Order surge sends OEMs into high gear.
Demand for heavy-duty trucks is shifting into overdrive as buyers place orders at the fastest pace in years.
In April, Class 8 sales were up 33 percent over March, according to the National Truck Equipment Association. In March, sales were up 90 percent over February.
Freightliner has added a third shift and 593 new full-time jobs at the company’s truck manufacturing plant in Cleveland, N.C. The additional shift is required to meet increased production demands, says Rainer Schmueckle, Freightliner president and CEO.
The Cleveland plant, Freightliner’s largest manufacturing facility, has been increasing its output throughout the year and now will employ 3,600 people in the production of Class 8 vehicles. Freightliner has also added 100 full-time employees to its Gastonia, N.C., parts manufacturing plant.
“The North American heavy-duty truck market continues its vigorous recovery,” Schmueckle says.
Mack Trucks plans to increase production at both its Macungie, Pa., plant, where it produces vocational vehicles, and at its New River Valley facility in Dublin, Va., where it manufactures highway vehicles.
John Walsh, Mack’s manager of trade relations, credits strong order support and strength in the North American truck market.
At Macungie, the average daily production rate was already increased from 58 units a day to 64 in early May. The plan was to further increase the rate to 72 by the end of June, and then again to 78 by the latter part of this month.
“We expect to add between 80 and 100 employees at Macungie as a result of these production increases,” Walsh says.
At New River Valley, the plan is to increase the rate from the current level of 36 units a day to 60 this month.
Volvo Trucks North America brought back a second shift to its New River Valley plant in May. “It’s a very strong order environment,” says spokesman Jim McNamara, singling out Volvo’s redesigned VN models.
“We have gone from one shift producing 73 Volvo VN trucks to two shifts producing 112 total,” McNamara says. Production was expected to increase further this month, he said.
Peterbilt also has increased production of its medium- and heavy-duty trucks and tractors.
“Peterbilt has adjusted, and will continue to adjust, employment accordingly to meet this higher demand,” says Dan Sobic, Peterbilt general manager and Paccar vice president.
John Fay, director of marketing for International’s Heavy Vehicle Center, credits the manufacturer’s product lineup and its dealer network for its recent success. The company has focused “on plant quality and efficiency, product enhancements to our existing product and a $300 million investment in our new linehaul product for 2007,” Fay said.
Production increases are being driven by higher shipping volume, a rebounding economy and the need to replace older equipment to minimize maintenance costs, said Steve Gilligan, Kenworth general marketing manager. Kenworth operates plants in Chillicothe, Ohio; Ste-Therese, Quebec, Canada; and Seattle and Renton, Wash.
“Freight tonnage is very healthy, and interest rates are still relatively low,” Gilligan said. “Truck fleets are replacing older equipment as concern over 2002 EPA-emission engines is fading and customers choose to purchase in advance of the 2007 emission
Before October 2002, fleets owners avoided engines designed for stricter emissions standards because they were concerned the newer models might increase maintenance and fuel costs.
“They’re operating older trucks,” McNamara said. “A large portion didn’t buy trucks for 2002.”
Findings included in the second quarter Fleet Sentiment Report show a strengthening demand for trucks and trailers for the remainder of 2004. Seventy-seven percent of fleets responding to a questionnaire said they plan to buy tractors in the next six months, while 69 percent indicated they would purchase trailers.
U.S. truck sales should continue to climb through next year, said Steve Latin-Kaspar, NTEA market data and research. Latin-Kaspar has projected sales of 200,000 units this year and 250,000 in 2005.
Those numbers are in line with 1999’s record high of more than 250,000 units, and well above the average of 150,000 for the last three years.
U.S. Court Overturns Hours-of-Service Rule
The United States Circuit Court of Appeals in Washington, D.C., has overturned the Federal Motor Carrier Safety Administration’s hours-of-service rule that went into effect Jan. 4. The ruling, which favors Public Citizen and other groups that sued to block the rule, vacates the rule and leaves big questions about the future of the regulations that govern the hours truckers work and rest.
“We agree with petitioners that the rulemaking was arbitrary and capricious, because the FMCSA failed to take account of a statutory limit on its authority,” the court ruled. “We therefore grant the petition for review and vacate the rule.”
The court has remanded the rule back to the agency.
“Under the court’s rules of procedure, (FMCSA) has 45 days to review the decision and decide whether to seek other legal remedies,” FMCSA Administrator Annette Sandburg said in a prepared statement. “During that period of time, the current hours-of-service rule, announced in April 2003, remains in effect.”
FMCSA said it will advise federal authorities and state law enforcement of their responsibility to continue compliance with the current rule and will advise major associations to educate motor carriers and drivers of the continued need for HOS compliance. The agency can also appeal for an extension of 90 days.
The American Trucking Assocaitions said the court’s decision will not immediately affect the industry’s ability to deliver freight. “Grocery shelves will continue to be stocked and consumer goods will continue to be delivered safely, efficiently and on time for at least the next several weeks,” the association said.
The appeals court issued the ruling July 16. According the ruling, “the agency failed to consider the impact of the rules on the health of drivers