The recession is going to last through 2020 and the pace of recovery is still going to be governed by public health issues, said Dr. Bob Dieli, economist, MacKay & Company, during Heavy Duty Manufacturers Association’s (HDMA) recent webinar.
“The larger implication is that we’re going through structural changes. More and more firms are moving to remote [work from home situations] and using Zoom-based and other types of [remote] meeting platforms,” Dieli said. “Those changes are not going to go away. As a consequence, what 2021 is going to look like will depend, in part, what happens in the next several weeks with the lockdowns and then how we are able to discern from the various reports we look at what is temporary and what has become permanent.”
Dieli explained the U.S. is in a structural, four-legged W-shaped recession, which are longer and deeper, compared with short and shallow cyclical recessions.
“I think we’ve reached the end of the second phase which is the rebound from the pandemic,” he said. “However, now I think we have to add the effects of the growing number of lockdowns that are some ways repeating what happened in the first phase. I think we’re in for some type of pause over the next several months, how long and deep remains to be seen.”
He said the pace of the recovery will be determined by the progress in resolving public health issues. He adds there are going to be lasting and far-reaching changes in the way goods and services are produced, distributed and consumed.
Regarding Class 8 sales, FTR’s forecast at the start of the year for 2020 was 198,500 Class 8 sales, said John Blodgett, vice president, sales and marketing, MacKay & Company. In August, MacKay & Company updated it’s model and the number fell to 155,000 and the low point came in April with 121,000 orders.
“If you look now at what [FTR is] forecasting, there’s not much of the year left, but they’re looking at 189,000 for the year,” Blodgett said. “It’s a pretty good bounce back, even if it was all over the place during the year. To me that’s a positive sign. I think the general theme is positive and trending in the right direction.”
In the last three or four months shop utilization has been increasing month by month.
“It’s a reflection that there’s more activity out on the road and the vehicles are needing maintenance and repair, so that’s another positive,” Blodgett said. “The trend since July is that most of the data has been good, it’s been positive. We’re asking truck dealers about their parts sales month over month and on average they’ve been up the last three months. September was up 1.5 percent. We’ll have the numbers out for October soon but indications are those are going to be positive as well.”
HDMA continues to study supplier absenteeism in its Pulse Survey. Supplier respondents reported a continued focus on ensuring a safe workplace and maintaining communication with employees; however, “As expected, along with the rise of COVID-19 rates, we’re seeing the rise in absenteeism,” said Richard Anderson, HDMA director, market research and analysis.
“It has become evident that the longer the pandemic wears on maintaining employee morale is a long-term concern,” Anderson adds.
As part of HDMA’s Pulse Survey, suppliers were asked to choose the three most significant challenges to restarting normal business operations. Labor force readiness and availability and raw material and semi-finished goods procurement were tied at 25 percent. Right behind, at 24 percent was accuracy of production and demand forecasts. Inbound/outbound shipper availability and cost; closure mandates of own facilities; and customer liquidity came in at 10 percent, 9 percent and 7 percent, respectively.