CHICAGO Class 8 truck and engine builder Navistar
International Corp. plans to reduce its headcount and improve
quality as it ramps up production on new models this year,
Navistar executives said on a March 7 earnings call. But a
persistent shortage of truck drivers and stricter regulations
on U.S. carriers may cast a pall on future orders, they said.
We just came back from the Truckload Carriers
(Association) meeting, and the mood there was pretty darn
optimistic: Freight is good, freight rates are good, John
J. Allen, president of subsidiary North America Truck &
Parts, said. But there are clouds on the horizon for
these guys, and thats making them tentative on capital
For example, if more stringent hours-of-service rules issued by
the Federal Motor Carrier Safety Administration go into effect
July 1 as expected (amm.com, Dec. 28), it is going to be
a 10-percent to 11-percent immediate reduction in
productivity, Allen said.
The driver shortage is not getting any better (either, so
carriers) like the business theyre seeing now in terms of
freight and rates, he said. But no one will step
out here and make any big purchases beyond what their
replacement needs are.
In terms of Class 5-8 truck sales estimates for 2013, If
you take the last six months order receipts and annualize
them, you come in at 212,000 (units). We anticipated 215,000
against 230,000 last year, Allen said.
Several big fleet customers have cited the
influence that driver availability has on truck orders,
Navistar president and chief operating officer Troy Clarke said
on the call. If there was not a driver shortage in the
industry, we would probably see a smoother flow of orders.
There wouldnt be this kind of lumpiness (in orders) that
we have experienced over the past year.
The Lisle, Ill.-based company also expects to lay off personnel
this year, particularly with the closure of its Garland, Texas,
assembly plant by the end of 2013.