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Kenworth building for the future

Posted: April 24, 2019 by John G. Smith

Paccar president Harrie Schippers and Kenworth GM Mike Dozier say some truck orders are being placed for 2020.

CHILLICOTHE, Ohio – Kenworth is actively building its trucks and capabilities alike. Coming off a record year in which it produced 39,800 Class 8 trucks at a manufacturing facility in Chillicothe, Ohio, the OEM is now breaking ground on a new US $140-million paint facility that promises to deliver better finishes and higher productivity.

And there’s clearly demand to be filled.

“Most of our 2019 availability is late in the year, and we’re doing quite a bit of work with orders in 2020,” Kenworth general Manager Mike Dozier said during a media briefing, referring to existing backlogs for new trucks. The strong production volumes are anticipated for months to come.

“Even if orders continue at a really low level, I would still expect us to start 2020 with a pretty good backlog,” said Paccar president Harrie Schippers.

Like other OEMs, Paccar officials stress they’ve been carefully reviewing customer orders to spot the difference between those used to reserve spaces on assembly lines and the orders that will translate into actual sales. Related discussions with dealers and customers “stepped up” last May and June when truck sales were accelerating, Dozier said. “The last 12 months we’ve been very focused on assessing the backlog.”

But economic fundamentals remain strong, and there are no signs of slumping truck demand even if orders themselves have slowed.

One economic factor that has had a nominal difference in prices has come in the form of steel and aluminum tariffs, which remain in place despite advances in the yet-ratified U.S.-Canada-Mexico Agreement.

Kenworth’s Class 8 trucks for Canada and the U.S. are produced in Chillicothe, Ohio, while medium-duty models are assembled in Ste. Therese, Que. While some components are sourced outside the U.S., tariff-related price increases have been limited to a couple of hundred dollars per truck, Schippers said.

“We prefer not to see the tariffs,” he said. “We like free trade. Free trade is good to the economy.”

From left at a groundbreaking ceremony for a new paint facility are Karen Logan, Kenworth Truck Company controller; Lex Tisdale, Kenworth Chillicothe director of engineering manufacturing; Jack Schmitt, Kenworth Chillicothe assistant plant manager; Judy McTigue, Kenworth assistant general manager for operations; Jay Timmons, president and CEO, National Association of Manufacturers (NAM); Harrie Schippers, Paccar president and chief financial officer; Mike Dozier, Kenworth general manager and Paccar vice-president; and Rod Spencer, Kenworth Chillicothe plant manager. (Photo: John G. Smith)

Investing for the future

Production-related investments at the Kenworth plant in Chillicothe clearly demonstrate a focus on increasing capacity for the future. The new 120,000-sq.ft paint facility to open in 2021 will be 25% larger than the painting area that exists today, and will increase capacity by 50%. While the manufacturing operation currently runs on two shifts per day, the existing paint facility needs to run on three shifts to keep up with demand.

A new US $33-million automated cab assembly system is scheduled to be operational this July.

And as of this week, the plant also completed its transition to produce 2.1-meter cabs associated with T680, T880 and W990 models. Work on 1.9-meter cabs has come to an end. About two years since introducing a full Paccar powertrain from engines to axles, about half of Kenworths roll off the line with Paccar engines, and more than 25% have a full Paccar powertrain.

Looking further to the future, Kenworth is also working alongside Toyota to produce 10 hydrogen-electric vehicles to be tested in Southern California over the next 18 months to two years.

“Hydrogen-electric and battery-electric all have a place,” Dozier said, referring to industry efforts to work with fuel cells and batteries alike.

“The whole point of this program is to take that technology, the hydrogen fuel cell electric, and put it in an environment where you’re testing it from shore to store.”

But don’t expect Paccar to follow the lead of Nikola Motor, which plans to produce fueling infrastructure alongside its hydrogen-electric trucks. Paccar has opted to partner with Shell. “They have the expertise,” Dozier said.

It isn’t the only alternative fuel being researched, but some will make bigger gains than others. Dozier expects natural gas to retain the limited market share it has today, largely to fuel applications like refuse vehicles. “Long term it’s questionable what place natural gas will have,” he said.

An artist’s rendering of a new paint facility being built in Chillicothe, Ohio. (Paccar illustration)

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