With service truck duties largely deemed essential, operators are proceeding with caution and the sector is largely avoiding the most severe impacts from COVID-19 and its abatement measures.
At OSSCO Group in Warminster, Pa., owner Kyle Miller reported an initial dramatic slowdown in late March. It was significant enough, he said at the time, that he curtailed all sales related travel and temporarily laid off four of seven employees.
Two months later, Miller reports all hands back on deck, in part thanks to a forgivable loan from the U.S. government through the Paycheck Protection Program and other components of the CARES Act.
“We’re back to pretty much normal operation,” Miller said, describing a 40 percent drop in revenues for roughly a month before business volumes started regaining gradually.
In fact, Miller reported a strong enough climb-back that he’s looking to hire two new technicians. “One for morning shift and one for night shift,” he said. “As of this week, we’re down about 15 percent, but I’ve got a week and a half’s worth of work already sitting in my parking lot for next week, and we’re starting to get slammed.”
OSSCO, which operates two service trucks and a 13-bay shop, works on tractors, trailers, cars, trucks and construction equipment. Miller said the money helps cover salaries and expenditures such as utilities and rent. If the loan is spent within eight weeks, it’s forgivable.
“We’ll see what kind of problems it causes later down the line when they have to raise my business taxes to make up for it, but it’s helped out currently,” Miller said. “It was mostly meant to get people off of unemployment and back to work, so that’s what we did.”
Some logistical issues
Still, Miller sees bottlenecks, with some parts in short supply and other logistical issues. “It’s like we pay for overnight or two-day delivery and get the parts in four or five days,” Miller says.
COVID safeguards are also challenging. Salespeople rely on electronic and telephone rather than face-to-face communication, and it’s now routine to disinfect vehicles and equipment before and after repairs. On the other hand, Miller says none of his staff have tested positive.
Equipment providers are also looking to make it through the crisis relatively unscathed. Steve Coffee, national sales manager with Houston, Texas-based Liftmoore, says the truck mounted crane manufacturer was set to resume sales-related travel in June with personnel using masks and gloves and practicing physical distancing.
“I don’t know what the reception will be, if our distributors will want or allow visits from our salespeople, so I think we’ll try to limit it to things that are necessary or essential that maybe our distributors and end users ask for,” Coffee said.
Liftmoore’s manufacturing operations have largely carried on business as usual, albeit with similar protective measures and gear. “If somebody has an illness they have to be cleared that they don’t have COVID and they need a doctor’s written notice as to why they were ill,” Coffee said.
Working from home
Coffee reported a slight decline in sales — with parts, particularly anything with gears and winches, sometimes delayed. “I guess they’re more limited in production and in the supply chain,” he said. “There’s only so many products that fit our needs. Some products aren’t a fit, so it’s a little more limited than some other products.”
As well, company mergers and acquisitions that were either underway or completed just before the onset of COVID have also had an indirect, unintended impact on supply chains. “It’s an interruption of the management process and being able to tell us when they can produce and when they’re going to deliver,” Coffee explained. “That, and you’ve got people operating from home, so they’re disconnected with the new management more so than they would be if they were in the office.”
In Cincinnati, Ohio, Venco Venturo owner-president Brett Collins said orders have fluctuated but
“Industries that are customers of the work truck industry are all essential industries, whether they be utilities, municipalities, construction companies or oil and gas companies. All of the major market segments that purchase work trucks are essential, and they didn’t scale back.”— Brett Collins, Venco Venturo Industries, Cincinnati
he has seen a modest increase in overall business. He attributes this at least partly to the time it takes for purchase decisions to become completed transactions, leaving the sector lagging somewhat behind the US economy as a whole.
“My gut tells me the orders our industry is experiencing right now are the results of capital purchase decisions made prior to COVID,” Collins said, also citing stimulus dollars as a spending driver.
Essential industries
“Industries that are customers of the work truck industry are all essential industries, whether they be utilities, municipalities, construction companies or oil and gas companies,” Collins said. “All of the major market segments that purchase work trucks are essential, and they didn’t scale back.”
Still, Collins worries a recession could soon follow. “The big question in our industry is when will it really hit.”
At Ramsey Industries in Tulsa, Oklahoma, corporate marketing manager Aaron Rayner said businesses paused initially while they examined their own scenarios. But the fact that the company’s three lines — Auto Crane, Ramsey Winch and Eskridge — are all considered essential manufacturing has helped.
While many customers are feeling the pinch, most have managed to bunker down and at least get by, he said. “All industries saw furloughs, potential layoffs and potential closures, so I don’t think anybody has gotten out unscathed,” Rayner said. “Ramsey Industries is fortunate that, with some management maneuvering and innovative planning to deal with getting back, we were able to kind of stay above water.”
Rayner said the need for essential manufacturing services and products won’t go away, so he sees his company weathering any lingering disruptions.
Associations optimistic
Industry associations also express optimism. Don Moore, director of government and industry
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“Anything to do with infrastructure work seems to be moving. I’ve heard of more issues on the trailer side than on the vocational truck side.”— Don Moore, director of government and industry relations, CTEA
relations with the Canadian Transportation Equipment Association, said members he’s spoken with are mostly coping though nowhere near capacity, with just a few reporting strong activity.
“Anything to do with infrastructure work seems to be moving,” Moore said. “I’ve heard of more issues on the trailer side than on the vocational truck side.”
Moore said he has spent considerable time sourcing information about government plans and programs. “I believe a lot of the small and medium-sized operations … have taken advantage to be able to continue to move forward,” Moore said.
With most work truck industry companies classified as essential, the NTEA — the Association for the Work Truck Industry is also busy informing members about economic aid programs. “The intent was to ensure companies understood their options and the overall application process,” said Steve Carey, NTEA president and CEO, noting the association doesn’t know how many companies actually applied for or received assistance.
Steve Latin-Kasper, NTEA director of market data and research, said commercial truck and truck equipment sales declined substantially, but some prospects look good. “With chassis OEMs reopening plants in the second half of May, it’s anticipated that chassis production will increase significantly throughout June and July,” Latin-Kasper said.
Short-term bottlenecks are also possible as OEM supply chains resume activities. Latin-Kasper said new truck and equipment orders have been in line with expectations for the first two months of the second quarter. “Solid communication will be essential so that fleets and other customers are provided with accurate information regarding completion dates of trucks ordered.”
Latin-Kasper said he expects the economy and work truck industry sales will stabilize in the third quarter and resume growing. “As more states lift stay-at-home orders and employees return to work, parts of the economy that were most negatively affected will start to recover, and consumer expenditures will increase,” he said. “However, this will take time.”
RESOURCES ONLINE:
— Saul Chernos
Saul Chernos is a Toronto-based freelance writer.
