Mack sees continued truck order growth, but likely higher prices due to tariffs

November 30, -0001 Brian Straight, managing editor

 Mack Trucks' Roy Horton, left, Jonathan Randall, center, and Stu Roselli speak to the media during a press briefing on Thursday at the Mid-America Trucking Show.

Mack Trucks' Roy Horton, left, Jonathan Randall, center, and Stu Roselli speak to the media during a press briefing on Thursday at the Mid-America Trucking Show.

With truck order forecasts continuing to rise, Mack Truck officials speaking at the Mid-America Trucking Show in Louisville on Thursday reiterated their confidence in a strong economy through the end of this year. Jonathan Randall, senior vice president-sales and marketing, said GDP growth should be 2.88% this year and strong freight volumes and tight capacity will drive NAFTA region Class 8 sales to 280,000 units this year.

“I can tell you there is significant upward pressure on that 280,000 number based on order intake,” he said.

“Things continue to hum [in the economy],” he added. “Things that were happening in 2017, we see continuing in 2018.”

Randall noted that the orders are not only replacement vehicles, but there is growth occurring. “Long-haul and fleets are driving this intake,” he said, noting that in the last 5 months, 48% of new orders are long-haul models.

“This isn’t pure replacement cycles, there is some growth,” Randall said. “But when we’re dealing with fleets and they are buying 50 trucks, they tell us if we could find drivers, we would order another 15.”

The lack of drivers is a concern that could dampen the market, he noted, especially as the construction market grows. Construction spending was $1.25 trillion in 2017 and the sector had 35% job growth in 2017 with 210,000 jobs added. With housing prices up 7% in 2017 and expected to rise another 6% this year, the building boom should continue, and with it more job growth that could pull away potential drivers.

“Who’s going to drive all these trucks because you’re going to have 280,000 trucks and that’s not all replacement,” Randall asked.

Day cabs have been particularly strong of late as fleets try to take advantage of more regional haul opportunities. Randall said order intake for day cabs has overtaken Mack’s construction and vocational orders in the last 5 months.

Areas of concern, though, relate to the renewed use of tariffs that could slow the economy, particularly the recently announced steel and aluminum tariffs.

“We’re obviously paying close attention to the tariffs … but we haven’t gotten a lot of direction yet,” Randall said. “It will certainly have an impact on cost, a negative impact on cost.”

Randall also mentioned that the strong order growth is adding pressure to the supply chain for vehicles. “There are challenges in the supply chain for sure, certainly everyone forecast a strong year but not this strong,” he said. “But at this time, we don’t see any major issues meeting demand.”

Driving the growth at Mack is its new Anthem model, first introduced last year and finally in production as of early February. The company said there are about 500 Anthem models in fleet operations already with more coming.

“The order intake has been very positive for us,” Randall noted. “Our order intake for this year has already surpassed our highway orders for last year, so we will see market growth.”

According to Stu Roselli, vocational product manager, the new Anthem with 70-inch sleeper with high efficiency GHG17 Mack engine is providing an 8.8% fuel economy improvement over a 2016 Pinnacle model with a 2016 engine. About 3% of that is attributed to the aerodynamic package and the rest to the engine. Using a standard GHG17 engine still produces a 6% fuel economy improvement, he said.

A day cab model achieves about 1 ½% in aerodynamics and 3% for the engine.

With ergonomic design on the inside and a standup sleeper allowing a 6-foot tall driver to easily walk from the front of the cab to the back of the sleeper, the truck was designed with driver comfort in mind. Controls are placed within easy reach for the driver and it offers more storage capacity than most competitive models, Roselli said.

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Potential customers can also go to build.macktrucks.com to design their own model. Once there, users can customize the vehicle as they choose and either print out the spec sheet and picture or email it directly to a dealer for order. They can also post to social media accounts.

Roy Horton, product manager, spoke about Mack’s efforts to support its vehicles, efforts which have reduced the average days out of service from 4 to 2. Those efforts include the Mack Connect solution. “We’re taking a lot of our vehicle and Uptime solutions and putting them in one place,” said.

Under the Mack Connect umbrella is connected driving, support and business functions.

Horton explained that the connected driving solutions features technologies such as Bendix Wingman Fusion (which is standard on Anthem models), infotainment and information services and predictive cruise control, which offers up to 1% fuel economy improvement through GPS-enhanced cruise.

GuardDog Connect falls under the connected support solutions. “Our telematics platform provides all the data communicating with our OneCall Center that has live people,” Roselli said. “And Mack ASIST ensures parts show up.”

Mack is also providing data to fleets under its connected business solution, including installed Telogis and Omnitracs options. “This gives our customers a choice so they are not reliant on having third-party services installed to get the services they expect,” Roselli noted.

Mack has also launched a new customer experience management program with Medallia so it “can see uptime through customer’s eyes.”

Medallia provides a number of services, including native text analysis and role-based reporting.

“This is not just a survey,” Roselli said. “We are taking the feedback from the customer, analyzing it [and incorporating it into our products and services].”

Randall also mentioned that Mack is working on over-the-air programming repairs for some diagnostic problems. “These tests are going very well,” he said. At this point, it is strictly in test mode.

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