Managing “ebb and flow”

Jan. 22, 2008
Though demand for vehicles – especially for commercial trucks – is expected to grow significantly over the next decade, manufacturers believe that growth will be uneven

Though demand for vehicles – especially for commercial trucks – is expected to grow significantly over the next decade, manufacturers believe that growth will be uneven, complicated by external forces such as higher energy costs.

That’s why vehicle makers and their suppliers must be smarter in how they prepare for the inevitable “ebbs and flows” in the market, said Joe McAleese, president & CEO of Bendix Commercial Vehicle System, in his first address as the chairman of the Heavy Duty Manufacturers Association (HDMA) in Las Vegas this week.

“To me, growth is about more than achieving the bottom line,” McAleese said. “It’s about how we develop as an industry. It’s about increasing the value we deliver to our customers. And it’s about how we prepare for the ebbs and flows that are inevitable. We will only achieve sustainable, long-term growth if we prepare for both the highs and lows we will surely face in the future.”

Rick Wagoner, chairman & CEO of General Motors, echoed those sentiments in a speech earlier this month at the North American Auto Show in Detroit. “You know … this industry has a lot of balls in the air right now,” he said. “Earlier this month, the price of oil hit a hundred dollars a barrel, as demand for energy around the world is growing faster than supply. And that’s not just a cyclical phenomenon. It’s structural, given the growth in emerging economies, which we fully expect to continue.”

Wagoner said on a global basis, to satisfy all energy needs, the world is consuming roughly 1,000 barrels of oil every single second – and the rate of consumption continues to grow. In fact, according to the U.S. Department of Energy, the world will need about 70% more energy in 2030 than it did in 2004, he noted.

“Now, when you consider these facts in light of the world’s heavy reliance on oil for automotive transportation – in the U.S., for example, 96% reliance on oil – we have to ask ourselves, what does all this mean for the global [vehicle] industry?” he said.

Back in Las Vegas, Bendix’s McAleese urged his fellow HDMA members to prepare for the future by planning for sustainable growth, recognizing the emergence of the global economy – and stressed it will likely be the second half of 2008 before things turn around. But he remains optimistic about the future, citing recent studies conducted on behalf of the American Trucking Assns. that predict the overall truck population will increase by 44% over the next decade.

“We must continue to provide the best value to our customers – to become suppliers capable of delivering on a worldwide scale, capable of growing and evolving to fit the needs of our customers in the global marketplace,” McAleese said.

About the Author

Sean Kilcarr | Editor in Chief

Sean reports and comments on trends affecting the many different strata of the trucking industry -- light and medium duty fleets up through over-the-road truckload, less-than-truckload, and private fleet operations Also be sure to visit Sean's blog Trucks at Work where he offers analysis on a variety of different topics inside the trucking industry.

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