HOW much is the trailer business changing? What’s different about the trailer manufacturing industry from, let’s say, a decade ago?
Thanks to the work of Paul Schenck, the co-founder of Trailer/Body Builders and the person who compiles our annual Trailer Output Report, we have decades of data on truck trailer production. His latest report, found on Page 22, includes production numbers for the largest trailer manufacturers in North America for 2013 and 2014. That data, combined with the insights provided by key members of each company’s management team, provide a pretty good picture of what kind of year the industry had compared with 2013.
But what if we compared the past ten years instead of the past two? What trends could we identify? Could we gain any new insights?
With that in mind, we gathered a decade’s worth of Trailer Output reports from every year since 2004 and placed them into a spreadsheet. To keep things consistent, we took the top 25 companies each year and added up their production. We then calculated how much each ranking position (not the individual company) contributed to the total for each year. This “market share” represents only an individual’s portion of the 25 manufacturers’ total production for the year. Since the industry consists of far more than 25 trailer manufacturers, we can’t claim that we are calculating market share of the entire industry.
Here are a few of the things we found:
• Even though production from the industry’s 25 largest manufacturers last year was 28% higher than it was in 2004, the combined production of the two largest manufacturers in 2014 was less than 1% higher than it was in 2004.
• Two of the top 10 trailer manufacturers from 2004 no longer exist as independent companies.
• One of the top 15 companies that year still exists, but management decided the company could make more money manufacturing other types of products.
• Great Dane, Utility, and Wabash finished in the top three throughout the decade. Each of the three had at least one year in the top spot.
• Combined, the three largest manufacturers accounted for at least half of the trailers built by industry’s top 25 manufacturers. That has been the case every year since before 2004.
These three manufacturers have dominated the market for years, but their combined market share is not quite what it was in 2004. A decade ago, the top three manufacturers produced almost 60% of the trailers built by the industry’s 25 largest companies. By 2014, that share has slowly declined—almost 1% per year on average.
The company that built the most trailers in 2004 had a market share of 24%. In 2005, its market share dropped two points and remained at 22% for three years. For the past three years, market share for the industry leader has been 19%. And remember, all three of these companies have spent time at the top.
So who has been picking up the slack? This isn’t to say that the top three manufacturers have been stagnant, but based on our numbers, companies that have finished in the fourth, fifth, and sixth positions have grown even faster. Unlike the top three spots—occupied by the same companies the past decade—six manufacturers have finished fourth, fifth, or sixth during the same period. And it is in this tier of manufacturers where we find companies persistently growing market share.
In 2004, 14% of the total came from the fourth, fifth, and sixth spots. By 2014, manufacturers in these three positions had grown market share to 29%.
Not only did these three slots gain 9% market share relative to the top three manufacturers, they also took an additional 4% from the ones below them. Positions 7 through 12 combined to produce 12% of the total in 2014, a loss of two percentage points from 2004. The rest of the top 25 (spots 13 through 25) contributed 10% of the total in 2014. This, too, represents a 2% decline from a decade earlier.
That is the “what” portion of the story. Much more interesting—which these numbers don’t tell us—is the “how.” How do Great Dane, Wabash, and Utility consistently manufacture as many trailers as the rest of the industry combined? What did the next tier of manufacturers do the last 10 years to grow their business and gain almost 15 points of market share? What should the strategy be for everyone else? Occupy a lower volume but higher margin niche? Attempt to climb higher up the charts? If so, how?
Trailer manufacturing is not the music business where songs rise and fall on a whim. The tastes of trailer customers are pretty consistent. Customers want a trailer that weighs less, lasts longer, and makes the customer more money. Most—but not all—of the companies shown in this year’s report were also there in 2004. We consider that to be a reflection of their consistent, dedicated effort to meet and exceed what the customer expects. ♦