INDIANAPOLIS. Dean Engelage, president of Great Dane Trailers, strongly believes “now is the time to make hay while the sun is shining” in terms of building more trailers because “this business is cyclical and there will be the inevitable downturn.”
He noted during a presentation at the annual FTR Transportation Conference that the “competitive landscape” of the North American trailer market “is more difficult than ever,” yet it is a great time to be in the trucking equipment business because “we’re experiencing a very strong cycle and we’re reaping the benefits of it.”
In an earlier presentation, Don Ake, FTR’s VP, noted that total North American trailer builds should top 302,400 units this year, compared to 265,300 units in 2014, then decline 10% to 273,000 units in 2016 and 225,000 units in 2017. [Click here for more details on his forecast.]
One “wild card” in FTR’s trailer forecast is the addition of extra trailer production capacity, Ake said, with four new plants coming on line over the next two years; boosting trailer build capacity by 20,000 units in 2016 and eventually to 40,000 units by 2017.
“This is the sixth year of a five year up-cycle,” he pointed out. “This is the longest trailer up-cycle in history. It’s a peculiar situation; it’s never happened before.”
Great Dane’s Engelage noted that his company is one of those trailer makers adding a new plant – specifically a refrigerated trailer factory – and he thinks much more capacity is going to added, upwards of 50,000 extra units of production, than most predict.
He also believes that when the “inevitable” downturn occurs – which could be two to three years from now, if the U.S. economy “softens” – that it will be “deeper and longer” than many project.
“It won’t be as deep as 2009,” Engelage stressed. “But there will be a lot of new equipment in the market, especially trailers that can last longer. So many will ask themselves, ‘Why spend millions on new units? I’ll keep my equipment longer.’ That’s why our focus is on weathering that storm when it comes.”
He believes one key to successfully surmounting that “storm” will be human capital, so Great Dane is making changes to how it trains and manages its workforce.
“Labor issues are critical for us; they are not teaching welding in high schools anymore,” Engelage said. “Also, most younger workers – especially Millennials – don’t want to work in a heavy manufacturing environment. On top of that, we’ll have a ‘multi-generational’ workforce as well. And we will need to be a low-cost manufacturer to survive. All of that is forcing us to act in new ways when it comes to managing our human capital.”