Executive Briefing - July 24
- NHTSA Investigating Firestone Replacement Tire Model
- Poor Earnings Lead to More Job Cuts
- Wabash Posts $10.8 Million Loss
- Greenspan Hints at Another Cut in Rates
- BNSF 2Q Earnings Drop 22%
- Production Cuts Threaten Winter Shortages
- Con-Way Sends Record 59 Drivers to Championships
- Volvo Reports Decreased Earnings
- Allied Posts Loss as New-Vehicle Production Slows
- Goodyear Earnings Fall 90%
- Landair Earns 26 Cents Per Share in 2Q
- Chapel to Open at Mo. Truck Stop
- Poor Earnings Lead to More Job Cuts
NHTSA Investigating Firestone Replacement Tire Model
A federal investigation has been launched into Continental Tire North America’s General Ameri*550 AS tires that Ford Motor Co. has been using as replacements for the recalled Firestone tires, the Associated Press reported.The Ameri*550 tire is used as original equipment on Ford F150 pickup trucks.
These vehicles are used in a wide variety of trucking applications, especially among service-oriented businesses.
Approximately 2.7 million of the tires in question have been produced since 1995, and NHTSA said the manufacturer had made several changes to them in recent years. Transport Topics
Poor Earnings Lead to More Job Cuts
In an effort to turn their fortunes, several companies have announced job cuts after poor earnings reports this week.Job cuts in the manufacturing sector are important for the trucking industry because it usually means a decline in the volume of truck shipments in the next few months.
Among the recent announcements:
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Wabash Posts $10.8 Million Loss
Wabash National Corp. (WNC), one of the largest manufacturers of truck trailers, reported a net loss of $10.8 million in the second quarter, compared with a net income of $7.5 million in the same period last year.
For the six months ended June 30, the net loss was $21.2 million, compared with net income of $16.6 million.
The company’s press release cited adverse impacts “by a number of factors, including continued weak freight tonnage, additional costs associated with the coating and finishing operations at the Huntsville, Tenn., facility and further softening of market conditions.”
During the quarter, the company recorded a $5.9 million pre-tax charge due to further deterioration in the current fair market value of its used trailer inventories, as well as a $4 million pre-tax charge related to a collection dispute with one of its customers.
As of June 30, the company's order backlog was valued at $450 million. Transport Topics
(Click here for full press release.)
Greenspan Hints at Another Cut in Rates
Federal Reserve Chairman Alan Greenspan said Tuesday that while the foundation is there for the economy to rebound, things could still get worse and more interest rate cuts may be necessary.Greenspan attributed recent weakness in the economy to sharp production cuts, like those seen across the manufacturing sector, in response to sagging demand, the Associated Press reported.
But Greenspan said the six interest rate reductions this year and the rebate checks in the mail to taxpayers should give the economy a boost.
The Fed is predicting a 2% expansion of the economy in 2001, and a 3% expansion in 2002, which incorporates a 1.2% growth rate in the first quarter, Bloomberg reported.
The Fed has cut interest rates a total of 2.75 percentage points this year, the most aggressive credit-easing action in two decades. The Fed’s next meeting is scheduled for Aug. 21. Transport Topics
BNSF 2Q Earnings Drop 22%
Burlington Northern Santa Fe Corp. (BNI) announced a 22% drop in second-quarter profits due to a combination of rising costs, reduced shipments and flooding in the Midwest.
Net income for the Fort Worth, Texas-based company was $195 million or 50 cents per share, compared with $223 million a year earlier.
The company said that vehicle shipments on the railroad – which is one of nation’s largest - fell by 20% during the current U.S. economic slowdown. Also, fuel prices increased $27 million from the same period last year.
Freight revenues for the quarter were $2.24 billion, even with last year. However, the floods cut into the railroad’s productivity, leading to a $30 million loss in operating income. Transport Topics
(Click here for the full press release.)
Production Cuts Threaten Winter Shortages
As oil refiners begin major cutbacks in oil production due to increased supplies and decreased profits over the summer months, analysts worry that a cold winter could bring shortages in heating oil, the Wall Street Journal reported.The trucking industry could face major price increases in diesel fuel. If heating oil runs short, suppliers will turn to diesel, sharply increasing demand and therefore prices.
U.S. refiners have said they aim for $25 per barrel, and recent reports show they are bringing in only $22, leading them to take strong cuts in production to perform maintenance to the refineries and to increase profits.
Analysts told the Journal that the summer months are usually the most demanding of oil companies, while they meet gasoline demands for summer driving and begin to build inventories of heating oil. Refining executives insist, however, that the winter supply is not in danger. Transport Topics
Con-Way Sends Record 59 Drivers to Championships
Con-Way Transportation Services said it will send a record number of 59 participants to the American Trucking Associations sponsored National Truck Driving Championships, where drivers compete for the top spot in one of nine equipment classes.More than 380 state champions from across the country will compete for national champion titles that will go to the top point earners in each of the nine competing classes.
Class winners will receive a cash award, plaque and a national champion belt buckle.
One driver will win Grand Champion honors and receive a championship ring and plaque. The championships will take place in Minneapolis from Aug. 22-25. Transport Topics
(Click here for the full press release.)
Volvo Reports Decreased Earnings
Volvo AB (VOLVY) reported a 28% decrease in profits for the second quarter to $127 million because of declining demand for trucks in the North American and Western European markets, Bloomberg reported.
The global trucks unit posted a 16.7% rise in operating profit for the first half of 2001. The company said that although the truck market continued to weaken in the second quarter, it is showing signs of stabilizing, Reuters reported.
While earnings fell from 39 cents a share to 30 cents a share, second-quarter sales did rise 52% because of Renault SA.
The Sweden-based company has incurred $121 million in charges for job cuts so far this year, including 1,400 in the United States. Transport Topics
Allied Posts Loss as New-Vehicle Production Slows
Allied Holdings Inc. (AHI), the parent company of several subsidiaries engaged in providing logistics, distribution and transportation services, to and from manufacturers, posted a second-quarter loss of $5.7 million or 71 cents a share, compared with a profit of $6.9 million a year ago.
However, Chief Executive Officer Hugh Sawyer said that he is beginning to see some evidence of recovery at Allied's largest clients, which include major automakers, should help improve profits in future quarters.
The Decatur, Ga.-based company blamed lower vehicle-delivery volume due to reduced new-vehicle production for the big drop in profits this quarter. The results were in line with a recent company forecast, according to Reuters.
Allied, which had previously layoffs, said the number of active drivers fell 19% to 5,024 over the past 12 months. Transport Topics
(Click here for the full press release.)
Goodyear Earnings Fall 90%
Goodyear Tire & Rubber Co. (GT) reported a 90% drop in earnings for the second quarter ended June 30, citing an ongoing slowdown in the automobile and commercial truck industries globally.
During the quarter, Goodyear earned $7.8 million compared to $77.1 million in the same period last year and the company’s chairman, Samir Gibara, warned that production curtailments will be needed in the third quarter.
The company had announced plans for job cuts totaling 7,800 after the first quarter.
Shipments of replacement tires in the United States were up about 1% during the second quarter, and the company continued to gain market share due to the recall involving Bridgestone/Firestone tires. Transport Topics
(Click here for the full press release.)
Landair Earns 26 Cents Per Share in 2Q
Landair Corp. (LAND) reported net income of $1.3 million or 26 cents per share for the second quarter, compared with $635,000 during the same period.Based in Greenville, Tenn., Landair provides truckload, dedicated and other transportation-related services to customers throughout the United States and Canada.
For the quarter, operating income increased to $2.4 million compared with $1.6 million for the same quarter in 2000, but operating revenue decreased by $5.9 million to $27.1 million. Transport Topics
(Click here for the full press release.)
Chapel to Open at Mo. Truck Stop
Rev. Gary Nussbaum, a former truck driver and regional director for Transport for Christ, said the group has received permission from Gateway Travel Plaza owner Doug Pratt to open a chapel at the truck stop in Madison, Mo., the St. Louis Post-Dispatch reported.Since 1951, this organization has sponsored 23 chapels in the United States, two in Canada, three in Moscow and a chaplain in Zambia. Nussbaum said he hopes to have a chapel in place in Madison by next spring.
The nondenominational church will hold Sunday services and provide truckers with spiritual counseling and Bible study 24 hours daily. Transport Topics
