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Freightliner CEO Warns of Looming Raw Material Crisis That May Hinder Truck Production

August 3, 2004

Order books for Class 6-8 trucks are filling up fast for 2004, and sales are expected to remain strong through next year and 2006, says the president and CEO of Freightliner LLC, Rainer Schmueckle, according to the Today's Trucking Web site on August 2.Speaking on a conference call to North American trucking journalists, Schmueckle said premium Class 8 orders are sold out until mid-October, while the company will have capacity for medium-duty vehicles beginning in mid-September. While improvements in the overall economy and increased freight movement are the basis for demand growth, Schmueckle said most of the sales to date are fleet replacements — not necessarily capacity expansion. For the North American Class 8 market, Schmueckle projects total OEM retail sales will total 240,000 units by the end of the year. For the Class 6-7 markets, he expects total NAFTA sales to reach between 160,000 and 165,000 units, with the vocational market starting to gain momentum as well. However, some factors are actually keeping a lid on the market, such as a driver shortage, fuel price spike, and "significant" shortages of raw material. Schmueckle predicts another 25,000 units, on top of the 240,000, would have been sold if not for the high cost and lack of availability of raw material — specifically steel — on the supplier side. "We do believe that the raw material shortage both for production parts and replacement parts to a certain extent is holding back the output of many manufacturers," he said. "As the world economy starts to align and countries like China provide a significant strain on raw material, we may struggle even more to reach the output in 2006, (meaning) the reductions in 2007 could be even graver than what we saw in 2002-2003."
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