Gotta give 'em credit

Once every month or so, a letter from the local bank arrives congratulating my father for the way he has handled his financial affairs.

The letter is quite flattering, especially considering that the bank has never done business with him. The letter praises his strong credit rating and the excellent way he has managed his business. This bank strongly wants him as a customer and has approved him for a rather substantial business loan.

But the bank really ought to give up trying to gain him as a customer. Nothing against the bank, but they will never get his business. That's because he officially closed up shop more than 25 years ago and has been deceased for more than a decade.

Can we blame these letters on a bank that bought a less-than-current bulk mailing list? Well, yeah. But the letters also symbolize what has been going on in the credit markets in recent years. Even after the effects of loony loan practices have become obvious, banks and other financial institutions continue to offer money to people who have limited means of paying them back. And it's affecting our industry.

Bad credit? No problem.

No money? How about zero down?

Don't want to begin making payments until next year? Write your first check in 2009.

Poor credit policies have put individuals, financial companies, and the economy at risk. Whether it's mortgages or credit cards, lax credit standards have helped fuel the national economy in recent years. Now those same lax standards are helping to drag it down.

And as the economy goes, demand for commercial trucks and trailers generally follows.

Speakers at industry conventions have repeatedly credited finance-dependent sectors such as housing for growth in the economy in general and in our industry in particular.

Until recently, easy loans and escalating housing prices gave consumers a strong sense of wealth, security, and financial optimism. They bought more, and we built a lot more trucks and trailers to transport those purchases. Not surprisingly, the holder of an interest-only mortgage doesn't feel like buying as much during a period of declining home prices — especially another house. Predictably, construction of new homes in 2007 fell to 24.8% from 2006, the second-largest annual decline on record, the Commerce Department announced in mid-January.

Is financing solely to blame for the current softness in the commercial truck and trailer market? Of course not. It's just one factor in the mix. But the way our nation handles credit has become a bill that is now coming due.

Even so, easy credit continues to be promoted strongly — even over more traditional selling points. Most truck equipment distributors and trailer dealers, when promoting their service departments, stress quality repairs, getting the job done right the first time, or offering a special price for a limited time on a popular service such as brake jobs. But we know of at least one shop that has decided not to emphasize any of these factors, choosing instead to advertise its easy installment plan.

Aggressive marketing programs are one thing, but they can lead to failure when policies attempt to supersede basic economic principles and human nature. More often than not, such programs influence when the customer buys, but they rarely expand the size of the market. Throughout this decade the truck and trailer market has been in tumult, posting some outstanding years, yet also dealing with the excesses caused by artificial stimulation from factors outside normal market forces. These include government regulations that led fleets to alter normal buying cycles, as well as the rise and fall of guaranteed trade-in values.

This copy of Trailer/Body Builders signifies the beginning of convention and trade show season. Elsewhere in this issue is a detailed preview of what to expect at The Work Truck Show in Atlanta. The Work Truck Show is the first of a series of major industry events scheduled to take place during the next few months. Between now and the second week in May, most of the major segments of the commercial truck and trailer industry will hold annual conventions and exhibitions. These include the National Association of Trailer Manufacturers, the Mid-America Trucking Show, Con-Expo, and the Truck Trailer Manufacturers Association.

Each of these events will allow visitors to see new product innovations and/or to attend workshops conducted by experts in their fields. But the unsung opportunity, this year more than most, may be networking time — a time when peers can meet face to face to share ideas.

In good times and bad, sales are made by meeting the needs of the customer, and that includes the customer's need for financing. During coffee breaks and opening receptions, take advantage of the collective wisdom in this industry this trade show season. You might just find a new way to get customers to buy or a better way to get them to pay.

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