Executives from four trailer manufacturers and a trailer supplier are generally optimistic about the next two years as the nation slowly pulls out of the economic abyss created by the worst recession since the Great Depression.
The Fab Five — Dave DePoincy of East Manufacturing, Craig Bennett of Utility Trailer Manufacturing, Dave Boyd of Aero Industries, Keith Limback of Manac Trailers, and Barry Freifeld of Trail King Industries — were part of a panel that took on the economic issue, and many others, during a 50-minute session.
Here's their crystal ball for the trailer industry in 2013 and 2014, and their theory about how the election might alter the picture.
Bennett: “This year, our numbers are going to be up 17%. I know there are different forecasts. We see business as being fairly strong next year. We're looking for a 5-7% increase, so I'm fairly optimistic. There's a lot of activity now. It has been my observation that CARB has driven refrigerated (trailer sales) like crazy. I think we can move forward in that segment. If we have freight, they'll buy equipment. If they don't, they won't.”
Freifeld: “We had a very strong year this year. Our business has been pretty diverse. We see it going well for 2013, and it's hard to tell for 2014.”
DePoincy: “We had about a 10% increase over last year. We just finished the first quarter of 2013, but we are in that range. 2013 will probably be another 5-10% of growth, primarily in the flatbed area, with the dump side being a little softer for 2013. Obama has not done coal fields much good this year, and I don't think he's going to do it next year, so we're seeing some effect there on the dump side of business. 2014 is so far out there that I'll reserve that until after the election. If Obama stays in, the coal markets will suffer. But 60 to 90 days out, it will all blow over and we can get back to business.”
Limback: “Like the rest of the panelists, we've had a really good year — particularly in dump trailers and flatbeds, and we benefitted primarily from the energy sector: oil and gas. There's a lot of movement of oilfield equipment, so flatbeds for that reason. Right now, there's been a recent pullback in energy. Next year, we'll probably see more of the same. We'll see some modest expansion.”
Boyd: “We're unique because we go as you go. While trailers were being built, flatbeds and dumps, we were a flag blowing strong in the wind. In '08 and '09, we were laying there limp. This year, what surprised us the most was flatbed production. Last year, we didn't even talk about percentages because they were so low. This year, it's going to be over 20,000 flats in the construction segment. It still seems pretty down. We continue to see our dump products lagging a little bit, and that's because of a lack of funding in states.”
Other questions they tackled:
Moderator: CSA is going to change the trailer and trucking industry. We're hearing CSA is having an impact because some drivers are refusing to haul old trailers. What impact do you see CSA regulations having on trailer specifications?
Limback: “CSA is primarily designed to improve truck and bus safety. But I think it's ultimately to prevent accidents. The controversy earlier is that the drivers now become responsible for proper maintenance of the vehicle. The driver today cannot any longer go down the road without worrying about whether he's in compliance or not.
We know how the fleet has aged. Trailers are over eight years old for an average age on the national fleets. The driver is going to protect himself if there is a problem with the trailer. He can have the ability to encourage fleets to replace those trailers. Drivers are going to use the leverage they have. Whether it's a good inspection or a bad inspection, the driver's record will reflect that.
As far as what we're doing, we'd all probably say we're using the highest-rated componentry we can, whether it's a wiring harness or long-lasting brake pads. We're paying attention to corrosion and metals. Drivers are also responsible for loading properly and anchoring, so we're doing some things that are driver-friendly.”
Bennett: “We're encouraging anti-theft things. I think it's all a real boom for you. This is shop business waiting to happen. Drivers will tell fleet managers, ‘Hey, fix it.’”
DePoincy: “Market share in the all-aluminum side of the flatbed business is shifting. There's a move toward corrosion resistance. I actually left the industry in 2007, and when I came back, the market share seemed to be higher by three to five points in the all-aluminum side. When guys look at issues because of corrosion or maintenance, especially areas that are susceptible to corrosion, that could be driving that market-share shift.”
Moderator: Has the tire-availability situation eased up a bit? What are the most volatile commodities, whether it's supply or pricing?
Bennett: “Aluminum costs have gone up the last few weeks. They were down and now are back up. We buy several million pounds of aluminum a week. We've been right half the time. It's a real guessing game. As long as you can win 51% of the time, it's good. But it's still really volatile, and I don't think we've seen the end of that.”
Moderator: In the manufacturer-dealer relationship, what's the most common frustration and the greatest contribution from your dealers?
Limback: “Many times today, you add value to our product. That's the greatest contribution. You take it from the initial customer contact to the sale to the aftermarket experience. Manufacturers generally don't have the infrastructure or resources to provide aftermarket service that keeps customers coming back. One observation I'll share is that the seller-to-customer relationship is changing. That's because the Internet's changing the traditional role, the regional business model, to a more national North American model. With a few keystrokes, you can gain access to a huge amount of trailer inventory. Greater access to that inventory, I believe, is making products easier to get to and less exclusive. It does have an effect on the value of the product.
The Internet does not bring you closer to the customer — it brings you farther away. When a dealer located in Miami sells to a customer in Seattle, who's going to provide that good aftermarket service they're going to need to keep the customer satisfied?”
Freifeld: “The specialized market becomes really critical — that if you're selling a product brought into a specific market and set up for the East Coast or West Coast, that responsibility is that you make sure that will satisfy that person's need. As far as contributions, it's supplying a solution to a customer's problem, supporting customers and doing what manufacturers don't have the capability of doing. You're a critical part of our business.”
Boyd: “Over the last five or six years, the relationship between OEMs and dealers has changed. I think it's really strengthening. We're seeing real flexibility with OEMs. A lot of times, especially on tank deals, they will step out of the transaction and try to work with dealers. Their ultimate thing is to solve your problems and have trailers that will fit the customer's needs. If they don't see their value in the pipeline, they're quick to step out of the transaction for the benefit of the dealer.”
Moderator: How do you feel about the so-called SmartWay-certified products such as side skirts, boat tails, and low-rolling-resistance tires? Do you see a big movement? Do they have realistic upside or some downsides?
Boyd: “The great state of California has created a market for side skirts. Virtually all vans have side skirts on them. There are three general areas of drag: between the truck and trailer, underneath the side, and the rear. In a perfect world, fleets wouldn't be mandated to do it. They would do it because of cost justifications. Fuel is such a big cost and there are ways to reduce drag and improve fuel conservation. But there's a lot of testing right now. Some of these fleets are doing their own internal testing versus independent tests. A few years ago, Craig (Bennett) had mentioned that if this thing did have legs, it would become a trailer OEM product, and I totally agree with that. There are some companies that are involved, particularly on side skirts, but at the end of the day, if skirts stay around, they will be an extension of the trailer. The cost of testing these things is prohibitive.”
Moderator: How do you see government regulations or payload changes affecting vocational and specialty trailer specs?
Freifeld: “We've been back and forth for years on that. The last I heard was they would do a two-year study to determine whether they will make any changes. There's constant change, with state requirements that put additional specific changes on us, specifically within suspension-axle areas. And I think that's going to continue. You find some customers trying to find one trailer that will do it all. I'm not an engineer, but it takes a lot of time to go through those things to determine what you exactly need for all these states. And so there are a lot of engineering resources that go toward satisfying that customer's needs. And in the end, he doesn't get all he wants.”