freightliner) might see an uptick in delayed deliveries.”
Bear Stearns believes that supplies of aluminum wheels overall could also tighten.
“We estimate that Alcoa has 52% market share for such wheels among the commercial vehicle segment; ACW has an estimated 48% share. ACW should intuitively benefit from tight aluminum wheel supplies out of Alcoa, although it would likely prove to be a hollow victory if the assemblers are shut down due to extrusion constraints.”