CHICAGO Parts manufacturer Accuride Corp. has been very clear on how the falloff in truck build rates has affected its business as the North American industry struggles to work off an excess inventory of finished vehicles after it overbuilt for its market needs.
"Class 8 truck orders have been very weak, which has caused OEMs (original equipment manufacturers) to significantly reduce their build schedules during the third and fourth quarters," president and chief executive officer Richard Dauch told investors. "Volumes are down at least 25 to 30 percent in the second half of the year compared to the first."
The Evansville, Ind.-based manufacturer of aluminum and steel wheels, brake drums, iron castings and other vehicle components is consolidating its Imperial Group operations in Texas and Tennessee into one facility by the end of March. Imperial produces truck bodies and chassis.
"We are negotiating with customers to address money-losing products at our Tennessee and Texas facilities, and if we cant reach an agreement we will look to exit some of that business," Dauch said.
Accurides Gunite business, which makes wheels, drums, hubs and rotors, has been negatively impacted "by the loss of (standard equipment status at) both Navistar (International Corp.) and Paccar (Inc.) and the continued offshore competition pressure we feel at both Gunite and in the steel wheels part of the aftermarket business," Dauch said.
Accuride, which has reduced its corporatewide head count by 14 percent, is accelerating the closure of Gunite plants in Elkhart, Ind., and Brillion, Wis., this quarterclosures that originally were scheduled for the first quarter of 2013. "We also plan to take extended downtime during November and December at most of our operations," Dauch said.
The order backlog and revenue for Accurides Brillion Iron Works unit, which makes castings for diesel engines, commercial vehicles and energy applications, has fallen about 40 percent on a monthly basis, Dauch said.
Although its been "one of the steepest and most rapid declines weve seen in a long time," the company said, its merely a near-term weak trend "rather than a long-term cyclical downturn."
"If we cant find a path within 24 to 36 months to have money being made at a plant, that plant wont survive. It will be closed," Dauch said. "If we have products that we cant make money on, we will exit those products."