When you talk about brisk sales in the Canadian heavy-duty trailer business, these days it’s important to clarify whether you’re talking about the vehicles or the companies that build them. Nearly three months after Trailmobile Trailer Corp. acquired controlling interest in Mond Industries, Canada’s second-largest trailer manufacturer, Canam Manac Group of Ville de Saint-Georges, Que., said it has reached an agreement to sell its Manac semi-trailer division to Chicago-based Great Dane Limited Partnership (GDLP) for $87.5 million. The deal, still subject to regulatory approval, includes all Manac trailer assets-assembly plants in St-Georges de Beauce, Que., and Orangeville, Ont., plus service centres in Quebec City, Boucherville, Que., and Mississauga, Ont.
Manac is Canada’s largest semi-trailer manufacturer, building nearly 7500 trailers and posting revenue of $229.6 million in 1998. The company is expected to operate as a wholly owned subsidiary of GDLP with its current management team intact-Gaston Bureau as president and Charles Dutil as executive vice president in the new Canadian firm yet to be officially formed. Canam Manac Group president and CEO Marcel Dutil said the sale would allow his company to focus on its core steel business, which posted record sales of $1 billion in 1998. Indeed, Canam Manac started producing trailers in the 1960s when it found that it wasn’t satisfied with what the market had to offer for hauling steel.
The deal also continues the trend toward consolidation in the North American trailer industry, and puts control of this country’s two biggest players in the hands of American interests. Ten years ago, that may have raised a hue and cry among Canadian nationalists. Not so today, because it’s a radically different free-trade world in which words like “globalization” are commonplace, where phrases like “branch plant economy” have little currency. Simply put, markets and nations don’t often share the same borders these days. In the case of Mond and Manac, existing Canadian plants will stay put to service not only the Canadian market but also the U.S. Northeast, though product lines will change.
Manac’s new parent is itself the result of a merger. GDLP was formed in February 1997 after Chicago-based CC Industries acquired the assets of Great Dane Trailers and merged them with its Pines Trailer division. The Pines nameplate was retired and all the company’s products now bear the Great Dane logo. GDLP currently operates eight manufacturing plants with a distribution network of 60-plus outlets in North and South America. With Manac in the fold, its combined production capacity would exceed 60,000 units per year.
The family-owned firm would not comment on possible changes to the Manac manufacturing and sales operations until after the deal’s ink has dried. But Charles Dutil indicates that Manac’s Orangeville plant will produce Manac-brand dry van trailers as well as Great Dane refrigerated trailers, bringing large-scale reefer production to Canada for the first time.
At Mond, production and employment at the Mississauga and Etobicoke plants will more than double. A trimmed-back product line-the exact range is not certain, but the focus will undoubtedly be dry vans-should allow faster build rates. Executive vice-president Bert Clay says that Mond’s total production could reach 7200 trailers a year at capacity, about 3000 of which would be exported to the northeast U.S. Mond will also build the 2000 vans Trailmobile had been exporting to Canada. All products produced by Mond will carry the Trailmobile name.
Deciding who will sell Manac and Mond trailers is another issue, because in quite a few cases there are distributors who were previously competitors now selling the same product line. Both Charles Dutil and Bert Clay acknowledge a challenge here. “There are changes coming,” says Dutil. “We’ll find the proper solution for the Canadian market, and I think it will be fairly quick. I really don’t see any problems.”
These two blockbuster deals represent an ironic turnabout in that American control of the volume trailer-making industry in Canada has made a return-after Manac and Mond between them revived the Canadian-owned sector. Both companies, and others involved in the trailer market, insist that such consolidation was inevitable.
Trailers are seen as a commodity, and it’s hard to make the kind of money companies need to foster serious growth so they can export products in useful quantities. Manac and Mond, in fact, at one point had discussed a merger of their own. Mond’s discussions with Trailmobile heated up when talks with Manac cooled down.
Both firms also insist that they remain Canadian and that these deals are good news in terms of increased exports and thus added employment. “The key initial effect [of the deal] will be a significant increase in production and employment,” says Trailmobile Canada president Pat DiLillo. Likewise, the infusion of Great Dane resources “will make Manac a much stronger player in the industry” without compromising Manac ideals, says Charles Dutil.
“I still have Manac on my shirt, I still have Manac on my hat when I walk around town,” he says. “What makes Manac are the people who make the trailer, the guy who sells it, the people who stand behind the steel and the tires.” That level of pride and commitment, he says, won’t change.