AS the trailer industry emerges from a downturn that might have seemed like a three-year root canal, manufacturers might be tempted to operate just as they did three years ago.
Randy LeMasters, national sales manager for the trailer division of Statistical Surveys Inc, said manufacturers should resist that line of thinking. In reality, he believes they'll be forced into a situation where they can't even toy with it.
“There have been a lot of changes in our market in the last three years,” he said. “We're creatures of habit. It keeps us in our comfort zone. You put your arm in the sleeve the same way every day. You take a shower and start putting soap at the same place every time. It's comfortable.
“Well, the industry has made a lot of changes, and it's not comfortable. We think this is a process of transitional changes that are probably good for the industry. We're seeing the trailer industry go from being a way of life for many manufacturers to a real business. It happened to the farming industry in the early '80s. The farming industry was a way of life. My parents were farmers. They made money because they worked hard, but they're retired and got out of farming. Today, hard work doesn't get it in farming. I think the same thing's true in the trailer industry. It's not going to be hard work that's going to get it. It's probably being a business person and knowing what's going on.”
In “Understanding and Selecting The Market You Sell To,” LeMasters presented statistics based on VIN numbers purchased by Statistical Surveys from the Department of Motor Vehicles.
He said that the total market was down 7.7% in 2010, with sales of 587,513 new trailers, down from 636,557 in 2009. Livestock trailers were the only category to experience a gain (7%), with boat down 18.6%, horse 11.4%, enclosed 5.2% and open 3.5%. Open sales were 333,934, nearly triple that of enclosed (113,804).
“It's a tougher market than it was last year,” he said. “It means we may have to improve efficiency and do things differently. Maybe some things have to change. How many have heard of (former Olympic gold medal figure skater) Scott Hamilton? He said, ‘It's not how hard you fall. It's how you get back up.’ That's where the trailer industry is.”
To illustrate the value of the statistical breakdowns, LeMasters presented statistics from Texas, historically one of the key markets.
The overall Texas market was down 8%, just .3% below the national market. The difference was that there was not a single type of trailer that experienced a gain, with boat trailers down 17.8%, horse 9.7%, livestock 5.7%, enclosed 7.5%, and open 4.4%.
“I think the perspective here is that statistics tell us where business is, and also, it's not going to be the same for one state as is in another or even nationally,” he said.
He said mapping is a quick way to look at different counties. In Texas, it's quite clear that the western half of the state did much better in 2010. Almost every county on the Gulf Coast was down, with the declines ranging from 3.6% to 61.1%.
Most of the counties were the same for open trailers, and the strength of the western portion of the state was even more apparent. Hudspeth, just east of El Paso, was up 40% in open trailers and just 10% in all trailers.
In enclosed trailers, the eastern counties did somewhat better. For example, Shelby, which was down 3.5% in open trailers, was up 25% in enclosed.
“What kind of trailer should a dealer in eastern Texas be stocking? Probably enclosed, because the market share is going up,” he said. “This is a lot better market share than in open trailers. Dealers should be increasing the volume of enclosed trailers.”
LeMasters said it's important for companies to be able to interpret the numbers.
“Is it more important for Big Tex to know it is in third place or is it more important to know why Big Tex is in third place? That three-lettter word — why — is a powerful word.”
In enclosed trailers, Forest River Inc experienced 19.9% growth (from 1891 to 2267), despite a 7.5% decline in overall enclosed sales. The other top-five companies were down: Pace American (25.9%, from 2419 to 1792), Cargo Craft (8.2%, from 1427 to 1310), Carry-On Trailer (0.7%, from 958 to 951), and Wells Cargo (0.6%, from 697 to 693).
“The industry was down 7.5%, so if you are Wells Cargo and Carry-On, you are above the industry average, so you are not doing terribly bad,” he said. “Forest River was 19.9% up in a state that was down 7.5% — that's pretty doggone good.
“This is point-of-sale data — where the product was sold. There are two different sets of data; the other is where it was registered. If I know the market is good in Austin, Texas, I want to get a dealer that's selling in Austin, Texas, in all probability, so I'm going to look for point-of-sale information.”
Best in west
In all trailers, Big Texas Trailer World's Odessa plant (up 8.5%) was the only one to experience an increase in a market that was down 8%.
“Odessa is in west Texas, which is probably where the market was the best,” he said. “The overall market was down 8%. How might you help any of these dealers with only these stats? Having a dealer stocking what's going to sell is going to be important. The Trailer Man in Manor was down 12%, so he probably has some old product that's not moving. You might help him with some script money to get rid of old product, or discount, help him pay for it. Big Texas in Odessa could increase his stocking. It's a market that's on a roll — 16% higher than the state average. Maybe he already did.”
In open trailers, The Trailer Man in Spring easily held onto its top spot despite a 14% decline. Big Texas Trailer World's plants in Odessa (up 12.1%) and Mount Pleasant (up 2.1%) were the only top-five companies to experience an increase in a market that was down 4.4%.
In enclosed trailers, Trailers Plus in Fort Worth was up 220.8% in a market that was down 7.5%. Trailer Wheel and Frame in Houston (down 4.9%) was the only top-five company to see a decline.
“Market-share mapping showing location shows up big-time here,” he said. “Houston, the eastern market, is down 4.9%. Trailers Plus is up 220%. If one of your dealers is a competitor of Trailers Plus, what would you look at in statistical data to assist him? The first thing I'd do is pull up what Trailers Plus is selling — the price groups and what kind of trailers, what size. If he or she doesn't know why they're there, they can't maintain it. They have to know why.”
In addressing retail pricing for all trailers, he said: “It is not necessarily going to be manufacturer's suggested retail price. The price we pick up is the price the dealer started with. It might be a 2-year-old product with a $10,000 manufacturer's suggested retail price. He's discounted it $2000 to get rid of it, so it's priced at $8000. We're going to pick up the $8000 because that's what went in.”
The top-selling price range for trailers in Texas was $1001-$1500, with 15,696 in 2010, but that was down 9.3%. The only price group with an increase was $6001-$7000 (9.1%, 18.4% above the market). In open trailers, the $6001-$7000 category was up 43.8%. In enclosed, the $7001-$8000 category was up 163.6%.
In trailer length, enclosed trailers of 21-30 feet in Dallas-Fort Worth were up 11.4%, while those in Houston were down 12.5%. And those of 31-40 were up 21.2% in DFW and down 22.3% in Houston. In 41-plus, they were up 57.1% in DFW and down 50% in Houston.
He said companies can save money by prequalifying dealers prior to dealer investment.
“This section alone would save manufacturers enough money to pay for the statistical data he buys,” he said. “If we need an open trailer dealer in the Houston market, we could use statistical data to pre-qualify a dealer.”
According to Rand McNally's Basic Trading Areas (BTA), which takes 4000 counties and shrinks them to 400 BTA, there were 9932 open trailers sold in the Houston BTA, down 13.6%.
LeMasters used Trailer Connection as an example: It was down just 1.1%, and 70% of its business is in open. Trailer Connection represents Trail Master Inc, which accounts for 321 of the 358 open trailers it sold.
“Where does he need help from Trail Master?” he asked. “In 17-20 feet, Trail Master is down 29.2%. That group was only down 7.8% overall. And the 21-30 group was up 3.8% overall, where Trail Master was up 20%. So is there an opportunity for your company in this dealer with the Houston market? Yes, particularly if you have a 17-20-foot trailer that's selling well.”
He said not all sales opportunity are equal.
“National trends do not happen in all state markets,” he said. “States are going to be different from counties, counties from cities. But the opportunity is to look at the statistics that are out there.
“State trends do not happen in all dealer territories. Different dealer territories will not react the same to your product offering. It is all about product turns. Stock your dealers with what sells in their market. That will maximize your product turns.”