THE truck and trailer industry is nothing if not cyclical. It has good times; it has bad times. Right now, the times are very, very good. That seems to be the consensus from those we have met and shared meals with the past several months.
May is always interesting because it marks the end of what we term “the spring trade show season.” By the time May rolls around, most major trade associations that serve the commercial truck and trailer industry have all had their big meetings for the year. In rapid-fire order, we get to hear from truck body manufacturers, truck equipment distributors, and the entire spectrum of trailer manufacturers.
Having breakfast, lunch, or dinner at any convention so far this year has been like taking a group of kids to McDonalds. All you see are happy meals. And why not? Those who are at the table have survived the worst downturn in their professional careers. And they now are reaping the benefits of working in an industry that can rise about as sharply as it falls.
This is not just a groundless claim — it has been graphed out by someone who tracks this sort of thing. One industry analyst, speaking recently at an industry gathering, pointed to a graph that depicted the latest industry cycle. What we are experiencing now is part of a symmetrical V-shape, he observed. We dropped off the cliff and are climbing out just about as fast and as far as we fell.
Climbing is good. And just about everyone seems to be climbing.
The National Association of Trailer Manufacturers is always among the first to hold its annual convention. (Details of its annual convention can be found on Page 44). One of the things NATM has been doing recently has been its benchmarking lunch. As these manufacturers of light-duty trailers share a meal, industry analysts share the results of a survey designed to take the pulse of their market.
In 2009, NATM met during the very month that economists identified as the bottom of the recession. It's interesting how quickly light- and medium-duty trailer manufacturers have recovered. The U S economy in general has experienced anemic growth since the trough, leading to 31% of the public to report a pessimistic view of the coming months. By contrast, 65% of the light trailer manufacturers expect their companies to grow this year. A very healthy 38% say their companies are thriving. All expect to sell more to existing customers this year, and 93% believe they will obtain sales from new customers in 2012. For a detailed report of the survey, see our story on Page 44.
The National Truck Equipment Association followed a few weeks later with the Work Truck Show and a full slate of workshops and seminars. Economist Steve Latin-Kasper's key point: Get on board or get left behind. After surging almost 30% last year, sales commercial trucks (Classes 3-8) are expected to continue to increase each year (albeit by single digits) until 2016. Details of his presentation can be found in the April issue of Trailer/Body Builders.
There were plenty of happy truck trailer manufacturers at this year's Mid-America Trucking Show (our coverage begins on Page 24). In large part, that was because of the record crowd that filled the booths and aisles. The show also attracted a record number of international visitors.
But even more significantly than a busy trade show, truck trailer manufacturers are happy because they have been selling trailers like crazy. As was the case with the light- and medium-duty trailers, production of truck trailers has been rebounding nicely since the 2009 trough. And much like the outlook for commercial truck and equipment, analysts seem pretty much in agreement that truck trailer shipments will continue to grow year-over-year for the next several years.
The picture was much the same at the ACT Research seminar held immediately prior to the opening of the Mid-America Truck Show. Kenny Vieth with ACT Research summed up where we are in the industry with a presentation titled “The Happy Side of the Cycle.” (See coverage, Page 20).
And most recently, the Truck Trailer Manufacturers Association closed out the spring trade show season with its convention. We will have special coverage of that event in next month's issue. But as a sneak preview, more good news.
At the risk of sounding like the Grinch trying to steal Christmas, we know that an unhappy side of the cycle is coming, too. The good news is — assuming the forecasts are accurate — we have several years to prepare for the next one.
Our challenge is to make the most of these good times, to use our money wisely, and to strengthen our companies so we can make it through the next inevitable downturn. No one wants to share the sentiments of the bumper sticker that appeared on many vehicles in Texas after the energy industry went bust in the early 1980s. “Lord,” the message read, “please send another oil boom. I promise not to squander it like I did the last one.”
So what should your company be doing to make the most of your boom?