Merry Christmas and Happy New Year
John Blodgett
It is actually the middle of October as I write this column and there hasn't been a whiff of winter weather yet in Chicago, although it does seem like the Cubs have hibernated.
So why bring up the holidays? Because they will soon be upon us and soon after that is the Heavy Duty Aftermarket Week (HDAW) in Las Vegas from Jan. 22-25, 2018. This is the preeminent conference on the heavy duty aftermarket in North America. It is run by a combination of associations whose primary focus is the heavy-duty aftermarket.
If you are a distributor of heavy-duty aftermarket parts and/or service and haven't attended this conference in the past, I highly recommend you consider it this year. It is an excellent way to network with other distributors, get one-on-one time with suppliers and enjoy interesting and educational presentations. If you are a supplier, it is likely the best bang for the buck to get in front of the people who are on the front lines of the independent aftermarket.
The primary reason I am writing this column now is to start you thinking about what you want out of this conference. It seems that everyone is extremely busy these days, mainly because business is good, but if you don't start outlining your goals for HDAW you risk leaving Las Vegas wishing you had spent more time preparing for this conference.
“If you don’t start outlining your goals for HDAW you risk leaving Las Vegas wishing you had spent more time preparing”
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).
If you are a distributor, start laying out the topics you want to discuss with each individual supplier you want to meet with at the one-on-one meetings. If you start that list now, you are not likely to forget to address the important items. Talk to your employees about their perspective on what needs to be addressed or brought up -they may have a different take.
Also think about what new suppliers it might make sense to meet with this year, if only to better educate yourself on possible new products or suppliers.
Finally, think about who from your organization you want to attend.
There are a lot of heads with gray hair and no hair at this conference (just the men) - not that there is anything wrong with that -but are there younger members on your team that would benefit from this conference? If so, get them signed up
If you are a supplier, you probably have already started thinking about the key messages or themes you want to get across to current and potential distributors. If you haven't started, get started, if you have started, start finalizing.
Determine what and who should be in your booth. Determine how you are going to differentiate your company from your peers and competitors. What are you going to discuss in your one on-one meetings? Will the distributors you meet with be able to remember your message? Will there be anything new from what you told them last year?
Finally, a shameless plug. If you are planning to attend HDAW, get in to town one day earlier and attend HDAD (Heavy Duty Aftermarket Dialogue) on Monday, Jan 22, 2018. It is a one-day conference sponsored by MacKay & Company and the Heavy Duty Manufacturers Association (HDMA) and it includes speakers and panels with distributor, dealer and fleet representatives discussing the pressing issues impacting the heavy-duty aftermarket. You can find more information at either organization's website.
Truck Parts & Service, November 2017, Article by John Blodgett
November eNews, MacKay & Company
Interview with Dieli, HDAD & DataMac Mexico
Cleaning up after the hurricanes
How Does YOUR COMPANY Compare to Your Competition?
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.
“Having the possibility to compare your performance against a very similar group of companies within your same industry segment is priceless. It helps you determine the effectiveness of your sales and marketing strategies. Acting based on the Aftermarket Index information is a much better feeling than acting based on macroeconomic statistics alone.”
“We follow the index very closely. We find it to be a great tool.”
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!
For more information, Contact John Blodgett via email at john.blodgett@mackayco.com or the Contact Form on his About page.
eNews from MacKay & Company
Longest Day: Good time to look at the long and the short of the aftermarket
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.
“Now is the time to take advantage of a good market and make hay”
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
Did the Soft Data turn into Hard Data?
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.
“Since the turn of the year, there has been a surge in business confidence.”
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