Manufacturers prepare for the downturn

LOUISVILLE, KY. Truck OEMs and component suppliers are preparing for a decline in truck sales next year, due in large part to the extra cost new emissions control technology will add to sticker prices. Yet opinions differ on how steep the drop in new truck sales will be and how long it will last.

"We expect new Class 8 truck sales volume to drop 40% and, operationally, we are planning for a 50% drop in new truck sales volume," said Joe McAleese, president & CEO of Bendix, during a press conference here at the Mid-America Trucking Show. "However, we expect that downturn to last only 12 months as sales should ramp up again in 2008 and 2009 before the final round of emissions rule changes that go into effect in 2010."

McAleese said Bendix has been preparing for this falloff for the last 24 months, mapping out how it will shift manufacturing, supply chain needs, and employment levels to minimize operational disruptions. "Remember, we're going to need all of that production capacity, supply chain throughput and employment when sales ramp again in 2008," he explained.

Truck OEMs, however, don't believe the sales falloff will be as large as many fear.

"There will be some downturn in sales and I don't know what that level will be; a lot depends on the health of the overall economy," said Dan Sobic, gm-Peterbilt Motors Co. at a press conference here at Mid-America.

"Yet I am getting a much more optimistic sense from our customer base about '07 technology," Sobic said. "Customers are much less nervous about '07 emissions-control solutions. Our larger customer fleets are still planning to buy in '07, largely from a need to continually upgrade trucks to attract drivers."

Bob Christensen, gm-Kenworth Truck Co., said that fleets continue to position themselves to buy trucks this year ahead of 2007; February '06 new truck orders reached the second highest level ever. "We're getting a lot of new interest in '07 orders as customers become aware of new features we're adding to offset the cost impact of '07 technology, like our new aerodynamic packaging," he said at a press conference here at Mid-America. "Pricing continues to be an issue, but new truck capability is an issue as well."

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