While “no one really knows” what economic and market conditions 2007 will bring, Freightliner and its parent, the DaimlerChrysler Truck Group, “are ready to respond,” said Andreas Renschler, head of the truck group and a member of the DaimlerChrysler board of management. “We're getting mixed signals from the U.S. economy, and there is no stable forecast” at this point, “but the most important thing is that we feel we're prepared for whatever comes,” he said in an interview with Fleet Owner.
Even if Class 8 sales in North America drop 40% next year and medium-duty 25% in “a worst case scenario,” Freightliner president and CEO Chris Patterson “has prepared the company and it will remain profitable,” Renschler said.
Among the moves by Freightliner to prepare for a down cycle was the announcement last week that it would lay off 800 at its St. Thomas, Ontario, assembly plant in March as the first step in what could total 4,000 assembly job cuts in North America.
“Four thousand [layoffs] is the worst case,” Renschler said. “We'll be watching our order intake carefully, and be ready to respond where ever the market goes.”
At this point, the company expects truck sales to remain strong in the first quarter of 2007 as manufacturers sell off a backlog of trucks fitted with 2006-spec engines. Second quarter sales will see “a big dip” as OEMs begin installing the more expensive low-emissions ‘07-spec diesels, with that downturn extending into the third quarter as well, Renschler said. If the North American economy remains strong, he expects to see sales begin to pick up in the last quarter of the year.
“The good thing is we know when this [downturn] will end because of EPA 2010,” he said. Fleets are expected to purchase new trucks ahead of the next diesel-emissions cutback, which is scheduled to take effect in 2010.
Turning to the next emissions hurdle, Renschler told Fleet Owner that DaimlerChrysler expects to employ selective catalytic reduction (SCR) technology, which the company currently uses in Europe under the brand name Bluetec. The EPA has been resistant to SCR because it requires liquid urea that must be refilled by vehicle users and it was concerned that no infrastructure currently exists for distributing urea to trucks.
“I see EPA as more accepting [of SCR] now because they've seen that the [distribution] network has not been an issue in Europe,” he said. Federal regulators also recognize that SCR offers significant fuel consumption advantages, according to Renschler. For users, SCR should also be the most cost-effective way to meet 2010 requirements, he said, adding that Freightliner and the company's Detroit Diesel engine subsidiary would market the technology under the Bluetec brand name.
The company is also continuing work on hybrid technology for a variety of commercial vehicle applications. “We are already the largest hybrid bus maker in the U.S.,” he told Fleet Owner. “We've delivered 425 to New York City alone, and have taken a total of 800 orders [for hybrid buses] this year.”
Freightliner has also recently unveiled a hybrid concept version of its M2 medium-duty truck, and the Mitsubishi Fuso operation of DaimlerChrysler has released a commercial Fuso Canter Hybrid in Japan. “We have a walk-in chassis hybrid, too,” Renschler said. “Hybrids aren't the answer for every application, but you have to have a combination of technologies so each [customer] can select the right one for them.”