New York Company Seeks to Grow and Develop Technology in Auto Transporter Market
Call it synchronicity. Call it synergy. Call it simple coincidence. Whatever you call it, it's working for Delavan Industries Inc.
The combination of two events - rail chaos instigated by the merger of Southern Pacific and Union Pacific, and the asset sale involving Ryder, which operated Delavan for 26 years, that led to the formation of the new company - has positioned Delavan for a strong growth spurt.
Delavan, which engineers and designs auto transporters from the ground up in West Seneca, New York, has been in business for 50 years - longer than any other company in the industry - and has produced thousands of transporters still on the roads. Delavan doubled production between 1998 and 1999, and will triple it by the end of this year to maintain its status as one of the nation's top three manufacturers, according to vice-president of operations Michael Bevilacqua.
When the economy rapidly grew in the 1990s, the rail infrastructure struggled to handle increased traffic. And then came the $5.4 billion Southern Pacific/Union Pacific merger in September 1997, which led to breakdowns in management, schedules, and computer systems, primarily in the Midwest and West. A series of wrecks even put Union Pacific, then the nation's largest railroad, under review by the Federal Rail Administration. The takeover of Conrail's Northeast rail web by giants CSX Corp and Norfolk Southern Corp led to clogged traffic because of data and staff problems in a scenario that was hauntingly reminiscent of the SP/UP merger.
Then, in February 1998, all of Delavan's know-how - the engineering, prints, machinery, and equipment - was purchased from Ryder, which had bought the company in 1972 from Delavan Welding.
The new Delavan is run by Lohr Industries, a $300-million company based in France. With plants on four continents, it is considered the world's largest manufacturer of auto transporters. Nu Van Technology, innovator of the curtainside car haulers, is a significant shareholder.
Diversion Runs Boost Demand Delavan, like other auto transporter manufacturers, has been capitalizing on the need for transporters to run diversion loads because of rail's inability to ship vehicles to the market quickly enough.
"Rail is better than it was a year ago," says president Robert Farrell of the Detroit-based National Automobile Transporters Association, which represents the carriers who buy the trailers. "But as we look toward quicker delivery-time cycles in the industry, theoretically it's possible that some of the traffic could move to truck just to meet delivery times that the manufacturers are imposing.
"If you have a dedicated bullet train leaving the Midwest for the West Coast, the train's going to get there before the truck will. But the key is to get the dedicated train."
Eric Belton, Delavan's vice-president of marketing, says the major manufacturers are progressively allowing smaller fleets to take part of the business.
"What manufacturers like is that they get a dedicated service out of these customers," Belton says. "When you handle the same product day in and day out, it decreases damage to the vehicles. If you're in a big fleet and you're being dispatched all over the country, you're being sent to any location. You might have never been to a railhead site where you had to load Corvettes, pickup trucks, and sport utilities.
"The big thing the Big Three are after is getting product delivered as soon as possible to the dealer, with the least amount of damage. They are involving additional carriers to prevent anybody from getting overwhelmed and to make sure the product gets to the market in a timely manner."
Car Market Has Been "Strong" Other factors in Delavan's growth: a strong economy that has encouraged fleets to more aggressively renew their large-scale programs and add units for new business; the proliferation of car leasing, which has created second and third markets because transporters are needed for shipment to auctions and then from the auctions to the buyer's destination; and easier access to financing sources.
The growth of car manufacturing is easy to chart. According to Automotive News, there were 14,654,695 vehicles in production as of the end of October - compared to 14,276,938 at the same time in 1999.
"This year has been very steady in keeping pace with last year, and last year was a very good year," Belton says. "So I think the market has still been very strong."
Even if it weakens, Belton and Bevilacqua are encouraged by the steady climb in retail truck sales in Class 1 and 2 - which comprise 60% of the vehicles hauled by the carrier companies Delavan serves. The only year in the past decade where sales declined was 1991, when there was a 9.1% dropoff from 3.96 million. The two years since the rail chaos have been marked by 6.8% and 9.8% growth.
The growth of transporter manufacturing is not as easy to chart. There is a black hole in the period from 1997 to 1999. No figures on total production are listed because it was discovered last year that there was a previously unknown manufacturer that was cranking out transporters in disproportionately large numbers during that time. What the Truck Trailer Manufacturers Association does know is this: In the first eight months of this year, 1,639 trailers were produced - nearly twice as many as in all of 1996.
It's still not a large portion of the overall trailer industry. But there is a market, and Delavan is aggressively courting it.
New Paint Process Earlier this year, aided by a grant from the Empire State Development Corporation, Delavan added a 65,000-sq-ft facility in the nearby town of Blasdell, installing a 6,000-sq-ft US Filter paint booth and hiring 71 employees in painting, welding, and machine operation.
The company has used it to transition to a complete cure system. At Delavan's 70,000-sq-ft facility in West Seneca, it used air dry, which permitted dust and debris to cosmetically prevent an automotive finish. Now, as soon as they are done blasting the unit, it goes directly into the paint booth, is brought to temperature, primed and then cured. They have eliminated the 12-hour post-paint wait and can now work immediately on the units.
"That's been a huge gain for us," Bevilacqua says. "It's been a quality increase."
Delavan also is in the process of switching from a 2D cad system to 3D Unigraphics cad in its engineering design.
"The big thing in manufacturing is if you get prints to the shop that aren't 100% correct, it's a disaster on the shop floor," Bevilacqua says. "The better your prints, the better your process. In 3D, you can see interference. If you're going to have a problem with assembly, in 2D, you're just laying out a sheet of paper and it's hard to visualize. In 3D, you can graph a part and rotate the whole thing. That is a huge change in our business."
Bevilacqua says Delavan has carved a niche in the industry and is known for building high-quality, high-end transporters that require minimal maintenance. He says that because of its special weight-distribution capability, it outperforms the competition on the load factor. Delavan uses high-tensile metals that are put through rigorous Finite Element Analysis.
"FEA has allowed us to lighten the weight of the equipment without losing the structural integrity of the unit," Bevilacqua says.
With 10 engineers on staff and another 40 at Lohr, they can run a quick and efficient analysis. Delavan runs its own stress calculations but also can take advantage of two Lohr engineers who are dedicated strictly to FEA tests.
Bevilacqua says the design process has changed in recent years because of the proliferation of pickups and sport utilities. Almost every load involves SUVs, as opposed to the previous scenario of 90% cars.
Weight Savings Feature He says Delavan was the first company to use laser technology to lighten the weight. They use two 2600 Trumpf Laser Cats that will cut 40" a minute on 1/2" steel.
"Without the laser, we could never efficiently take out the weight," he says. "With a laser, we can now manufacture a part inside a part, so when we're building equipment and trying to make the weight light, we're putting a lot of weight-saving holes in.
"You can build the average trailer. It's just tough to get it light enough - that it's 40,000 pounds at 75' long."
Delavan also addresses the weight issue by using a hollow rod instead of a solid rod on the hydraulic cylinders. Delavan also uses a stand-tube design, featuring two ports on the bottom instead of one port at the top and one at the bottom. It saves on weight because it limits the amount of hose that's required, and it saves money because it uses less hydraulic oil and hose.
New Models on the Market Delavan produces a variety of transporters, including three-, four- and five-car headramps, line haul, quick loaders, commercial haulers, and low boys for trucks.
- Two new models entered the market in September after debuting earlier this year at the Mid-America Trucking Show:
- Conventional 48' hauler. "There are a lot of owner-operators out there who one weekend are hauling a reefer body and the next weekend are hauling cars," Bevilacqua says. "This gives them a lot of versatility." Says Belton, "It's an easier piece of equipment to use, because it's only a semi-trailer, as opposed to a trailer plus a body. It's easier to use and less expensive to buy at the beginning. And obviously it offers versatility, because you can use the same power unit of truck and go from hauling cars to hauling regular freight with another type of trailer."
- A 75' stinger-steer enclosed hauler, built in conjunction with Nu Van.
Bevilacqua says Delavan is positioned in a prime geographical area to take advantage of the transporter refurbishing market. Forty percent of new-car production - in Detroit, Ohio, and Canada - takes place within a 300-mile radius of the Buffalo area.
"The way we set it up, we're within an area where they can drop off a load, drop the vehicle off, deadhead one time and then after that, they finish one and take one," he says.
Delavan's Blasdell location is well-equipped to handle refurbishing, which accounts for 20% of its business.
Bevilacqua says Delavan's welders are subjected to a rigorous in-house testing that goes beyond DOT and other standards. "We know that if our guys pass this criteria weld, we'll get a good-quality weld," he says.
In addition to the new paint booth, one of the key features is an air-scrubbing unit, with a pair of compressors that put out 800,000 BTUs each. Instead of simply sucking all the hot air out, it filters all the dust and pumps the heat back in.
With 240 employees on three shifts, Delavan is capable of producing more than 60 complete units per month. They'd like to gain an even larger share of the market.
"We're putting everything in place," Bevilacqua says. "You have to have the capacity to grow the business. If you go out and get the business and you don't have the capacity to stand behind what you're saying, you'll fail. Sixty a month would not be a problem for us."