Trailer Makers Expect Little Joy in 2009

By Rip Watson, Senior Reporter

This story appears in the Dec. 22 & 29 print edition of Transport Topics.

Saddled with widespread layoffs and continued slumping sales, trailer manufacturers have low expectations for 2009, as fleet customers hunker down to cope with a recession, dwindling freight markets and tight credit.

All major trailer makers recently reported layoffs, either in Transport Topics interviews or in public statements, and some, such as Wabash National Corp. and Strick Trailer, said their typical holiday shutdowns would be extended into January.

“In 2008, the year dwindled as we went along,” said Chris Hammond, vice president of Great Dane Trailers. “It started out OK and ended up somewhere below average. Looking into 2009, it will probably be slower than 2008. We are going into 2009 with a lot of people shut down.”

Two of the three lowest production months ever were recorded in the second half of 2008, matching production during the 1975 and 1982 recessions, Stephens Inc. analyst Thom Albrecht said.

Production in 2008 fell to about 140,000, or roughly a third less than the 220,000 trailers built in 2007. For 2009, FTR Associates estimates 92,000 units built, while A.C.T. Research projects 117,000.

“The truck trailer market in North America has continued to deteriorate over the course of the year, and the deterioration accelerated in the last 60 days,” said Craig Bennett, Utility Trailer Manufacturing’s senior vice president of sales and marketing.

There are a number of reasons, including reduced tonnage and a lack of financing at reasonable rates, Bennett said.

“It’s been a very slow year for all of us,” said Ken Wahlin, president of Stoughton Trailers.

Asked to sum up the 2008 and 2009 trailer market, Charles Dutil, president of Manac Inc., had a single word: “Challenging.”

Several executives pinned their recovery hopes on a federal economic stimulus package.

“Something is going to have to happen after [President-elect] Obama comes into office,” Bennett said. “How fast he is able to turn it around remains to be seen.”

“We are hoping that some of the promised infrastructure money from the government comes through,” said Buck Buchanan, vice president of marketing for Fontaine Trailer. He pinned some hopes for a stronger 2009 on more orders for heavy-haul trailers.

Others agreed.

“All of us who have been in this business for a while know it’s a violently cyclical market.” said Charlie Mudd, president of Vanguard National Trailer. “I hope that by midyear some of the recovery efforts and stimulus plans will begin to have some effect. Trucking and transportation always precedes an upturn in the general market.”

“Everyone is affected by the economic malaise,” said Glenn Harney, chief operating officer of Hyundai Translead. “This is going to turn around at some point. We hope it will occur sometime in 2009. It’s possible it will be sometime in the third quarter.”

Trailer manufacturers are making other moves during the production slump.

Great Dane is hunting the right spot for a new refrigerated trail-er plant in the Southeast, said Hammond.

“Our strategy is not to hunker down — we’re focusing on research and development,” said Fontaine’s Buchanan.

Stoughton has upgraded training for its workers, including quality certification programs. At the same time, the manufacturer is “taking a second job,” as Wahlin puts it, by doing metalwork and managing inventory for other customers, as well as renting out space.

Stoughton, Utility, Hyundai Translead and Fontaine all plan to introduce new products, their executives said.

“If trailer shipments in 2009 reach historic lows, the industry will likely mothball or even shut down some operations, meaning it will be very tough to approach the 200,000 level in 2010, as it will likely take some time to ramp trailer production back up,” Albrecht said.

Small-to-medium fleets that are strapped for cash will turn to an abundant supply of used trailers to re-equip their fleets, Albrecht added.

“There is still some demand for 2003, 2004 and 2005 equipment,” said Charlie Wilmott, who heads used-trailer dealer WillGo Inc. “You can generally sell those if you are not too greedy.”