THE trailer segment of the industry is not rebounding as quickly as trucks are, but a mid-decade boom in the truck equipment market is in the offing, according to Stephen Latin-Kasper, the NTEA's director of market data & research.
“The forecast pros are heavily outweighing the forecast cons at this point,” he said. “A lot of good things are happening.”
He said the pros are low interest rates, inflation, and unemployment, along with increasing productivity, capital expenditures, and trade. He said the unemployment rate of 6.1% is essentially the historical average.
“There are problems in the labor market,” he said, “but the simple fact of the matter is that 6.1% is not a bad unemployment rate. And we would expect that to improve going forward.”
He said the cons are terrorism/consumer confidence and a decline in government spending. Consumer confidence has been creeping up, but as he noted, “We have potential here for having more difficulty in taking care of things in Iraq and Afghanistan than had been expected on our way into those conflicts.”
Medium-truck production started outpacing sales toward the end of 2002 — meaning inventory was being built — but Latin-Kasper expects the same kind of correction that happened in 1998 after production got way ahead of sales in 1995.
Heavy trucks
In the heavy-truck segment, he said that production has been falling in 2003 as sales have declined slightly. But the pre-buy's effect on the numbers will stop causing problems, and by the second quarter of 2004, production and sales will be nearly equal.
The Trailer Production Index has showed a steep incline in 2003, with a 45-55% increase over 2002. But Latin-Kasper said the picture still is not good.
“The only word to describe it is terrible,” he said. “As bad as things were in the medium- and heavy-duty truck segments, what was going on for the trailer-manufacturing segment was that much worse. You've seen a huge increase in the percentage of growth since the beginning of 2002, but in terms of the level where it peaked at the beginning of 2000, they have a long way to go. So even at 45-55% growth in 2003, they'll need another two years of 30-40% growth to get back to where they were in the beginning of 2000. But they're headed in the right direction.”
In the 12-month period ending in July, the Producer Price Index had showed a 0.8% increase for truck trailers and chassis (10,000 lb per axle and over) and a 0.2% increase for complete trailer units (10,000 lb per axle and over, except vans and tanks).
“The bleeding has stopped,” he said. “They're no longer having to lower prices. The prices are starting to come up a bit.”
Aluminum plate had experienced a 4.5% decline in price, while there were only modest increases in steel, hot-rolled sheet and strip (0.1%), and steel, sheet and strip, cold-rolled, and stainless (4.0%).
“The worst of the steel-price increases is over, and prices are falling, which is good news for us,” he said.