Much has been said about what this year holds for trailer manufacturers — specifically, will we have the worst year since 1975?
The outlook for trailers was a common topic for discussion at this year's TTMA convention. For thoughts on the economy and the outlook for the industry, you can peruse the rest of this month's issue. It's filled with market data and analysis compiled by some of the best experts in the business.
We will leave the prognosticating to the prognosticators. Instead, let's look back at 1975, the “gold standard” for tough times in the trailer business. Trailer customers bought fewer than 78,000 trailers that year. What happened back then, and is there a lesson for us today?
In 1975, the bottom fell out of trailer production. The industry went from a record year in 1974 to the worst year in decades — a 65% drop in business in just one year.
The primary reason for the decline: the National Highway Traffic Safety Administration was about to mandate antilock brake systems on trailers. Trailer manufacturers and suppliers protested that the technology was not ready for the regulation. Customers, afraid that they would only get unreliable brakes for the extra money they would need to pay, rushed to get their trailers ahead of the January 1, 1975 implementation date. It was the mother of all pre-buys.
A new report published in The Federal Register April 24 gives new validity to those old concerns. The purpose of the report is to evaluate the maintenance costs of two major trailer-related safety components — antilock brake systems and rear underride guards. But it also includes some insight into the reliability of ABS before the agency mandated it in 1975. During a two-year test in the early 1970s, 46% of the trailers required ABS maintenance. Most of the work involved inspection and/or adjustments to the system. But one-third of the service work required repair or replacement of the ABS. The agency mandated ABS anyway. (A complete report on the study can be downloaded from the NHTSA Web site, www.nhtsa.gov).
After the mandate went into effect, the complaints continued. The American Trucking Associations, Paccar, and what is now the National Truck Equipment Association took NHTSA to court. Three years after ABS was mandated for trailers, a federal appeals court agreed with industry tossed it out.
For almost a decade, ABS was not required on trailers — but improvements in the technology led many fleets to buy ABS-equipped trailers voluntarily — especially fleets that hauled hazardous cargo or had other safety concerns. In 1998, NHTSA again mandated ABS for trailers, but this time the technology was ready — thanks in part to major improvements in computer technology.
So has the second generation ABS been reliable? Apparently so, according to the study that NHTSA released recently. The research is based on repair data from 13 trucking fleets on service work performed between 1998 and 2003. The conclusion: ABS maintenance costs fleets on average 25 cents per month per trailer (in constant 2007 dollars).
The report also looks at maintenance costs for underride guards. Like ABS, establishing standards for underride guards was a lengthy process — one that went on for years. Eventually NHTSA developed performance standards that significantly improved the old ICC bumper. And according to the study, maintenance of this safety device is nominal. Fleets spend an average of 16 cents per month on underride guard maintenance.
The point: effective (and cost-effective) rulemaking takes time, and it requires listening to all concerned. In the interest of highway safety, fuel economy, or environmental concerns, it's easy to get ahead of ourselves. Yet it's awfully hard to force feed innovation, and it is risky to build mandates on unproven technology. Regulations work a lot better when the technology required to comply with those regulations also works.
As of yet, the Obama administration has not appointed a director for NHTSA. But that has not kept the agency from placing a number of initiatives on its agenda, including tighter fuel economy standards and restrictions on the emissions of greenhouse gases. The goals of these regulations are worthy. Yet regulations sometimes have unintended consequences — including potential effects on an already struggling truck and trailer manufacturers.
What path will the agency take in regulating this industry? In recent years, the agency has done a much better job of considering all facets of an issue before implementing regulations.
Right now, trailer shipments are approaching 1975 levels. Let's hope our agencies' approach to regulations never does.
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