Do you ever wonder why record years for trailer production nearly always seem to be followed by a hangover?

Over the course of the past 50 years, trailer manufacturers have set production records seven times. But six of those seven record years have been followed immediately by production drops averaging 32%.

A new high in trailer production is one of the most reliable leading indicators for predicting an industry downturn. This industry, to state the obvious, can be pretty volatile.

But last year was different.

The industry could have been ripe for another fall in 2016 after manufacturers posted record numbers in 2015. The bar had been set especially high in 2015 after several trailer manufacturers piled historically high numbers of container chassis on top of a record number of complete truck trailers.

But the thud never really happened. Rather than the average post-record-year drop of 32%, total production was off less than 7% last year. Factor out container chassis, which are not considered complete truck trailers, and the market edged down just 5% in 2016.

Trucks trailers, and the economy all tend to cycle. But at least in the trailer business over the past half century, it has been jolts to economy and the unintended consequences of regulatory activity that have caused the major swings.

For example, the US economy hit the skids following the dot-com bubble. The trailer market tanked, too, sending manufacturers into a three-year funk. By the time the skid was over, trailer production had been cut to half of what it had been in the record year of 1999.

The most infamous boom and bust associated with federal regulations has to be 1974-1975. Demand for trailers was at record levels in 1974 as fleets were trying to buy ahead of an upcoming NHTSA safety standard mandating antilock brake systems on trailers. The technology at the time needed further development, the trucking industry claimed. But the regulation took effect anyway on New Year’s Day, and trailer production fell by two-thirds in 1975.

So what made 2016 different? What about these six consecutive years of growth in trailer production? Shouldn’t an industry that historically cycles every five years be poised for a downturn? And shouldn’t it be by more than 5% following an all-time record? How did the industry market avoid the post-record blues?

It helped that no bombshells disrupted the economy and no radical regulation was looming that would trigger a pre-buy of trailers.

It seems instead that the boom in trailer production is being sustained by the shocks that rocked the economy almost a decade ago. Given the financial crisis and the severity of the collapse in 2009, gun-shy trailer customers returned to the market very slowly. Even after six years of growth—culminating in record production in 2015—the trailer market continues to feel the effects.

When we realize that the nation’s capacity to manufacture trailers is not that much above the normal replacement demand, it can take years to recover from a downturn. In a call to investors last month, Wabash National calculated that 200,000 dry-freight vans are still on the road that need to be replaced.

Nor does there appear to be a looming regulatory proposal that intimidates fleets enough to change their minds about when or if they should buy trailers. Phase 2 of the Greenhouse Gas proposal could have been one of those regulations, but for many fleets, GHG 2 will simply mandate what they have voluntarily installed on their trailers. That could change, though, as the standard becomes more stringent between now and 2027. Meeting the 2027 requirements may require technology that is not currently available.

We will leave the specifics to the experts, but 2017 has the potential to be much like 2016—not a record, but a very good year. Can there be surprises? Absolutely. We had lunch today with the Washington liaison for the National Association of Trailer Manufacturers. When asked what was new in Washington, he grinned and replied, “Everything. And I do mean everything.”

There is a good chance that among all those new things will be a second consecutive year of strong demand for trailers following a record year. Meanwhile, check out the results of our annual survey on Page 20 for more details on what happened last year and what trailer manufacturers expect to see in 2017. ♦