Happy autumn, Equipment Today readers, or, if you’ve just returned from bauma in Munich and are stuck in multilingual mode: Frölicher Herbst!
The 33rd annual iteration of the largest construction equipment and mining tradeshow in the world featured innovations in sustainability, enormous “wow-factor” equipment and machinery with alternative fuel source options. New products of note included Hyundai’s HW155H hydrogen-powered excavator prototype, two Manitowoc Grove cranes—the GMK5150XL and the GMK5120L—and two all-new Takeuchi excavators, the TB350R and TB395W models.
After three long years and a six-month delay due to ongoing certainties around the COVID-19 pandemic, the excitement of the attendees at bauma was palpable. Peering inside the international construction equipment industry offered me a unique lens, as well. I had productive and meaningful conversations with engaged manufacturers concerned about the ongoing labor shortage in the United States, both for skilled trades like construction and trucking and for roles that require higher education, like OEM engineering.
A few weeks before I flew to Munich, the Heavy Duty Manufacturers Association (HDMA) and MacKay and Company, a leading marketing research and management consulting firm for the commercial trucking, construction and agricultural equipment industries, reported in a monthly webinar on Sep. 28 that labor remains the most significant barrier to growth for the commercial vehicle segment. However, the same statistics also offer optimism – a reduced risk of a U.S. recession. In an economic downturn, businesses generally don’t seek to hire as much, according to MacKay and Company.
“Unless we have entered a magic mystery cycle where we have a recession with rising employment,” joked Bob Dieli, MacKay and Company economist and president and founder of RDLB, Inc. an economic research and management consulting firm based in Lombard, Ill.
Truck drivers, technicians and manufacturing employees looking to die Treppe hinauffallen – shoot up the ladder in their careers by securing promotions – will have good opportunity to do so in 2023.
At a recent Mack Trucks event in Bethlehem, Penn., Jonathan Randall, senior vice president of Mack Sales and Operations, reaffirmed that the trucking industry looks strong into 2023.
“Oil prices are high, but they’re declining. Interest rates are climbing. GDP is dropping. Yet, all the other indicators, at least from the trucking industry, remain fairly positive,” Randall said, explaining that the U.S. economy indicates it is heading toward a slowdown. “However, at the same time, we find ourselves in an unprecedented level of demand for commercial trucks. … Manufacturing orders are climbing and unemployment rate remains low.”
Emphasizing that the labor market is extremely tight and continues to be one of the main challenges in the trucking industry, particularly in manufacturing new trucks, Randall said that both the pent-up and continuing demand for Mack trucks is incredibly high. Randall predicts that the demand for new Mack trucks for 2023 will be even stronger due to an order backlog and the average age of tractor fleets. Over the last couple of years, production has not been able to meet the demand, Randall explained, and replacement cycles are longer due to the difficulty meeting just the replacement demand of trucks.
Thus, the industry foresees strong demand for the near future, despite the impending economic pullback. What’s more, due to the pent-up and future demand for new trucks, any softening of the truck order market will not match the softening of the economy—it will not be a 1:1 ratio, according to Randall.
A report released by Freight Transportation Research Associates, Inc. (FTR) on Oct. 5 revealed that preliminary North American Class 8 net orders for September skyrocketed to 56,500 units, the most ever for a single month. September order activity was up by 169% month over month and up by 102% year over year. In the last 12 months, North American Class 8 orders total 254,000 units.
“Due to the limited availability of new equipment fleets have not been able to phase out aged equipment over the past two years,” said Charles Roth, FTR commercial vehicle analyst. “As a result, we anticipate replacement demand to stay elevated throughout 2023.”
The difficulty getting new trucks due to the order backlog, tight labor market and supply chain challenges has led to increased sales of used trucks, as well. According to the latest release of the State of the Industry: U.S. Classes 3-8 Used Trucks, published by ACT Research, used Class 8 truck sales were up by 29% month over month. Increased purchases and driving of used trucks makes for more maintenance work and parts replacement. Gott sei Dank (thank goodness) that Oct 2-8 was National Technician Appreciation Week then! The American Trucking Associations (ATA) and ATA’s Technology & Maintenance Council (TMC) sponsored National Technician Appreciation Week, on the heels of the 2022 ATA TMC fall meeting in Cleveland, Ohio, and its TMC SuperTech skills competition for professional commercial vehicle technicians.
If more fleets are comprised of used trucks these days, they will need talented technicians to maintain them. Cheers to those workers who von seiner Hände Arbeit leben, or “live on the work of their own hands.” Until December, bleibt gesund (stay healthy).
