INDUSTRY parts departments aren’t just surviving. They’re thriving.

That’s the picture that emerges from interviews conducted by Trailer/Body Builders with truck equipment distributors, trailer dealers, and parts specialists from around the country.

The commercial truck body and trailer business was hit hard during the recession and has come back strong, but parts departments were far more consistent during that time, and they remain very healthy.

“We’re in growth mode,” says John Gipson, VP of Cobble Hill Trailer Sales in Milton, Vermont, a Wabash dealer. “We just opened our third location. I see a lot of opportunity in the parts market. I see a lot of doors opening. The parts market was kind of strong through the downturn because people weren’t trading equipment. Somehow, we have managed to achieve growth each year.

“Now the sales side is coming alive. With people buying new equipment, there will still be a strong surge on the parts side because they’re trading in equipment and that requires repair work. A lot of fleets are starting to purchase new equipment and some of the fleets are purchasing new equipment and holding old equipment so they can get trailer pulls back up, so it could be a win-win on both the trailer sales side and parts side.”

And the good news appears to be that the trailer and truck-equipment industry doesn’t appear to be experiencing the same kind of issues in the supply chain as the auto industry.

According to a story in USA Today in June, “a combination of rebounding sales and an unprecedented number of new models in the works has stretched the auto parts supply chain so taut that the entire industry is holding its collective breath that it does not snap and jeopardize the recovery.”

Carla Bailo, who heads Nissan Americas’ research and development in Farmington Hills, Michigan, told USA Today that everyone in the car side of the business is experiencing parts shortages and that the supply chain is one of the biggest threats.

“Everyone cut back, and is now ramping up,” she said. “We can’t get up to speed as quickly as in the past.”

A few examples were cited: There were parts and quality issues with the Lincoln MKZ, forcing customers to wait months for cars to be fixed and delivered; and the new Jeep Cherokee launch was delayed by a month.

While most of the truck equipment and trailer industry executives said the supply chain isn’t an issue, Gipson said he has experienced problems.

“We order parts through our PDC networks and they’re blaming it on another manufacturer, whether it’s a raw-material shortage or inventory shortage,” he said. “I do believe the problem we’re running into is everybody has run their inventories down so low and they’re relying on inventory turns to be their success. They want low overhead and want to boost sales, so now we’re starting to see a surge in sales and surge in equipment sales at the same time.

“Usually what happens in that market is that original equipment manufacturers trump the aftermarket side so manufacturers gobble up what inventory is out there. A lot of PDCs are not ready for this demand, so their inventories are low. Everybody’s trying to run a very slim inventory, and it leads to lot of supply line and lead-time issues.

“It makes us work harder for the sale. Sometimes you have to go through three or four different suppliers to find the necessary parts because the customer needs those parts and cannot wait for a three- to four-week lead time. They need those trailers rolling. So you’re making seven phone calls instead of one or two. As a result, time management is out the window.”

Here’s a sampling of what Trailer/Body Builders found:

 

Jason Hall, parts manager
Wick’s Truck Trailers
Omaha, Nebraska

What’s happening in the parts market?

“Things seem to be improving. Customers are a lot more cost-oriented. They want to know where parts are coming from. They’re asking the country of origin. They’re even more price-conscious than they’ve ever been in my 30 years of doing this. They know what the guy down the street is selling it for compared to what I’m selling it for or compared to the guy across the country. It’s a lot more competitive market, and the customer is a lot more in tune with what he should be paying than he has ever in the past. I just think it’s the overall economic conditions. With the Internet, guys are more in tune in their downtime to see if they’re buying a wheel bearing or a wheel seal or a wheel speed sensor in Omaha, how does that compare to what they’re paying on the coast? Is it 10% cheaper or 10% higher? I think you can find a lot of these products on eBay stores now.

“We adjust to it. We changed our philosophy. At one point in time, we had products we were buying solely based on who gave us the best bulk buys. We adjusted our thinking. We’re keeping all name-brand products, for the most part. We’re buying very competitively. We’re taking fair markups to the street, but we’re trying to compete with big-box stores, so to speak—your FleetPrides and your larger WD people around the country, adjusting the markup percentages we’re doing across the counter, keeping them fair and reasonable and being consistent with products we’re keeping on our shelves. If you come in and buy a Meritor part from me today, I’m going to have that same Meritor part tomorrow, next week and next month, where in the past the competition in town hasn’t always been able to say that. You’d go in the door and buy a Bendix brake valve on Monday, and Wednesday of the following week, they’d have an offshore-branded part on the shelf. Whoever got it for the best price on that day is who suppliers were buying from. We fell into that a little but have changed our focus. We decided we’re going to be competitively priced on name-branded, first-fit-style, OEM-type parts as much as possible.

“We want to be known for quality customer service and quality products at a competitive price. I don’t necessarily want to be known as the cheapest guy in town. I want to be known as being highly competitive and having quality products every time you come in the door. And consistent service. That keeps our main clientele coming back.”

Any supply-chain issues?

“A little bit. Everybody is going with what they’re considering just-in-time inventory. I remember back in the late ‘80s early ‘90s, your PDC may possibly have run out of something but you were able to pull it out of a truck plant or trailer plant where they had an excess. And they could ship that to you in an emergency-need situation. We don’t really have that ability anymore because all plants have just-in-time inventory. They know they’re going to build 50 trucks this week and here are the specs of each one of the 50 trucks. They have parts to build those 50 trucks, period. They don’t have excess inventory. Trailer manufacturers seem to have followed that trend. That has impacted us slightly. I think the supply chain has reacted quickly, for me at least, and that has overcome that issue. There are some things here and there that pop up. For the most part, the supply chain has a done good job of reacting to OEMs’ just-in-time philosophy. That was painful for a short period of time for me. They’ve adjusted and we’ve adjusted pretty quickly. I don’t see any huge issues there.”

Any hot new products you’re adding?

“The big thing right now has been aero devices. There are several different styles and models out there. People’s philosophies change pretty quickly—or what they think they need or what they think works best. So I’d say for us, that’s been a pretty hot topic. We have three different styles in house right now. That’s been a good boost to our business. And tire-inflation systems and repair parts for them. I get most of my calls for the Wabash proprietary system, the DuraPlate AeroSkirt. And SmartTruck UnderTray systems are a popular item. Then you have Green Wing aerodynamic side skirts, which is a decent product and we’ve had good luck selling that.”

What can suppliers do to offer better service?

“Turnaround times with the supply chain. Just putting emphasis on their customer service is the best thing they can do for people like me that service walk-in customers and repair-trade people coming into the shop. When I call my support staff that takes care of us through supply channels., I need them to be responsive and get back to me in a timely manner, and if we have a back-order situation, to follow it through the chain and make sure nobody drops the ball. That’s been pretty good for us right now. I have very few issues with that. I think everybody’s pretty hungry right now and wants to do everything they can to make sure they’re not losing sales and keeping my end user happy, because if he’s not happy with me, it goes all the way back to the OEM level. That breeds discontent through the entire supply chain. I think everybody’s realized that more than ever.”

 

Dave Durand, VP of aftermarket
Great Dane Trailers
Savannah, Georgia

What’s happening in the parts market?

“Year over year, trailer parts sales are relatively flat, and we see 2014 as being about the same.  The overall industry is very mature, which contributes to keeping the growth rate minimal.  When you combine that with the recent large amounts of new trailers being purchased, and the fact that today’s trailers are built much better than in years past, it puts a damper on trailer parts sales.

“The growth we have seen has been coming from parts products not typically associated with a trailer dealer.  The truck parts and accessories and truck equipment parts are both doing well for our dealers that have entered these segments.  In other words, growth is coming to our dealerships when they expand outside of their typical trailer-parts horizon and aggressively expand into new product groups.

“For example, Royal Truck & Trailer, our full-line dealer in Detroit, has just opened a second facility to better serve their parts customers.  In addition to the new facility, they have expanded their parts product offering way outside of what a typical trailer dealer normally offers.”

Any supply-chain issues?

“We occasionally experience a glitch in the offshore supply chain, but not to the degree the automotive industry is currently experiencing.”

What can suppliers do to offer better service?

“Spend more consistent, quality time with our distributors.  They welcome supplier support, primarily as it relates to product and repair information, marketing, and training.  We think there is a huge opportunity for good suppliers to sell more of their product through our distribution channel by engaging our distributors in a bigger and better way.”

 

John Gipson, VP
Cobble Hill Trailer Sales
Milton, Vermont

What’s happening in the parts market?

“The trends we’re seeing—and we might be regional—is a lot more of service style equipment, LTL spec vans and reefer vans, and LTL roll-up doors, being worked on, spec’d and sought out. I don’t know if it’s more of the service end doing it. That’s what I’m really starting to see.”

Any hot new products you’re adding?

“I don’t have any rising stars I’m happy with and out there selling. We focus on the wheel end and trailer body parts. We focus on trailers and steer away from power a lot because we have a lot of power dealers up here and it’s not a market we want to get into. There’s a lot of experimentation going on, but there’s not one I see rising to the top. We had some aero devices. We’re a Wabash dealer and do deal with aero skirts. We’ve seen a rise in those sales but the rise in those sales isn’t so much customer-driven as it’s government-driven. If they’re hauling into California, they have to have certain things so they can get in and out of California. Aero skirts are one of them. Those are by far the most common. These rear header cones don’t seem to be big up here, but we’re in the Northeast. We don’t run the long, straight roads they do out west.”

 

Joe Walker, parts manager
RC Trailers
Birmingham, Alabama

What’s happening in the parts market?

“As far as body parts, it seems like over the past several years, the supply availability has gone down. Nobody’s stocking as much, so we’re having a problem with that. We get a specific trailer in there that’s a wreck, and nobody locally is stocking any parts. I think it just comes down to the idea that everybody’s cutting inventory. A lot of times, whenever we go to Great Dane or Utility for a piece of rail, you have to buy the whole rail. You used to never hear of that, but it’s more frequent now. You need 10 feet of rail, and you have to buy a 52-foot piece. At PDCs, we’re having problems with fabricated parts not being available. You just have to do the best you can.”

Any supply-chain issues?

“Generally speaking—and I’ve been in this for 39 years—when the order line gets out to five, six, seven months, availability gets difficult because so much is going to the manufacturing side.”

 

John Princing, president/owner
Scientific Brake and Equipment
Saginaw, Michigan

What’s happening in the parts market?

“It’s been a good year. Obviously, trailers and trucks hauling petroleum-type products are hot entities, but I don’t see any particular trends as far as parts and brands. There is lot more crude oil drilled for and hauled. There is a lot of fracking work for natural gas, so anybody in the oil and gas business is running pretty heavy. Parts involve pretty much everything they use. There are a lot of replacement parts: brakes, suspensions, proprietary valves, things that are moving the product. That will continue to be consistently strong. I don’t know if it will go crazy, but it will be strong for awhile. They use just about everything from a parts perspective.”

Any supply-chain issues?

“No. With most of the trailer OEMs, I’d say they are comfortable with their backlogs, and there have not been any real blips. Nothing like, ‘Gosh, we lost two or three weeks of production because we couldn’t get one particular component.’ We haven’t seen it on the heavy-duty side.”

Any hot new products you’re adding?

“We’re always adding different things, but there isn’t one particular hot new product. Everybody’s coming out with something new and different. I think vehicle lighting is a part of the business that’s changing the most right now. For people who are adopting LED lights, there is not much of a replacement-parts

business, so those companies have become designers of what I’d say is accessory lighting—extra lighting that goes on work trucks and trailers.”

 

Mike Anderson, VP
Semi Service Inc
Salt Lake City

What’s happening in the parts market?

“We are pretty diversified on the parts end. We do trailers and truck equipment and CNG. The semi-trailer parts market is steady, but not where it has been. On the truck equipment side, it’s starting to trend up. We’re talking flatbeds, dump beds, service bodies, ladder racks, toolboxes. CNG is the business that has died off on our end. We do the EPA-certified kits, and we’re losing a lot of business to non-certified EPA kits. And there’s more and more competition in the industry on that end. Trailer parts are trending steady. The van business on the truck equipment side … we’ve been double what we did last year. We’re so diversified. Snowplows are trending down, and we can’t figure that out.”

 

Tom Foulger, purchasing manager
Semi Service Inc
Salt Lake City

What’s happening in the parts market?

“It’s slow, but we’re transforming into disc brakes, and the aftermarket is going to follow that. It’s a matter of stocking inventory. When you’re first seeing the transition away from drum to disc, it changes a lot of inventory around. But how much do you buy on the front end and how much do you wait for demand to build before you buy your inventory? It’s a dilemma. You can’t buy a bunch of parts and set them on the shelf and let them sit. That doesn’t make sense. You have to see what the market is demanding in the way of disc brakes and rotors as opposed to brake drums and shoes. There are dealers that buy truckloads of drums at a time, and that’s’ going to change because I don’t think you will see discs wear like the drums, so that’s going to be a diminishing market in drums and an increasing market in brake disc shoes.”

Any supply-chain issues?

“Not as much in the trailer industry, probably because the number of dry vans and trailers out there far exceeds tractors, so general demand for that stuff has been good.

“You’re seeing a lot more sale of new vehicles in the last few years. Ford, Chevy, and Dodge all had their best months ever in the last month in truck sales. Class 8 trucks are enjoying increased demand. It’s indicative of the amount of time people have lengthened buying cycles. Demand has exceeded the supply right now for new stuff because demand has been higher than it has been in five years. The supply chain is changing because you get a lot more overseas—Chinese, Asian, or even European vendors—and the replacement cycle for your inventory is increasing.”

Any hot new products you’re adding?

“Skirts became required in California, and I think you’ll see that grow nationwide. That’s a fuel savings, but the majority of the market was not going to do it until you made them do it. In California, they made them do it. I think that will become a standard in the future.”

 

Mike Skinner, parts manager
Knapheide Truck Equipment
Quincy, Illinois

 What’s happening in the parts market?

“Our parts market is kind of sporadic. It’s been a slow summer. Wintertime, we start picking up business with snowplows, but as far as truck equipment in this local area, it’s slowed up. It’s just the way the economy is around here. This is a farm area. It’s not a big metropolis like Kansas City or St. Louis. It’s taken its toll around here. Our manufacturing facility is just up the road, so we’re doing a lot of work with our manufacturing, which sends products across the country and around the world. The local market is just not there. We’re tops in utility service bodies around the country, so we have products going all over the place, and luckily enough, we get to put some of that on too. We’re an installation facility. We do dump bodies, platforms, and our service body.”

Any supply-chain issues?

“There are always ongoing changes, but nothing out of the ordinary. Not any long lead times in any particular area. We’re able to get anything we want in a reasonable amount of time.”

 

Scott Anderson, GM
Southwest Trailers
Tulsa, Oklahoma

What’s happening in the parts market?

“It’s been relatively good for us the last two years. I see it staying about the same. There are so many changes going on in new equipment that people are afraid to commit to new equipment, so that will continue to supply the parts side of it. I look for the future to be as good as it’s been the last few years. On our end of the business here, there are a lot of suspensions, brakes, cargo control, filters.

“Our numbers are up, but it’s the same products we’ve been selling out of this location for 10 years. Probably the biggest thing that has increased has been cargo-control items. We’ve probably doubled sales in the last year on that. I think that’s because we have a better control of our inventory and having more of it available at the time of need instead of losing sales. I’ve increased the dollar value of merchandise on the floor by about 20% in the last two years. I like to think a lot of that has to do with our continued growth and increased numbers.”

Any supply-chain issues?

“Not very much. I got in a big order today from one of my suppliers. Most every week, 100% of what I ordered is there.”

Any hot new products you’re adding?

“We haven’t sold a whole lot of aero devices. Here in Tulsa, we have a lot of flatbed and dump trailer business. Skirting doesn’t have much effect on those trailers. In fact, I’ve got one nose cone in stock I just ordered for a wreck. That’s probably the first one I bought in three years.”

 

Jeff Schmidt, parts manager
Auto Truck Group
Chicago

What’s happening in the parts market?

“On the railroad side, we are extremely busy. We deal mostly with railroad trucks. Most of the places I’m talking to—the repair shops—seem to be extremely busy. It’s steady, and then some. We deal with road vehicles. We look at anywhere from three-quarter and one-ton pickup trucks all the way to Class 8 trucks we upfit and put equipment on. We’re an upfitter of trucks, but our main accounts are railroads. There are always parts going out for those, whether the economy is good or bad. The segment that doesn’t seem to be real strong is the construction side. But I don’t see as much of that.

“The last three or four years, we’ve seen nothing but steady, constant stuff. We’re in growth mode with parts. We merged with Fleet Body Equipment out of Dallas-Fort Worth recently, and if you put our two segments together, we’ve grown at least 20%. We’ve got some pretty good growth trends there.”

Any hot new products you’re adding?

“We’re pretty much on the same products we always do. Maybe different variations due to technology, but the products are still the basic bodies, cranes, and high-rail units we service and sell.”

 

Andy Nickel, owner
Illiana Truck Parts
Terre Haute, Indiana

What’s happening in the parts market?

“The bulk of what I do is used parts. We do sell some new and used grain trailers and grain bodies. We have used bodies in the yard. Our used-parts sales are up. Our retail is not as good as what I’d like to see, but we’ve had a good wholesale market.

“Compared to last year, we are extremely busy. We’re big on agriculture here, and we’ve been busy with parts and body sales. It’s probably as good as it’s been in a good while. Last year was a burnout year because of the drought. Nobody did anything because they didn’t have any reason to spend money. This year, they’ve got a good crop. We’ve had some rain, so it seems like everybody’s pretty optimistic.”

Any hot new products you’re adding?

“No, but the biggest-selling parts would be engine transmissions and differentials. The bulk of them are mid-range. We do get some on the Class 8, but a lot of it is Class 6-7.”

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Outlook from the University of the Aftermarket

What’s new and coming in the aftermarket? Pedro Ferro, president of Meritor’s aftermarket and trailer operation, offered these thoughts in a presentation given at Northwood’s University of the Aftermarket in July:

  • Private labels will continue to grow, and products increasingly will become viewed as commodities.
  • Increased direct buying from low-cost sources that lack the technical expertise to guarantee performance and quality, and product safety. This market trend creates an opportunity for imitation parts to enter the market.
  • Differentiation and technical innovation is key to profitable growth.
  • (Platinum Shield example)
  • The increasing consolidation of distributors.
  • Commercial vehicle aftermarket have become attractive targets for private equity and light vehicle Aftermarket companies. This trend is driving up competition and changing the channel structure, with the emergence of mega-players.
  • Repair facilities are finding it difficult to access the right information. The successful suppliers and distributors will be those that can tie parts availability, service readiness and relevant repair information all together.
  • Proprietary systems in vehicle electronic systems are increasing.
  • Parts are lasting longer. A brake block today lasts on average 400K miles versus 160K 30 years ago.
  • We have a growing need to find and provide parts and services to second and third owners, wherever they are. ♦