There were a lot of highlights from the 2009 Heavy Duty Aftermarket Week (HDAW) and Heavy Duty Dialogue (HDD): Economic recaps and outlooks, business-building workshops and awards that recognized the aftermarket’s best, to name a few.
On the economic front, dismal truck sales are expected to continue through at least this year. The aftermarket, historically better insulated from the industry’s wide fluctuations, will likely fare this year about the same as it did last year. Expectations are for overall performance to mirror 2008 or go down a couple of points, but mostly stay strong, especially compared to other economic sectors.
The current recession, according to William A. Strauss, senior economist and economic advisor in the research department at the Federal Reserve Bank of Chicago, isn’t going away anytime soon. Speaking at HDD, the precursor to HDAW, Strauss said that while past recessions have lasted, on average, 11 months, this one potentially could go on for 18 to 24 months.
He went to say that housing will continue to be an economic drain, as there are about 13 months of available inventory of single-family homes nationally. The trucking industry is closely tied to housing – with about six to eight truckloads of freight estimated to serve construction of a single home – and there are tens of thousands of trucks idle due to the housing slowdown alone.
A bright spot in the truck sales downturn is trucks are being run longer. Sure, carriers are running their newest equipment and parking the older vehicles to save on maintenance and repairs, but the overall age of fleets is increasing. Tom Plimpton, vice chairman of Paccar, said during HDD that the average unit age in 2008 was 6.2 years and will increase to 6.4 years in 2009. If conventional wisdom holds true, that means increased parts and service requirements.
Despite expected predictions for a sustained recession and at least one more rough year for trucking, I was relieved that the mood among HDAW attendees was generally upbeat. While anxiety and uncertainty seem to be driving the markets, panic wasn’t present among this group.
For the most part, trucking has seen all this before. There may be unique nuances this time around and certain elements may be better or worse than past downturns, but this is a cyclical business and it doesn’t take much for the trucking industry to start screaming that the sky is falling.
This point was driven home during the HDD “MegaTrends: A CEO Strategy Discussion” by Charles “Chip” McClure, chairman of the board, CEO and president of ArvinMeritor, Inc. “The one thing the truck industry has always had to deal with is cycles, and we’ve proven over the years that we’re pretty good at it,” he said.
And while other industries find themselves in much worse shape, the aftermarket, since it runs lean through good times and bad, should be relatively well positioned to take full advantage of the upturn. As McClure pointed out, the companies that take advantage of the weak economic times by evaluating all aspects of their operations with unflinching honesty are those that thrive regardless of the market conditions.
Speaking of his own company, McClure listed a few areas they focus on, but it’s a list that all of us can benefit from:
- Strengthen the balance sheet;
- Diversify the business;
- Influence pending government regulations;
- Invest in innovation and technology; and
- Involve employees.
It’s a way of finding the good despite bad times. It’s also a good way to stay optimistic while others around you may be running around like Chicken Little.
