April 24– Apr. 24–Last year, Mack Trucks took in nearly 31,300 orders for its heavy-duty vehicles, up 23% from 2017.
Now, as Mack starts to work through that hefty order backlog, production is expected to surge in 2019, especially at the company’s Lower Macungie Township assembly plant that employs about 2,500 people.
That’s exactly what happened in the first quarter, when Mack delivered more than 7,600 trucks, up 54% from the same period a year ago, according to a report released Wednesday by Mack’s parent company, Sweden’sVolvo Group.
“Activity levels in our truck business are high,” Volvo Group President and CEO Martin Lundstedt wrote in the report, pointing to the North American market in particular for the busy production. One year ago, Lundstedt noted, the company’s truck business in North America grappled with “capacity constraints in connection to the changeover to new truck generations for Volvo and Mack,” the latter ramping up production of its Anthem highway model in early 2018.
While Mack’s deliveries skyrocketed, its order intake was down big. In the quarter, Mack took in more than 3,200 orders, down 67% from the same period one year ago. With the high volume of orders received last year, Mack spokesman Christopher Heffner said, a large portion of the company’s 2019 order book is already filled. In addition, he said, Mack has been working with its dealers to ensure any orders received are “quality orders and not simply placeholders for build slots,” which also affected the company’s first-quarter order intake.
Mack’s market share in North America continued to drop in the quarter, hitting 5.5% in a decline that could be a reflection of a slowing construction industry that is a key market for Mack. Heffner noted that the overall heavy-duty truck market has grown primarily in the long-haul segment, which Mack expects to grab a larger portion of as the year progresses on the strength of the Anthem.
Mack’s first-quarter figures are indicative of what’s going on in the heavy-duty truck market, where orders for the industry were down 64% through the first three months of 2019, said Steve Tam, vice president of Americas Commercial Transportation Research Co.
While freight demand and freight rates (what truckers charge to haul a load) are growing at a slower rate than they were, Tam said both are still growing and truckers continue to pursue incremental profits, keeping them in the market and buying trucks. But right now, he noted, most truck manufacturers have no production capacity remaining for 2019, so a trucker placing an order today would be looking at the first quarter of 2020 for delivery.
With the order backlog, 2019 is shaping up to a be a better year for the industry than last year. Tam said ACT is projecting 337,000 new heavy-duty trucks in the North American market this year, up slightly from 2018 — when, he said, the market was “already banging against the ceiling.”
But in the cyclical truck industry, what goes up must come down — it’s just a question of when and how low it goes.
Tam said ACT is forecasting a drop to 245,000 heavy-duty trucks in 2020. He’s expecting production at truck manufacturers to begin slowing down late this year, specifically around the end of the third quarter or start of the fourth quarter.
“Time will tell whether that’s right,” Tam said. “That is, in fact, the most elusive factoid in the industry. Everyone is trying to figure out the timing of when the cycle is going to turn.”
Morning Call reporter Jon Harris can be reached at 610-820-6779 or at firstname.lastname@example.org
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