While the U.S. prepares for major leadership changes in the federal government — and the effect it’ll have on the economy — leaders in the service truck industry say they’re feeling optimistic as they look ahead through 2016.
With continued growth in housing and construction and a growing customer demand for new, more efficient products, many sides of the business are seeing rapid growth that they don’t expect to stall anytime soon.
Jeffrey Messer — president of the board of trustees for the NTEA, the association for the work truck industry — said consumer confidence appears to be growing, and businesses are willing to spend money to upgrade their equipment.
“Some of the purchases are probably from pent-up demand,” said Messer, who is president of Messer Truck Equipment in Westbook, Maine. “But the business climate is busy and people need work trucks to do their job.”
Post-recession growth continues
That rush to make up for lost time during the economic downturn and keep up with growth has some companies experiencing rapid expansion.
Brett Collins — president of Venco Venturo Industries LLC, a Cincinnati, Ohio manufacturer of truck-mounted cranes, service bodies, and hoists — said his company has grown by 45 percent in the last two years. He attributes part of the surge to internal leadership changes and part to just how much work is trickling down from a variety of industries.
“Everything seems to be a really strong factor of what’s going on elsewhere,” Collins said. “If we’re seeing a 1 or 2 percent increase in (gross domestic product), that may translate into an 8, 10, 15 percent increase in our industry.”
In Canada, that demand is also shaping the flow of business from the U.S., said Albert Ribeiro, sales and marketing manager with Wilcox Bodies Ltd., a Milton, Ont.-based manufacturer of service, utility and crane bodies. A low Canadian dollar — it had sunk to less than 75 cents U.S. as this went to press — has Americans looking north to make big purchases.
“With the American dollar the way it is we see more sales coming into Canada because it’s worth their while,” Ribeiro said. “Also we’re seeing a lot more Canadian companies buying in Canada because when they go to the U.S., it’s the opposite way.”
Regardless of where they buy, he said, customers seem to have reached the end of the line when it comes to holding on to old equipment.
“What we’ve seen here with our company is we’ve just been going full tilt,” Ribeiro said. “Everybody seems to be in the purchasing mode right now because they probably waited a long time to replace their fleet and there comes a time when they have no choice.”
That’s not to say it’s all good news. Some in the industry say they’re concerned about the energy market. Messer said it’s clear oil prices need to go up before drilling and exploration take off again.
In Canada, that issue is particularly visible in Alberta, where business isn’t taking off like it is in most other regions, said Don Moore, executive director of the Canadian Transportation Equipment Association.
“That’s one area of concern, with the oil prices the way they are,” Moore said. “I don’t know if there’s much our government or (the U.S. government) can do to change what’s happening there, because it’s a much more global issue.”
Political shifts anticipated
Ups and downs in the energy industry will be among the challenges for Canada’s new government — Justin Trudeau, son of Pierre, became prime minister after his Liberal party won the majority of seats in the Oct. 19 federal election — and for the contenders vying off in the U.S. presidential election in November 2016.
Moore said leaders of both governments will likely have a role in shaping some big projects, like the Keystone XL Pipeline, that might effect the economics of the businesses that drive the service truck industry.
Collins, with Venco Venturo, said he expects the U.S. election to have only a minimal impact on business, perhaps with the exception of any major alterations to health care laws. He said his company is still sorting out how to rework its plans to ensure they are affordable, but knows that a new administration on either side of the political aisle might shake things up all over again.
“It seems like all the insurances companies are waiting to find out what the rules would be,” he said.
In the U.S. and in Canada, industry leaders are also waiting to see how much their respective countries will invest in infrastructure. A major uptick in funding for highways, bridges and other critical development could mean significant business for work trucks.
Mike Kastner, managing director of the NTEA, said the next president is likely to have to tackle highway funding. He said it seems there’s room for agreement on a multi-year spending plan, but it’s still not clear where all the money will come from.
Because the industry is a big contributor to highways through the 12 percent federal excise tax on the sale of heavy-duty trucks, people are paying close attention, he said.
“The work truck industry also produces the trucks necessary to build and maintain our roads,” Kastner said. “As such, we are concerned with how much money is available to the highways and how those funds are raised.”
Subhed: Tighter regulations in the offing
New leaders on both sides of the border will also get a chance to weigh in on the regulations governing vehicles on the road.
At the NTEA, Kastner is keeping a close watch on the second phase of federal greenhouse gas and fuel efficiency regulations for trucks. His agency has submitted comments on the proposed rules, and he said a final rule could likely be issued in the spring.
Kastner expects those new regulations – which would require that trucks be more efficient and produce fewer greenhouse gas emissions – would go into effect starting about four years later.
“This would come at significant costs to truck purchasers,” he said. “For instance, the government estimates the payback period from reduced fuel consumption for the increased cost to vocational truck buyers would be six years.”
Ribero, with Wilcox Bodies, said he’s seeing customers gear up for those changes already. They want lightweight bodies made with aluminum and smaller trucks than they would have purchased in years past. It’s a trend he thinks has been picking up speed for the last three years.
“I think more fleets are downsizing the size of the vehicle, just because of safety issues and fuel,” he said.
Moore said Canada’s emissions standards will likely mirror those in the U.S., though they may be administered differently. He expects to see changes coming from the U.S., regardless of which party wins the White House in the fall.
Kastner said regulators are likely to continue drilling in on issues of distracted driving.
“We expect to see proposals for collision avoidance technologies in the future,” he said.
Subhed: As tech booms, good workers in demand
Across the industry, advances in technology are continuing to change the way equipment is built, sold, and repaired.
Moore said it could be a particularly exciting time to be in the business of manufacturing chassis, even though developments like crash-avoidance technology get more attention.
Work trucks are likely to continue to look more like mobile offices, equipped with wi-fi, tablets, computers, and smartphones, and each device sharing information with each other through the Internet, Messer said.
“In general, our industry is slow to adopt new technologies, but this trend is gradually changing,” he said.
At the same time, however, companies continue to struggle with finding enough qualified workers to join the evolving industry.
“I just seems like less people are getting into this kind of a trade versus maybe they just want to get into computer technology, versus the manufacturing end of it,” Ribeiro said.
He said it’s clear it’s not just his company or his side of the industry. Across the manufacturing industry, he’s heard of companies struggling to find good welders, assemblers, and other workers.
Collins said he believes companies aren’t going to have luck hoping workers will come to them equipped with the right skills.
“One of the ways that I think our industry and others are going to have to treat these labor shortages is that we’re going to have to go out and find people ourselves and train them,” Collins said.
Messer, who called the worker shortage the “top issue” across the country, concedes that not much immediate progress is being made. But in 2016, he said, more people are aware of the problem and interesting in encouraging different paths for young people.
“College isn’t the answer for everyone and we need to help more people realize there is a viable career waiting for them in the work truck industry,” he said.
Erin Golden is a writer based in Minnesota.