Nothing causes an industry to change more than an economic downturn. And perhaps no point in the business cycle is more critical for individual companies than when the downturn is finally over.
While it could be coincidence, it strikes us that an inordinate amount of change takes place toward the end of a downturn. Companies that have been trying to hold on cannot, or choose not to, hang in there any longer. When one of those companies is a major player, the entire industry feels the collapse in one way or another.
Even when a company ceases operation early in a downturn, it often is not until the market picks up that those who bought the defunct company's assets really have the opportunity to put them to use.
It has been a particularly tumultuous time for trailer manufacturers. As we reported earlier this summer, the assets of HPA Monon were acquired by a subsidiary of China International Marine Containers. Until it went bankrupt during this downturn, Monon perennially was one of the largest trailer manufacturers in the industry. The assets that China International acquired include 10 buildings on 300 acres. The newly created Vanguard National Trailer Corporation will have United States management — including former Wabash National executive Richard Dessimoz — yet its parent company undoubtedly has its own strategies that it has developed in a manufacturing environment half a world away.
Earlier in the downturn, Great Dane acquired four major trailer plants, two each from Strick and Trailmobile. These four plants give Great Dane more capacity than any other trailer manufacturer on the planet and the ability to satisfy demand in the foreseeable future.
Truck body manufacturers have had their share of changes during this downturn. Our feature story on Page 24 reports on the how the assets of one major truck body manufacturer — Grumman Olson — are now being shared by three others: Kidron, Morgan, and Union City Body Company (or more technically, by the parent companies of these established van body manufacturers). Each company anticipates different strategic advantages from the assets they acquired — primarily as the market grows stronger.
Truck equipment distributors are going through significant changes, as our report on the NTEA board's strategic planning meeting discusses (see Page 20). The entire channel of distribution — from the chassis manufacturer to commercial truck customers — has been under pressure during the downturn. As companies search for ways to offer and receive more value, they are taking on roles that others in the chain traditionally perform. They are selling or servicing new products in new ways, in new areas. They are dropping products and services that don't provide a benefit that exceeds their costs. And they, too, are buying companies, selling companies, and occasionally opening or closing up shop.
Signs of a turnaround are beginning to pop up just about everywhere we turn. Truck sales are up. Manufacturers are reporting improved profits. Consumers are becoming more confident. More specific to our industry, leading analysts of the truck and trailer industry are reporting output that exceeds last year and forecasts that are better than today. While the upswing may not be in full swing, the downturn portion of this particular business cycle appears to be over.
Eventually, things get better. We reach the point where we say, “The worst is over. We survived. Now what?”
What about your company? How did things change for you? How did you respond to the changes? What are you going to do differently as business picks up?
Not everyone has the financial resources to make the strategic moves that some in our industry did during this downturn. But we all have the resources to learn from it, to plan through it, and to become better prepared for the next upswing.
The oil bust of the mid-1980s devastated the finances of hundreds of thousands of people and crippled the economies of cities that depended on the energy sector. As the bust continued, it was not uncommon to see a Mercedes — slightly scratched now and not nearly as clean as before — with this bumper-sticker prayer pasted on it: “God, please send another boom. I promise not to squander it this time.”
Companies learn a lot when times are tough. With the economy appearing to strengthen, now is the time to benefit from the lessons we have learned.
Agree or disagree? Make your voice heard by visiting Trailer/Body Builders Express (www.trailer-bodybuilders.com) and clicking on “Contact Us”.