U.S. Truck Market Hasn't Hit The Skids --Eaton CEO
24 Aprile 2012 - 12:59PM
Dow Jones News
The U.S. commercial truck market should generate solid growth
this year after truck makers align their production with moderating
demand, Eaton Corp. (ETN) Chairman and Chief Executive Alexander
Cutler said Monday.
Cutler, whose company is a major supplier of transmissions to
the truck market, dismissed recent assessments by analysts that the
North American truck market has stalled after three straight months
of lower year-over-year orders. Rising fuel costs, scattered
reports of orders being cancelled and factory production cuts have
added to the bearish outlook for the truck industry.
"We're not panicked," said Cutler in an interview. "You've got
people over reacting to pieces of data."
Cleveland-based Eaton on Monday reiterated its earlier forecast
that production of heavy-duty trucks in North American will reach
about 300,000 vehicles, roughly 16% higher than the 259,000
vehicles built in 2011. Cutler though acknowledged that production
volumes have been out of whack lately. He said truck makers ramped
up production late last year to accommodate a surge in orders. But
the accelerated volumes extended into 2012 with production recently
running at an annualized rate of about 325,000 vehicles, even
though March orders came in at annualized rate of about 206,000
trucks.
Truck maker Paccar Inc. (PCAR) earlier this month announced that
it plans to reduce heavy-duty truck production for its Kenworth
brand after orders declined 10%. The company intends to reduce its
workforce at an Ohio assembly plant by 10%. Paccar will release
first-quarter earnings on Tuesday.
Cutler said he expects orders to accelerate from March, which he
described as a seasonally weak month because truck markers are
transitioning to a new model year, prompting some truck buyers to
delay or cancel their orders to obtain the new truck models.
"Cancellations are always higher in March and April," he
said.
Other aren't convinced the weakness is temporary. Kristine
Kubacki, an analyst in St. Louis for Avondale Partners, expects
heavy-duty truck production in North American to be no higher than
255,000 to 260,000 trucks this year.
She maintains a federal tax program to encourage purchases of
capital equipment siphoned truck sales away from 2012 as big fleet
moved their purchases to 2011 to that advantage of the program,
which expired at the end of last year. Kubacki on Friday lowered
her ratings on truck makers Paccar and Navistar International Corp.
(NAV) and parts manufacturer Meritor Inc. (MTOR)
"Given the current inflated inventories and production levels
for the industry, we could be looking at 30%-plus production cuts
in the back half of the year," she said in a note to investors.
-By Bob Tita, Dow Jones Newswires; 312-750-4129;
robert.tita@dowjones.com
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