LOUISVILLE, KY. Denny Slagle isn’t wearing rose-colored glasses when he looks at the economic conditions facing the trucking industry today. Yet he firmly thinks good opportunities for truckers and OEMs alike to improve and grow their businesses despite the downturn still exist today.
“We’re certainly facing challenging times right now and no one knows when they’ll improve,” Slagle, president & CEO of Greensboro, NC-based Mack Trucks said here at the Mid-America Trucking Show. “But everyone agrees that [the downturn] will end at some point. The question is only when.”
He sees “positive momentum” building from the recent passage of the federal government’s $787 billion stimulus package, though he cautioned that it will take time for construction projects sponsored by that money to get started.
“You have to take the ‘shovel ready’ claim you hear with a grain of salt, because all construction projects, even ones ready to go, take planning to get started,” he said. Still, Mack expects to see a stronger uptick in the construction business as a result of the stimulus to occur late in the second quarter and into the third quarter this year.
Slagle also noted Mack’s captive financing arm, Mack Financial Services, is doing well as many banks exit the equipment markets. “Also, many of our [trucking] customers tell us the reason they are working with us [to get credit to buy trucks] is that they don’t like the uncertainty in the banking market – the thought that institutions they get credit from today may be gone tomorrow,” he said.
Tom Guse, vp of truck financial services, echoed Slagle’s view in written remarks. “In today’s market, with stability an issue, the role of a captive finance company is even more appealing to customers because a captive is often better positioned to lend,” he explained. “As a captive, we understand the cyclical nature of the trucking industry and thus prepare for all points in the business cycle. This enables us to provide capital to well-established trucking companies and remain in support of Mack dealers.”
Yet Slagle cautioned that Mack is also seeing a lot of consolidation occurring among trucking fleets in various markets, such as construction, and that sometimes can remove opportunities from the market. “Larger fleets typically have their own financing options,” he said.