2015 Heavies Show Prosperity, But No ‘Boom’

By Tom Berg, Truck Editor | September 25, 2015

These are the best times in a long time. Construction activity is strong, particularly in home building, and fleets are buying new trucks to support it. Truck builders say activity began picking up several years ago as the Great Recession receded, and healthy sales are expected to continue well into 2016. Of course, many pieces of “old iron” are still at work, but they’re slowly being replaced by new trucks and in certain cases, glider kits.

But, are there some dark clouds on the horizon? Construction and sales of trucks and equipment that support it are cyclical, and history tells us that prosperity is always interrupted. Some economists are already talking about the next slowdown, or even recession. Others note that this recovery has been restrained, with annual growth of about 1 to 3 percent, well short of “boom” levels that are never sustainable. So any relenting of the current pace could be moderate, as well. Maybe that’s a white cloud.

Full-Service Truck Leasing Allows Predictable Costing

Government regulations, however, have sometimes been big black clouds that have rained barrels of cold water onto the economy. That’s particularly true with truck design. Regulations dating to 1975 have demanded better-performing brakes, including anti-lock systems and shorter stopping distances. Noise limits were imposed about 35 years ago. Rules limiting exhaust emissions began in the 1990s, bringing electronic controls to more precisely manage combustion. The limits became increasingly disruptive and expensive, and equipment that makes diesels exhale cleanly continue to be troublesome, even though reliability is improving.

There are certainly some positives. These regs brought greater safety, as modern heavy trucks stop much surer and quicker; trucks are quieter and more comfortable; and air is noticeably cleaner in most cities, and even around individual vehicles. Exhaust stacks belching black smoke, once thought of as a macho badge, have gone out of style and are becoming rare. Most people realize how unhealthy that smoke is, even as they wring their hands at the high cost of clean air.

Trucks also use less fuel, which is the result of advance engineering and also emissions cleansing. Since the 2010 implementation of selective catalytic reduction that doses exhaust gases with urea fluid, engines themselves can be tuned to run more efficiently. And current regulations demanding lower emissions of greenhouse gases, especially carbon dioxide, are being met by reducing fuel use, which saves money for operators. The underlying principle is that lower fuel consumption also cuts exhaust emissions containing CO2.

Phase 2 greenhouse gas rules

Now there’s a new set of rules being proposed for greenhouse gases and fuel economy. Called Phase 2, the proposals from the federal Environmental Protection Agency and National Highway Traffic Safety Administration would require further reductions of CO2 and higher fuel economy, beginning with vehicles built for model-year 2018, which begins at various times in calendar year 2017. Heavy, medium and light-duty trucks—including those for construction—and heavy semitrailers are among those affected. Phase 2’s term runs through model-year 2027.

Rule writers at EPA and NHTSA said they tried to be realistic with their Phase 2 proposals because they recognized the wide array of uses that commercial trucks see, and the huge variation in cargoes that they carry. Thus, vocational trucks are far less affected than over-the-road rigs, which will have to become more streamlined and roll easier to meet requirements. As Phase 2 unfolds, advanced technologies might have to be applied to engines to achieve fuel economy targets. These will be costly, adding $10,000 to $12,000 to the cost of a freight-carrying tractor-trailer by 2027, but that will be paid back in fuel savings, the agencies insist. Critics note that such estimates for costs of compliance have been grossly understated and wonder how accurate this one will be.

Engine advances that improve fuel economy—and thus reduce emissions—could be applied to vocational trucks, and they already are. Phase 1 rules, which went into effect for model-year 2014 and run into 2017, are expected to lower fuel consumption and greenhouse-gas emissions by 5 percent for heavy trucks and 9 percent for medium and light trucks, compared to 2010 “baseline” trucks, according to one analysis. The International Council on Clean Transportation, a research and advocacy group based in San Francisco, further says that Phase 2 rules will cut fuel consumption and greenhouse gas emissions by another 4 percent for all classes.

But vocational trucks with their sometimes oddly shaped bodies are not good candidates for aerodynamics, and some carry equipment that also impedes air flow and increases drag. Then again, few cruise for long distances at highway speeds, so aero improvers do little good in everyday operations. Tires, though, can be designed for lower rolling resistance, and that is one of the improvements called for by Phase 2 rules, according to ICCT’s analysis of the lengthy and complex proposals.

The EPA-NHTSA document runs 1,339 pages, and though manufacturer input was solicited and considered, executives and engineers at the companies still spent weeks pouring over the published proposals to fully grasp their meaning. Some people are still pondering them. Among many other things, Phase 2 rules accommodate separate targets for engines; something applauded by Cummins, the only independent engine maker still in the truck business. The proposals also encourage coordinated efforts to optimize engines and vehicles and tractors and trailers.

But in conferences leading up to the rules-writing, some truck builders had argued against the separate treatment for engines. Each company has its own series of diesels and said optimization is best achieved when a truck and engine are developed together. All buy engines from Cummins, but it appears that some builders are intent on expanding their own offerings and squeezing Cummins’ products from their vehicle lineups.

One builder that has warmly embraced Cummins after temporarily dumping it, though, is Navistar. When its attempts to meet American 2010 exhaust-emissions limits without SCR and urea injection were unsuccessful, it turned to Cummins for SCR equipment that it applied to Navistar diesels. And it is selling more Cummins diesels in certain truck models than its own engines.

Glider kits—new trucks without powertrains—are one target of the Phase 2 proposals. They would require volume assemblers of gliders to use current diesels instead of earlier models. That would mean the engines would run more cleanly but add considerable cost to the vehicles. Large companies and those assembling more than 300 gliders per year would be affected by that requirement, and others exempt from it.

In construction, most gliders are front-discharge mixer trucks. Typically, one of those gets a new chassis, cab, wiring, and mixer drums but uses a remanufactured or rebuilt engine, transmission and rear axles. It costs 30 to 40 percent less than an all-new truck, and that’s why gliders are popular with ready-mix companies whose managers are currently renewing their fleets.

Dave Rinas, director of sales and marketing for Terex Advance, says glidered trucks and glider kits assembled by customers comprise about half of the company’s business. New trucks and mixer bodies account for the other half. Advance has built a few gliders with new engines and remanufactured or rebuilt transmissions and rear axles, and they ended up costing about 10 percent less than all-new trucks. Advance built fewer than 300 gliders last year and expects to stay under that number this year, so it would be exempt from Phase 2’s current-engine requirement. However, Terex is a large company as defined by the rules, and for that reason might be caught in the prohibition.

Indiana Phoenix produces only glidered front-discharge mixers, says Dane Keener, the company’s general manager. Last year it built about 140 and expects to turn out a few more than that this year. Low volume and the fact that Phoenix is a small company would exempt it from the new-engine requirement. Keener and Rinas said they are watching the situation and are being represented during the comment period by the National Ready Mix Concrete Association. In addition, Rinas said he and an engineer attended an EPA-NHTSA hearing on the Phase 2 proposals, where the engineer presented the case for gliders as they are now constituted. And Rinas pointed out that Terex Advance’s Fort Wayne facility is a small operation and that’s how it should be classified by the federal proposals.

Gliders in the crosshairs

EPA’s concerns about gliders centers on the dirtier emissions their older engines produce. The agency’s targets seem to be firms that have aggressively marketed the part-new, part-old trucks. A principal one is Fitzgerald Gliders, which in recent years went from 200 per annum to more than 4,000. The company emphasizes the lower purchase price and good fuel economy from reman’d 1998-2002 Detroit Series 60 diesels, though it also installs renewed Caterpillar and Cummins engines. The company once offered complete dump trucks, but now concentrates on sleeper- and day-cab highway tractors, most of them from Freightliner kits.

Tommy Fitzgerald Jr., who heads the operation, is strongly opposing the proposals. He asked his congressional representative for help, and she successfully introduced an amendment that would stop EPA and NHTSA from restricting glider building. The bill to which it was attached has stalled, but should be taken up in Congress’ fall session. In the long run, Fitzgerald doesn’t anticipate winning. “Really, this could be the end of gliders, although those we’re putting into use with customers would be grandfathered in and could run another 10, 15 years,” he commented from his booth at a recent truck show. “I’m looking beyond gliders and planning to manufacture something else, some other kind of truck equipment.”

Those building, selling and using gliders tend to keep a low profile, because they don’t want to attract attention from the IRS or any other government agency. Daimler Trucks North America, Freightliner’s parent, has declined to comment on the Phase 2 proposals; Kenworth and Peterbilt, which also offer glider kits, also waved off questions.

One man who uses glidered trucks is Bob Broerman, owner of Go Bucks Trucking (named for the Ohio State Buckeyes), a dump and slinger operation out of New Bremen in western Ohio. He now has six Kenworth T800s assembled from glider kits, along with other KWs bought new. He assembled the gliders himself.

“I grew up on a farm, and you’ve got to be a jack of all trades,” he says. “My dad and brother were in trucking. As a little kid, I hung around in the shop and learned by watching. There’s a lot of labor in putting a glider truck together. If you pay someone 60, 70 dollars an hour to put it together, then you’re not saving much money over new.

“A glider costs about $272,000 with slinger vs. $312,000 on a new chassis,” he says. “Plus you have the benefit of an engine that doesn’t have pollution controls on it. In dump trucking you have short runs, plus the new trucks have sensors that are automotive (in quality). They might work fine out on the highway, but they don’t take to mud and dirt and water too well. I have a brand-new truck, and it’s been nothing but a nightmare since I got it. So I changed an order for two more new ones to gliders.”

Many truck operators have never heard of gliders, and to them, a new truck is an actual new truck with all its pleasures and pains. If an engine’s complex exhaust aftertreatment equipment and advanced electronics prove troublesome, most buyers learn to deal with it and, as well, appreciate the greater efficiency and comfort they offer. Today’s trucks have efficiency, comfort, convenience and performance undreamed of by previous generations of owners and gear jammers.

But they’re not so happy when on-board sensors find serious problems that light up fault codes on the dash and prompt electronic controls to cut engine power—derating,” it’s called—to avoid self-destruction. Controls can shut down the engine if the driver doesn’t pull over in a set amount of time. That means a road service call, probably with a follow-up visit to a dealer, whose shop people might or might not be able to correct the underlying cause quickly. For years, fleet managers have complained that dealers are not ready to support today’s complicated trucks with technician know-how, parts and special tools.

Manufacturers say they continue to strive to meet customer expectations and demands for service. Examples include use of telematics to broadcast truck conditions to owners and dealers. Mack Trucks recently explained that its system (which is similar to that of Volvo, its sister company) automatically diagnoses the problem, makes an appointment at a nearby service department, notifies it of an imminent arrival, and instructs supervisors and technicians on what tools and parts they’ll need to fix the truck and return it to the road quickly. Billing can be handled electronically and with little human intervention.

Most truck builders offer telematics and specialized service. Telematics and the supporting service are standard on some models, even if owners might not use them. A deal for any new-truck purchase today ought to include training on how to use these time-saving features, because part of the purchase price covers them. Good relationships with dealers can ensure that these futuristic capabilities become present tense.

Business changes in Class 8

  • Caterpillar is not renewing its Cat Truck deal with Navistar, wherein Cat adapted the International PayStar to its own standards and Navistar produces the trucks, complete with Navistar diesels painted yellow. Next year, Cat will commence assembling the trucks in an excavator plant in Texas, but they will remain the same as now. Navistar says the contract manufacturing arrangement will continue through the end of 2016, and it will turn over Cat Truck designs. Navistar execs immediately announced plans for a “premium” International severe-service model, based partly on knowledge gained from the Cat Truck program, to be launched in 2016.
  • Navistar’s deal with Indiana Phoenix involving Continental-brand front-discharge mixer chassis is gone, as Navistar has sold Continental Mixer, say sources at Phoenix. The Continental trucks were all new, and Phoenix’s own products were, and are, glider trucks and glider kits sent to customers. Phoenix also refurbishes existing front-discharge trucks sent to its factory in Avilla, Ind., by customers.
  • Kimble Manufacturing, better known as Kimble Mixer, gained a sister company, Crane Carrier Corp., and is now building both product lines at its plant in eastern Ohio. CCC, lately of Tulsa, Okla., was bought by Kimble’s parent, the Hanes Companies, which put the two together. This occurred in 2013-14, and CCC production moved north last year. Most of Kimble’s chassis are front-discharge mixer trucks, while CCC’s product line includes trash collection trucks and purpose-built, highly specialized vehicles for oil field service and other off-road applications.
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