Volvo Trucks CEO: Industry Moving "Full Speed Ahead"
29 March 1999
Volvo Trucks CEO: Industry Moving "Full Speed Ahead"
LOUISVILLE, KY.--March 29, 1999--With the U.S. economy in the midst of its longest peacetime expansion - 95 consecutive months - Marc F. Gustafson, President and CEO of Volvo Trucks North America, Inc., questioned why the financial markets haven't reflected the trucking industry's strong, sustained growth as he spoke to the Heavy Duty Manufacturers Association on Friday at the Mid-America Trucking Show.
"The performance of truck stocks is difficult to accept when we are constantly inundated with stories about the Dow breaking the 10,000 mark," Gustafson said. "Even more astounding is the fact that most of us just completed the most profitable year in our respective company's history."
Volvo Trucks sold 30,000 trucks in 1998, the best year in the company's 18-year history. And according to Gustafson, the growth shows no sign of slowing: Volvo has projected that in 1999, the truck industry will sell 270,000 trucks in North America. Such sales would mark the fifth record year of the decade for the industry.
"Prospects also look good from our customers' perspective," Gustafson said. "Morgan Stanley projects 15 percent to 20 percent earnings growth for trucking companies in 1999."
So why, Gustafson asked the audience of 500, did trucking stocks fall three percent in 1998?
"In spite of our industry's progress, the market appears to be unwilling to reward our industry either for past success, or for promises of short-term, stronger performance in the future," he said. "In short, the capital markets view our business as part of the 'smokestack industry' during an age in which 'dot-com' is in fashion."
Ironically, Gustafson noted, a thriving trucking industry greatly contributes to the growth of Internet technology and the Web-based marketplace.
"We tend to lose sight of the fact that a very tangible world consisting of roads, new construction and of course, trucks, must exist before any gains from the virtual world can materialize," he said.
In addition, just as trucking contributes to the Internet landscape, the reverse is also true. Gustafson challenged his colleagues to embrace a new world, one in which trucking will finally be viewed as a vibrant, expansive industry very much in step with the technology sector.
"A new frontier lies ahead," Gustafson said. "We are embarking on a race that will define a new market space. Those who embrace the opportunities first will have the opportunities to forever change the competitive landscape."
That change will happen by necessity. Though trucking stocks may never generate the interest among consumers that marks the `dot-com' stocks, the two industries are not far removed: truck drivers have become one of the fastest-growing group of Internet users in the country. As a result, Volvo Trucks and others are developing a new breed of 'dot-com' trucks linked to the Internet, voice-mail and e-mail. Moreover, Gustafson noted, Volvo Trucks has developed a virtual service network linking dealers and service stations throughout North America.
In addition, Gustafson said, Volvo's recent alignment with Petro Stopping Center Travel Plazas, offering 50 locations throughout the United States, will add to its ability to serve the growing desire of customers to combine business and lifestyle. Volvo and Petro will build 50 additional new state-of-the-art facilities that will combine driver education, truck services, Internet/cable access and leisure activities.
"The foundation is being laid for an accelerated deployment of new technology," said Gustafson.
Other changes imminent within the industry, according to Gustafson, are competition based on integrated products and a dramatic reform in truck distribution channels.
Most of that change, Gustafson said, will revolve around the quick dissemination of information.
"Information technology is about to revolutionize the business of heavy duty trucking," he said. "If we don't stake out a new position in that market space, others will do it for us. How long before the Jack Welches, the Wayne Huizengas and the Bill Gates of the world set sights on a North American truck industry that generates $20 billion in new truck sales, $14 billion in parts, and $20 billion in service labor each year?"
Volvo Trucks is leading the revolution, and Gustafson encouraged others to sign up.
"We are committed to shape the new competitive landscape rather than become servants to it," Gustafson said. "We openly invite the most progressive suppliers and service providers to join us. Together, we will shed the smokestack legacy that undervalues our contribution to this economy."
Volvo Trucks North America, Inc. manufactures commercial trucks and tractors, including the VN Series, Autocar(R) and Xpeditor(R). Since late 1996, more than 40,000 Volvo VN Series trucks have been ordered and sold, half of which have come from new accounts.
The company leads the heavy-truck industry in the areas of safety research and development, quality manufacturing processes and environmental care. The company also markets Volvo heavy-duty diesel engines and rear suspensions. Headquartered in Greensboro, N.C., the company is an affiliate of Volvo Truck Corporation, Gothenburg, Sweden.