...if you are a distributor in a rural or semi-rural area you should not overlook the opportunity related to trucks used in agriculture and off-highway equipment used on farms.
Find the answer with MacKay & Company's Monthly Aftermarket Index Report.
Since 1998, MacKay & Company has managed an aftermarket index for component suppliers to the medium and heavy duty on-highway truck, bus and trailer aftermarket in North America. This report is the first and ONLY Index covering commercial vehicle aftermarket parts.
The Aftermarket Index is a monthly report covering the size and performance of the commercial parts aftermarket. We segment the Commercial Vehicle Parts Market by country – U.S., Canada and Mexico and by two channels – the Original Equipment and the Independent Channel.
Performance is tracked: Monthly, Quarterly, Year-to-Date and for a 3-month and 12-month Moving Average. In the monthly report, we also include a blind YTD Change Per Company (no name given), sum of average sales per day for all companies and historical data back to 2009. (All individual participants’ sales data are kept confidential; only summarized data is reported to the group.)
Currently, 20 companies participate in our Aftermarket Index. With our current participation, the Aftermarket Index represents $2.8 Billion in commercial aftermarket parts sales in North America. With each new company that joins the index, the value of the Index increases because it represents a larger share of the market. Join the Aftermarket Index and begin to utilize all of this data to better understand how your company stacks up!
I like when people get creative with vehicles, cutting and welding to make unique mobile machines. One of the side pleasures of working in the trucking industry is occasionally seeing vehicles that people have built — typically for no other reason than just for fun. This would include vehicles like Class 8 pickup trucks, tractors with three bedrooms/two bath sleepers, monster trucks that climb over anything but also Freightliner’s Evolution Truck (certainly not just for fun).
Last month, I decided to work from our family cottage on Cayuga Lake in New York and one night while there I headed down to the village of Aurora for dinner. On the way, I saw a large house boat in front of an automotive repair garage. I had seen it before (kind of hard to miss at 32 feet long) and wondered what they were doing to it.
This time, I noticed some big farm vehicle tires resting against the side of the house boat, which intrigued me even more. I also noticed that the tires were not just resting against the side of the house boat, they were being mounted on the front of the boat. Also, on the back of the boat there was a third tire mounted with a bracket that pivoted to steer this massive vehicle.
I inquired about this vehicle to a man who was welding in the hull of the boat. This man, Theon Parseghian (owner of Theonomics), is the mad scientist behind this planned amphibious houseboat called Beast of Burden. This young man creates all sorts of unique vehicles in his spare time. If you are from this area you may have seen his picnic table boat with a beer keg fuel tank or his amphibious Volvo station wagon or his Ford Fiesta with the Camaro engine that did incredible front wheel burn outs.
Quite often we hear that young people don’t want to work on trucks or off-highway equipment — that they don’t want to get dirty. Theon seems to relish this type of fun (I don’t think he considers it work).
The current project is another “you gotta have fun” project for Theon. He bought the boat with plans to scrap it after he figured out there was too much rust in the hull, but then at some point he decided it would make an incredible amphibious boat (he lives 500 feet from the lake- so why not?).
Beast of Burden had to have the entire interior removed, and most of the hull. Theon then bought an old three-wheel Big A sprayer. The sprayer provided the engine (CAT 3208), transmission (Allison Automatic), tires, and axle (some wheel end extenders had to be added) needed to get power to the road. With some additional parts from the salvage yard, the boat/truck was redesigned to fit these new additions. Some old frame rails from a bus are used to hold the driveline in place. To have the boat move on water, a new dual prop system was put in with the help of a couple bush hog mowers donating some parts.
He is getting close to a launching. He needs to finish up some odds and ends and wants to sand blast and paint Beast of Burden, but he is hopeful that in a few weeks she will be in the water. There are some concerns as to how it will work in the water, although Theon is fairly confident that it won’t sink.
Theon’s ulitimate goal would be to traverse across the middle of each of the five main finger lakes. If you want to get a better visual on this beast and others Theon has created, search for Theonomics on YouTube, hopefully there will soon be a successful Beast of Burden launch video. I can’t wait to see what he builds next.
Truck Parts & Service August, 2017 Article by John Blodgett
As I write this column, we just finished the longest day of the year (I mean daylight hours, not a bad day which doesn’t seem to want to end) June 21. Not quite the midpoint of the year, but close, so maybe it is a good time to review what we (MacKay & Company) know so far about the aftermarket for 2017. I do understand that by the time you are reading this it is likely August and Jordan Spieth has already won the British Open.
Let’s start with our Fleet Utilization Index. Each quarter we measure fleet vehicle utilization rates for over 700 fleets of various sizes and vocations. Obviously, fleets’ equipment usage has a direct impact on the aftermarket for parts and service. First quarter utilization came in at a record high and the forecast by the fleets for the second and third quarters was also very strong.
We also have an Aftermarket Index of component suppliers’ sales to OES and independent channels. Preliminary numbers through May have the parts sales for these participants up 3.5% year-to-date compared to last year. Canada is up 7.8%. Sales to Independent channels are outperforming OES in both markets. Both markets (U.S. and Canada) were down last year compared to 2015. Commercial break- If you would like to join Index – let me know. Now back to the column.
Monthly, we also survey several truck dealers and independent parts distributors each month about their aftermarket parts sales. Our survey respondents in May for both channels were up between 4% and 5% year-to-date compared to 2016.
Bob Dieli, our economist and frequent contributor to this column, has a short term economic outlook tool called Enhanced Aggregate Spread (EAS). I won’t enlighten or bore you (depending on interest level for economic forecasting) on the details now, but basically Bob takes four real economic measurement, combines them in an Index and pushes it out nine months — turns out to be a good short term indicator of economic activity. At present, it is showing positive economic activity out into the first quarter of 2018. EAS is also a good leading indicator for our measurement of trucking economy called Truckable Economic Activity (TEA®). Currently all sectors of TEA® are at or above levels measured last year.
Retail sales are forecast to be down this year, but while retail sales can be an indication of economic health, they don’t truly impact the aftermarket of the current year.
Our forecast for 2017 aftermarket in January of this year was for the market to be up 1.5% over 2016. At present, that looks light, but time will tell. We do complete our major update and forecast in July, so stay tuned.
In summary, most indications are positive and the short term outlook is positive, business and consumer confidence is good and forecast capital spending by corporations is expected to be up. Now is the time to take advantage of a good market and make hay (or better yet money). Turn off the radio and TV talking heads (and twitter account if you have one) and focus on what you can control – your business.
Truck Parts & Service July, 2017 Article by John Blodgett
This happens to be one of those situations where the lead time between the writing of a piece and its appearance can actually be helpful to both the person reading the article and the person writing it.
As we put “pen to paper” (actually as we click away on our keyboard) we are looking at an industry environment rife with positive “soft” data. What are “soft” data? The results of surveys about business confidence and spending plans. Since the turn of the year, there has been a surge in business confidence and a rise in spending plans for both people and equipment. What we have not yet seen, for reasons that we shall presently explain, is the associated uptick in the hard data. What are “hard” data? The number of units reported in the last edition of Class 8 truck sales, for one.
And there you have the reason for the question at the top of the piece. Our expectation is that some of the confidence and optimistic plans will translate into more spending and hiring. The problem is the lead time associated with each of the efforts.
One activity where we think results should show fairly quickly is hiring. The decision to increase payrolls is usually made quickly and the hiring process is straightforward. Of equal importance, the reporting interval is short. The Bureau of Labor Statistics updates the truck transportation employment figures every month.
The data relating to other types of spending takes longer to come to light, both because of the process involved in the spending itself and then the reporting of same. In the case of a Class 8 truck, the buyer specs the truck and places an order. Then the OEM has to slot that truck and build it. Then the OEM reports it to Ward’s. Then Ward’s has to compile and publish the numbers. Then the various media outlets have to show you the numbers. All of this can take months. In the case where the spending figures get aggregated into statistics like Gross Domestic Product, or our own metric Truckable Economic Activity (TEA®), the reporting interval can be even longer.
The other area where the transition from soft to hard data is both lengthy and hard to forecast is in the budgeting process at both the Federal and the State levels. All units of government operate on a fiscal year and a legislative calendar. Both of those are widely known and set the parameters for when certain actions should be taken. Where things get complicated is between the start of the process where the president or the governor proposes a spending plan and the subsequent hearings, bill drafting and lobbying that happens before that agenda is settled and put to a vote. And, let us not forget, while the legislatures are debating how much to spend, they will also be debating how much to tax. All of which adds up to another instance of soft data (campaign promises) get converted in hard data (legislation and regulations).
There used to be a commercial that asked the question “is it soup yet?” The employment “soup” should come together quickly. The other “soups”, based on the confidence-driven numbers on spending, will take longer. The political “soup” follows its own rules. Because of that, the folks who don’t understand how hard data come into being and how long they take to come to light will downplay the progress that is being made. Because it could well be this time next year before they can measure how much of the “soft” data turned into “hard” data, we all need to monitor our sources closely for the evidence of that process.
-- Truck Parts & Service June 2017 Article by Dr. Robert F. Dieli, In-House Economist
The headlines lately are all about Big Data. However, many organizations don’t execute on small data effectively. It always amazes me when I hear stories of how little value is placed on the mining and exploration of data, no matter the company or the industry. Worse yet, companies think they value it, but aren’t dedicating nearly enough resources to producing truly actionable intelligence from it. This may be because the cost of housing data is really expensive, but shouldn’t you want a return on that investment aside from a data holding tank? It also could be that the wrong people are watching your data.
Undertaking a giant task of looking for stories in data is daunting, so start small. Look for things in the data that match your existing knowledge first. This will give you and those to whom you are providing data some comfort. Data is like a hiking trail, once you go down a path, keep going until the story in the data stops. By then, you should have many other connections to explore. In prior lives, I was always the data guy, no matter my official role. I would explore the data queries (searches) of those that came before me and puzzle together what I was looking for. Once I did that, I was off and running. There wasn’t a stock or purchasing optimization project I didn’t have the ability to gather data for. Mining the data for those projects gives you experience on finding other useful information. Most likely you have someone in your own organization that would like the opportunity to do this for you. Give them a couple hours to see what they can do.
- Everything is data: purchase orders, sales orders, parts returns, core returns, technician repair data, parts purchases, customer invoices, customer payments, warranty data, employee time off, fleet composition, etc. All of these sources have stories.
- Data quality matters…a lot. If you are reporting on data that is garbage, it can do more harm than good. Audit the data that is input and make sure it is useful by standardizing inputs where possible.
- Utilize subject matter experts for the data mining projects, NOT just database IT personnel unless they are the same people. A technical person without subject matter expertise can lead you in the wrong direction.
- Ensure your reports give you the data you need and are easily accessible by everyone who needs them. If not, why not?
- It is dangerous to have one person control all reporting or data.
- Make time for implementing actionable data projects. Producing reports without a goal is a waste of time.
- Internal staff who know what they are doing are 10 times more valuable than expensive reporting software systems with recognizable names. Listen to your staff.
The bottom line is data can be a nebulous and scary term. It makes people uncomfortable –sometimes because it can produce stories that defy an expected narrative. Don’t be afraid of it, using it effectively can head off problems before they make the light of day, help you stay more competitive, discover a customer’s unmet need and optimize products and processes. If these things aren’t happening at your organization, explore options to make your data usage more effective.
Trucks Parts & Service May 2017 Article by Lynn Buck