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Surge In Truck Sales May Point To Better Times
By Peter Passi - Duluth News Tribune

Trucking companies in the Northland and nationwide have been beefing up their fleets with new rigs, an encouraging sign for the U.S. economy.

"It looks like we're going to end up with a banner year -- a great year -- for truck sales," said Richard Stewart, director of the University of Wisconsin-Superior's Transportation and Logistics Research Center.

While many people use consumer spending to assess economic health, Stewart said transportation spending often can serve as a more useful predictor. He said the transportation industry's role as a supplier of raw materials for manufacturing, as well as a distributor of finished goods, place it in a unique position.

"About 80 percent of everything that moves in this country goes by truck," he said, and as the economy revs up, trucking companies have had no choice but to respond. "Most of the nation's trucking companies are operating at or near capacity, and they need more vehicles."

Truck sales at Allstate Peterbilt of Superior/Duluth have doubled between 2003 and 2004, said general manager Steve Khalar, although a new facility produced some of that growth. Even if the pace slows in 2005, he believes stronger truck sales reflect economic rebound.

"Transportation is one of the key areas you need to look at to judge where the economy is going," Khalar said.
The strong demand for trucks in 2004 stands in sharp contrast to the early part of 2000.

"When we were in an economic downturn, many trucking companies didn't dare to invest in new assets," Stewart said.
Brandon Niesen, sales manager for Boyer Trucks of Superior, confirmed that many companies delay plans to replace trucks during uncertain times and consequently entered 2004 with older-than-usual fleets. He believes the postponed upgrades helped set the stage for robust sales this year.

Niesen said Boyer Trucks' 2004 order book is stronger than it has been in years, and he's optimistic the industry has turned a corner.

"I think our orders show the economy is getting better," Niesen said. "Products need to move."

Boyer Trucks is so bullish on the prospects for its Superior dealership that the company is preparing to pour $3.5 million into a new facility at the foot of the Bong Bridge. Boyer carries Freightliner, Sterling and Western Star trucks.

"Record freight volume, fleet expansion and improved carrier profitability are driving new truck orders," said Tom Plimpton, president of Paccar Inc., manufacturer of the Peterbilt and Kenworth truck lines, in a recent state of the industry report.

"Demand for freight is up," Khalar said. "From what I've heard, people in the trucking industry are not having trouble getting work. They're having more trouble finding people to put behind the wheel."

Paccar's truck dealers in the United States and Canada expect to sell about 35 percent more trucks than they did in 2003.

Plimpton predicts more of the same in the coming year. He estimated his company's 2005 heavy truck sales will reach 270,000 to 280,000. That would equate to a 15 to 24 percent increase compared with anticipated 2004 figures.
Paccar's truck-manufacturing operations are second in size only to those of DaimlerChrysler, maker of the Freightliner and Sterling truck lines. For the first 11 months of 2004, DaimlerChrysler reported even more impressive results than Paccar. It sold more than 643,000 trucks and buses -- 44 percent more than it did during the same period last year.

Stewart said truck sales have been fueled not only by growing demand for freight but by relatively low interest rates.

New emissions standards scheduled to take effect in 2007 could provide yet another continued incentive for trucking companies to upgrade to newer trucks in the coming year, Stewart said.

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