Trucking Industry Continues to Face Tribulations

THE JOURNAL RECORD, August 22, 2000 | Go to article overview

Trucking Industry Continues to Face Tribulations


NEW YORK (AP) -- Just a year ago, truck dealer Dave Olson could not hire enough sales people to keep up with all the customers looking to trade in their old vehicles and buy new rigs.

But these days, Olson and his staff are doing much less selling and a lot more consoling of would-be buyers, as a glut of used trucks has cut drastically into the value of their trade-ins.

"You've got to just look the guy eye-to-eye and tell him, `Here's what your truck is worth. I'm sorry'," says Olson, vice president of truck sales at North Star International Trucks, a dealership in Minneapolis.

In nine cases of 10, Olson estimates, those customers are walking out the door, abandoning their plans to buy.

Stories like Olson's are becoming increasingly common and the industry is anticipating new truck sales to decline by about 25 percent in the next year. Soaring diesel prices, rising interest rates, and a shortage of drivers have hit the industry in the gut, scaring truck operators away from dealerships.

While makers of heavy trucks have recently had some of their best years ever, manufacturer Navistar International forecasts industrywide sales this year of 245,000 heavy trucks, down from 286,000 last year.

Navistar recently announced plans to cut 1,100 white-collar workers. The cuts follow layoffs of 800 workers at its Ontario, Canada plant and word that another 500 may soon follow.

Freightliner, owned by DaimlerChrysler, also announced the layoff of 3,475 workers at its parts and assembly plants. That was preceded by word from Paccar that it has been cutting workers and reducing production days at its five North American plants.

Paccar estimates industrywide orders for new trucks are down 30 to 40 percent over last year. Freightliner says it expects heavy truck orders to drop by about 25 percent for the entire year.

What went wrong?

Observers say part of the problem is that aggressive production and sales in the past few years have saturated the market with late- model used trucks, driving trade-in values down by as much as 50 percent in the past six months.

"The fleets just cannot afford to take that loss on their used trucks, so they're running them longer," said Phil Pinto, sales manager at Adams International Trucks, a dealer in Charlotte, N. …

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