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Jul 1, 2009 12:00 PM

Truck builders battling worst recession in their history

Throughout its nearly 100-year history, the commercial truck manufacturing industry has experienced plenty of changes and economic ups and downs. Nothing compares with what truck builders are experiencing right now, though.

That assessment was delivered by Jim Hebe, Navistar International senior vice-president. He discussed the industry in a presentation entitled “Trucking Challenges from the Class 8 Perspective” made during the NTTC's 61st annual conference May 10-12 in San Diego, California.

“My life has spanned about two-thirds of the truck manufacturing industry's history, and I've seen a steady succession of cycles,” he said. “Cycles are part of a normal capitalist economy. However, the cycles that our industry is experiencing seem to be occurring more often, and they are becoming more extreme.”

Every recession since World War I was preceded by a rise in fuel prices, and this one is no different, Hebe said. US diesel prices soared to a record average of $4.76 a gallon in 2008, and the trucking industry consumed approximately 39.1 billion gallons of diesel at an estimated total cost of $156.8 billion.

Recessionary pain

This recession has been particularly painful for commercial truck builders, according to Hebe. Heavy-duty truck production dropped 70% since the current recession began in 2006. He said he believes the recession could continue into 2011.

Economically, US truck builders are in the midst of what Hebe described as the perfect storm. In addition to soaring diesel prices in 2008, the industry has been hit with emission regulations and other factors added new costs to truck manufacturing, and the worldwide economic slowdown has cut new truck demand significantly.

“We have been hit much harder than the automotive industry,” Hebe said. “However, we don't want help from the federal government. We want the government to stay away, and we will survive.

“We weathered difficult economic times before and survived. We've seen many predictions that the US truck manufacturing industry would go away. During the 1980s, for instance, we heard predictions that diesel prices would reach $10 a gallon, and Japanese companies would take over the US commercial truck market. It didn't happen.”

Transition time

While expressing confidence for the future of truck manufacturing, Hebe cautioned that the trucking as a whole is being forced to change by a number of economic and regulatory changes. He made it clear not all of these changes are good for the United States.

Trucking re-regulation