LAS VEGAS, Nev. – Kenworth general manager Mike Dozier continues to be impressed by market fundamentals that are driving truck sales.
Current forecasts for 2018 Class 8 truck sales in Canada and the U.S. sit close to 285,000 units, and those volumes are expected to be repeated in 2019.
“If we look into ’19, this level seems OK. We can continue to sustain at this level,” he said in an interview with Today’s Trucking.
“If I look at the market this year, the great thing is customer businesses are successful. They’re getting rates where, even going back three or four years, pennies were hard to come by,” he said. “Combined with the economic market fundamentals, things are in a good place. Tonnage is good, construction just continues to go, general consumer purchasing [is strong].”
Outside of the economy’s unanticipated response to U.S. midterm elections, nothing is expected to change between now and the first quarter of next year.
Any potential softening would likely be limited to the back half of the year, which is true in any year, he added.
It puts manufacturers in a better place than the sales surge around 2006.
But there are limits. Even in a strong market. “There’s only so much the market can digest,” Dozier said, referring to the shortage of drivers as the primary limitation. “We’ve kind of kept creeping [manufacturing volumes] up versus taking big jumps.”
Meanwhile, component suppliers are facing pressures of their own.
“The supply base at large within the industry, they’re running hard,” Dozier said.
As is the case with fleets, a labor shortage has been the source of many of those constraints. Kenworth is a leading employer in the area around Chillicothe, Ohio, but unemployment rates that are held down to around 4% create a competitive labor environment for every business.
Meanwhile, Dozier takes recent aluminum and steel tariffs in stride, simply accounting for them in budget line items. “Other than taking that into account and putting it into our planning and our pricing — but that’s the normal course of business,” he said.
Commodity prices were even rising before tariffs were introduced, he added.
“Usually there’s a staggered implementation [for tariffs]. You’ve got to get into the detail. Our purchasing team does a very good job.”
In the meantime, the manufacturer continues to monitor trade negotiations with the U.S. and Mexico. And for good reason. It has manufacturing facilities in Ste-Therese, Que., Chillicothe, Ohio, and Mexicali, Mexico.
“We’re working as quick as things are identified,” Dozier says.
“When things are finalized, let’s go in and understand what it means.”
An earlier version of this article has been updated to reflect the weekend release of a proposed U.S.-Mexico-Canada trade agreement.