By Stu MacKay: MacKay & Company
An introductory note of caution: This article was written three weeks before the November presidential election. By now, the winner will have inspired such a sensational burst of confidence in the country and the business environment that all that follows is little more than a history lesson. Should this forecast be accurate, I have a couple of really good used cars …
It certainly appears that we’re a little short of good news these days. There is apparently no realistic bottom to the stock market, both the domestic and global banking markets are imploding, consumer confidence is solidly under water, no one in government has any meaningful credibility left – and that’s the good news!
In our own little heavy-duty corner of this arena, the picture isn’t much better. Truck and trailer utilization rates are tanking, trucking bankruptcies are expanding, equipment is being parked and rumors of cannibalization are increasing.
The only REAL problem with the heavy-duty business today has nothing at all to do with employment, consumer confidence, utilization rates, bankruptcies or anything like this. It is simply a function of geography!
Individually and collectively, we are scrambling to cope with a business situation that is, on average, thirteen time zones out of sync. We are struggling today simply because we are operating on the wrong end of the Pacific Ocean. Where we are is the good ol’ US of A; where we need to be is CHINA!
The current operating universe of heavy trucks in China is (pick a number; nobody knows, especially the government). But this observer’s recent roadside observations would indicate that whatever the number is – it is humongous! The reputed average fleet size is 1.2 rigs. They come in all shapes and sizes, powered by anything from a garden tractor to a legitimate 15-liter diesel. The standard color is blue and color option No. 1 is dirt!
Road speeds are also an option, generally controlled by the proximity to the preceding rig – until it can be passed (on either side). Traffic control systems are of Darwinian origins; a successful traffic merge yields no loud crunching noises. Yellow road lines are little more than suggestions, generally disregarded.
But what an aftermarket opportunity! All rigs are open top; the more you load, the more you make. Every rig that isn’t empty appears to be right down on the helpers. The suspension aftermarket must be a gold mine.
And the brake business must also be phenomenal – at least judging by the frequency of brake applications tailgating at maximum speed and minimum intervals. Same goes for the clutch, transmission and driveline aftermarkets. Downshifting seems to occur long after rpms sink – and then usually only without any particular flair or grace.
Maintenance – of the preventive kind – is a concept yet to be adopted. Fix on fail is standard operating practice. More often than not, the right-hand lane on many roads is shared equally by bicycles, motor scooters, small jitneys and trucks under repair. “Get Out and Get Under” was a popular song in the U.S. 90 years ago; it is very much in practice in China today.
Shops are typically family-run storefronts doing everything from brake jobs to engine overhauls. Kids and dogs are part of the staff; everybody pitches in. A small charcoal fire in an inverted brake drum keeps the noodles at the right temp all day long.
Remanufacturing? Not a chance. Take it apart, pull out the busted pieces, weld it up and put it back together. Emergency parts delivery? Never heard of it. If you don’t got it, make it out of something else.
The bottom line appears to be a truly huge aftermarket, totally fragmented and growing like gangbusters. China’s truck product support today is what the U.S. must have had in the twenties and thirties – but on a much grander scale. Back then, we maybe had 50 million people and a commensurate number of trucks. By comparison today, there are 1.3 billion Chinese and millions of trucks. It wouldn’t take much of this business to give those of us on this side of the Pacific pond a real financial boost.
The current heavy-duty aftermarket system in China today does work; but it won’t work forever. Some of our smart companies and people should profit handsomely bringing this system into the 21st century.
One final thought. The horn aftermarket may be the biggest opportunity of all. Horns are used far more often than any other component on the truck!