Used truck boon brings plant closure

Freightliner LLC’s announcement that it is closing its Reconfigured Day Cab facility in Tooele, UT, signals an end to a difficult chapter in the used truck market

Freightliner LLC’s announcement that it is closing its Reconfigured Day Cab facility in Tooele, UT, signals an end to a difficult chapter in the used truck market. After resale values fell through the floor, Freightliner opened the 80,000 sq.-ft. former army depot in 2000 to convert used Class 8 sleepers to day cabs.

The phased shutdown of manufacturing operations will take place through October and early November. Freightliner opened the plant, an

Around 1999 a downturn in the trucking industry occurred as freight volumes declined and fuel prices, insurance and other costs exploded. A number of carriers went out of business, in turn causing a glut of equipment to appear on the used truck and trailer markets. OEMs that had guaranteed residual values on used equipment were locked into big losses as carriers traded deflated equipment for new trucks.

“Freightliner knew as well as anyone there was an oversupply of used equipment that was configured the same,” Chris Visser, editor of American Truck Dealers/National Automobile Dealers Assn. Official Commercial Truck Guide told FleetOwner. “They were the one manufacturer that stepped in and made the investment to change the configuration of the trucks in the market. They had the largest share of heavy-duty trucks in the market back then.”

Ironically, the U.S. Environmental Protection Agency’s 2002 diesel engine emissions rule, which had wrought turmoil on OEMs, was actually a boon to used truck dealers and left Freightliner positioned to capitalize on the turn of the market.

“[The Tooele plant was] a strategy that nobody could have argued with, especially when the ’02 pre-buy existed,” Visser said. “The pre-buy started in ’01. Once fleets realized the impact of the emission standards, they started buying late model low-mileage used trucks. It was a used-truck pre-buy in a way. There were still plenty of trucks on the market with average-to-high mileage.”

It’s not clear whether Freightliner saw a return on investment on the labor required to boost resale values and on the Tooele facility. Freightliner was unavailable for comment at press time.

“Generally, trucks with integral sleepers will require more involved labor to convert into day cabs,” Visser said. “But Freightliner did some impressive engineering to create a “pre-fab” package. They cut out the sleeper and were able to attach a replacement back to the tractor. Dealers had also been doing it on their own…at that time the labor was worth it.”

“Tooele helped with the oversupply of sleeper tractors,” Terry Williams, editor of Used Truck Blue Book told FleetOwner. “They applied manufacturing line processes and they were running hundreds, if not thousands, of trucks through Tooele. Because they were converting so many trucks from sleepers to day cabs, they would realize reduced cost because of volumes. It was a more creative and innovative way to handle the supply of returned leased trucks,” he added.

Just as EPA ’02 diesel engine emission standards boosted the used truck market in 2001, the tougher ’07 standard is now sharply driving up demand for low-mileage late model tractors to the point where Freightliner no longer needs to perform extensive reconfigurations to turn a profit on trade-ins.

“The used truck industry has simply changed since we started our reconfigured day cab manufacturing operation, and our customers now indicate a stronger need for long-haul trucks,” stated Rich Ferguson, president of Freightliner Market Development Corp. “We intend to channel our supply of used sleeper cabs directly to the market, as opposed to reconfiguring them.”

To comment on this article, write to Terrence Nguyen at [email protected]
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