January 2009

Saying Goodbye to Sterling

Branded to Crawl

Going Retro

How the Retrofit System Works

The Good, the Bad and the Ugly

Fulfilling Your Medium Duties

In The News

Saying Goodbye to Sterling
Daimler Discontinues the Brand in 2009

Parting ways is never easy, but difficult times can call for difficult decisions, like Daimler Trucks North America’s (DTNA) decision to focus on a two-brand strategy and say goodbye to the Sterling Trucks product line.

The comprehensive plan aims to adjust and strengthen company operations in response to continuing depressed demand across the industry and structural changes in the company’s core markets. The Sterling Trucks brand will be discontinued in March 2009. Sterling models have substantial overlap with offerings in the Freightliner Trucks product line. Launched in 1998, Sterling has only achieved a quarter of the Freightliner nameplate’s market penetration despite ongoing improvement initiatives and product launches.

Additions to the Freightliner and Western Star product ranges will be made to address market segments that have been served exclusively by Sterling offerings in the DTNA stable.

“It is a principle of our ‘global excellence’ strategy to strive for benchmark profitability and to address structural market changes in a timely and consequent way,” said Andreas Renschler, Member of the Board of Management of the Daimler, responsible for Daimler Trucks. “We are confident that this forward-looking strategy for DTNA is the right measure to address the challenges in the North American market.”

“Plans based on an expectation of brief, sharp market events driven by regulatory change, followed by periods of reasonable growth, are out-of-step with the emerging realities of the latter part of this decade,” said Chris Patterson, President and CEO of DTNA. “We’ve examined every part of our organization in light of the changed economic environment.”

DTNA expects that the Sterling dealer network will continue to perform warranty repairs and maintenance services, supply replacement parts and provide technical support for Sterling Truck owners. Dealers will continue to accept orders until Jan. 15, 2009. New truck sales will continue until present dealer stocks are depleted.

As a result of the decision to discontinue the Sterling brand, the St. Thomas, Ontario, plant will cease truck manufacturing operations in March 2009, concurrent with the expiration of the existing agreement with the Canadian Auto Workers members employed there. The plant manufactures Sterling medium- and heavy-duty trucks. DTNA will also close the Portland, Ore., truck manufacturing plant in June 2010, when current labor contracts expire.

Western Star commercial production will be assigned to the company’s Santiago, Mexico, plant, while production of Freightliner-branded military vehicles will take place at one of the company’s manufacturing facilities in the Carolinas by mid-year 2010. A migrating supplier base and high logistics costs have had a major impact on the cost of production in this location.

Launched in 1998, Sterling has only achieved a quarter of the Freightliner nameplate’s market penetration despite ongoing improvement initiatives and product launches — a major factor in Daimler discontinuing the brand.

The end of production at the 39-year-old Portland manufacturing plant will not affect the location or operation of the company’s headquarters in the same city. The company recently completed the relocation of sales, marketing and customer support functions to Fort Mill, S.C., leaving 2,200 employees engaged in administration, product development, procurement and information technology in the headquarters building on Portland’s Swan Island and neighboring satellite offices.

An estimated 2,300 workers in the St. Thomas and Portland plants will be affected by mid-2010, on timelines related to the plant closures noted above. This figure includes 720 workers at the St. Thomas plant that were laid off in Nov. 2008, as already announced in July.

The company also plans to reduce its salaried workforce by approximately 1,200 positions, with over half directly related to the Sterling brand. A voluntary separation program will be available, as well as other measures to offer flexibility and choice to affected employees.

“We are very mindful of the effects these decisions will have on the lives of many of our employees and on our Sterling dealers’ businesses,” stated Patterson. “We are committed to taking measures to ease the transition for all those affected and to emphasize the support offered to those owning and operating Sterling Trucks in the wake of this announcement.”

Branded to Crawl
Terex Launches Compact Equipment Lineup

White is the new yellow for Terex-branded compact track loaders. Terex’s compact equipment line will also feature excavators, compact wheel loaders, site dumpers, tractor loader backhoes, light towers, telehandlers, power buggies and tandem asphalt rollers.

When Terex Construction snatched up ASV — a pioneer of track systems for compact track loaders and UTVs — nearly a year ago, the question of machines maintaining the ASV branding lingered throughout 2008. That is until white Terex compact track loaders and a white tracked-out Scout UTV made an appearance at the Green Industry and Equipment EXPO in October. It was the first appearance of Terex’s new compact equipment line for North America.

The compact equipment line includes both Terex-branded compact track loaders, featuring the ASV patented Posi-Track undercarriage technology, and a broad portfolio of offerings from Terex, including compact excavators, compact wheel loaders, site dumpers, tractor loader backhoes, light towers, telehandlers, power buggies and tandem asphalt rollers.

“By combining Terex Construction’s broad lineup of compact products and services with our innovative compact track loaders featuring our patented Posi-Track undercarriage system, we are able to provide an exceptional ownership experience,” said Del Carver, Director of Sales and Marketing for the compact business of Terex Construction Americas.

Through Dec. 31, 2009, dealers who distribute ASV products only will continue to offer these machines under the ASV brand. Effective Jan. 1, 2009, all current ASV products will also be Terex branded and will join the North American Terex compact equipment line. In the interim, customer events and media coverage that feature both Terex and ASV-branded products will be promoted as Terex ASV.

In addition, Terex parts and service and Terex financial services are available to customers who purchase Terex equipment.
“We are committed to giving compact equipment owners more equipment choices, better product features and greater reliability, as well as the best service before and after the purchase,” Carver explained. “Contractors are demanding more for their money from both their dealer and their manufacturer, and we plan to give them what they want. With the power of the Terex compact equipment line, we are confident that we can do just that.”

Going Retro Volvo Engines Retrofit System for Construction Equipment Although Tier 4 emissions standards for off-highway engines are just around the corner, Volvo Construction Equipment is looking beyond new equipment to clean up engines already on jobsites. Volvo has entered into a strategic partnership with HUSS LLC, a leading specialist in diesel particle filtration and systems for exhaust after-treatment, to provide retrofit systems for Volvo construction equipment that will significantly reduce exhaust emissions and make the air we breathe cleaner. The HUSS retrofit system for Volvo equipment is capable of collecting up to 99 percent of diesel particulate matter (PM) emissions, substantially exceeding the CARB requirements. Volvo CE will begin its engine retrofit program immediately, utilizing the HUSS MK exhaust after-treatment system. The HUSS system is verified to meet California’s CARB Level 3 requirements (minimum 85 percent particulate collection), and Volvo equipment owners using the system will be able to meet the “In-Use Off-Road Diesel Vehicle Regulation,” New York Local Law 77 and future pending legislation. With their vast experience in after-treatment technologies, additional emissions reduction systems from Volvo and HUSS are coming — first, a passive system allowing a less expensive solution, but for specific machines and applications, and second, a passive/active system combining the benefits of passive and active systems with broad applications and no machine downtime. HUSS LLC, Palm Springs, Calif., is a specialist in exhaust after-treatment for diesel engines and has more than 20 years of experience in the manufacturing and servicing of diesel particulate filtration systems. Applications of the HUSS systems include construction and mining equipment, industrial and refuse trucks, transit and school buses, heavy-duty on-highway vehicles and stationary generator sets. The partnership is based on an agreement between Volvo headquarters in Sweden and HUSS headquarters in Switzerland, which will make the HUSS systems also available for Volvo Trucks, Mack Trucks, Volvo Penta and Volvo Bus engine retrofit applications on a global basis.

How the Retrofit System Works The retrofit system is equipped with a HUSS control unit that constantly monitors filter function to precisely control diesel PM loading and regeneration. The system is integrated into the exhaust system of the vehicle to collect the diesel particulate matter. Active filter regeneration, through an integrated fuel burner system, typically takes place after approximately eight to 10 operating hours and is completed in five to 35 minutes. Engine exhaust backpressure is set to Volvo requirements. In addition to the reduction of 99 percent PM, there is no increase of NO2 or other secondary emissions in the HUSS system. The MK system is extremely versatile and is applicable over a wide range of machines and machine operating conditions. The HUSS technology is also adaptable to high-horsepower equipment (up to 700 hp) providing reliable double-filter installations.

The Good, the Bad and the Ugly
FMI’s Fourth Quarter Report Predict Negative Nonresidential in 2009

While the early months of 2008 offered waves of news focusing on green technology and energy independence, it’s already clear that the economy will be on the minds of Americans for at least the first half of 2009. And according to FMI’s management consultants and investment bankers for the building and construction industry, Construction Outlook: The Fourth Quarter 2008 Report it’ll be the center of attention well into 2010.

• The good — nonresidential construction will close out 2008 in positive territory.
  
• The bad — 2009 will bring an end to five straight years of nonresidential construction growth.
  
• The ugly — downturn of growth in 2009 will continue through 2010, which should mark the bottom in terms of dollar volume. Transportation construction is the only nonresidential segment likely to grow in 2010.
  

However, the housing sector has good long-term growth prospects. With the population expected to increase by 100 million people over the next 30 years, there will have to be more housing. This population growth and eventual increase in residential construction also bodes well for the future growth of nonresidential construction.

Another important indicator for construction is the federal funds rate, which as of the end of October is at its lowest rate since 2003 at 1 percent. The Fed said the “intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of household and business to obtain credit.”

The FMI report also questioned the likelihood of a federal infrastructure spending bill. The timing (if any) of a major package is unknown and was not to be arbitrarily placed into the forecast. It stated that if a major package were to be passed, it then takes time to be worked into actual construction. A prime example of this is the federal money that was given to New Orleans post-Hurricane Katrina versus the actual amount of construction that has been put in place. Construction needs time to be planned, designed and also approved.

The report also stated that there is no guarantee that any funding from a new package would be used in addition to the old source. For example, if federal funds were given to a state for highway and street projects, it is possible that the state could use the federal money and then reallocate the old highway money to another area of need such as paying off interest on its bonds. If this occurs, no additional construction is actually built. The latest proposal calls for an investment of $60 billion over 10 years. This amount is a fraction of the highway bill funding level and is far shy of the $1.6 trillion that is needed to fix our crumbling infrastructure. The source of the funding for a major infrastructure package is also in question.

Founded in 1953 by Dr. Emol A. Fails, FMI provides management consulting and investment banking for the worldwide construction industry. FMI, management consultants and investment bankers to the building and construction industry, delivers innovative solutions to contractors, architects and engineers, construction materials producers, manufacturers and suppliers of building products and construction equipment, private owners, residential builders, utilities, government agencies, surety companies and trade associations.

Fulfilling Your Medium Duties
Kenworth Truck Co. Offers Key Tips for Spec’ing Commercial Trucks

When building your medium-duty truck, knowing your payload, terrain conditions and body requirements is as important as knowing where your keys are when you want to drive it to the jobsite.

Projects are becoming more competitive, cash flow is getting leaner and new equipment purchases are seemingly a luxury in this uneven economic ebb and flow. So if your crews need a new truck, the fine folks at Kenworth Truck Co. want to make sure you find the ideal work wagon —
especially when it comes to medium-duty chassis cabs.

“Customer expectations of medium-duty trucks have continued to increase in recent years,” said Judy McTigue, Medium-duty Marketing Manager for Kenworth Truck Co. “Many users look for a business solution that provides superior uptime and reliability. An increased focus on fuel efficiency and efforts to reduce the environmental footprint are driving interest in hybrids. Dependability is also high on the list because, day in and day out, medium-duty trucks are work trucks and customer satisfaction is based on making timely deliveries, pickups or service calls.

For years, a key criterion for spec’ing medium-duty trucks has been the gross vehicle weight rating (GVWR). Users select trucks primarily on the basis of their class.

But a medium-duty truck is not just any truck — it’s the wheels of your business, carrying crews and pulling pieces of equipment. For starters, medium-duty trucks fall into Class 5 (16,001- to 19,500-lbs GVWR), Class 6 (19,501- to 26,000-lbs GVWR) and Class 7 (26,001- to 33,000-lbs GVWR).

While the vehicle’s GVWR is still important, buyers are increasingly focusing on other factors. Know your payload, terrain conditions and body requirements and you’ll be on the way to developing a good understanding of how to spec your medium-duty truck chassis for your business application.

“For example, how many fires is it acceptable not to respond to because your town’s pumper truck is down for servicing? Or how many missed residential propane deliveries are allowable in the dead of a cold winter?” asked McTigue. “Your medium-duty truck must stay running because it’s not easy to rent when it’s down, unlike a tractor pulling a trailer. Think of it like a house. Your medium-duty truck chassis is very similar — you need it to deliver your goods or services, each day, all day. You wouldn’t build a house for your family on a foundation that will give way before the house itself.”

Body Wisdom

Some of the first things to consider are the type of load, annual mileage and type of operating environment.
Buyers can choose from a wide range of bodies that can be mounted differently depending on the truck’s wheelbase and local weight regulations.

“Bodies are mounted flush with the cab or with a space in between,” McTigue explained. “They can also be on top of the frame or extend below it. Kenworth’s body builder options help the body builder with this process. Frame strength and length can be determined when we know the type of body selected. Typically, the big issue with a frame isn’t just the kind of load, but also the body type and vehicle application. For example, there’s no problem with a truck-mounted crane when it’s traveling down the road mounted. But when it’s parked and lifting loads, we need to have a better understanding of the weights and stresses that will be placed on the vehicle.”

The Drivetrain

A carefully spec’d drivetrain can lower your total operating costs over the truck’s life. Be careful not to over-spec the engine.
“In a fire and rescue application, you’re going to need high horsepower and torque to get good acceleration.

But in most pickup and delivery applications, you aren’t going to need nearly the same amount,” McTigue said.

“A manual transmission may be best if you either have an experienced driver or don’t make frequent deliveries. An automatic or automated transmission may be a better fit if you have either a new driver or routes with frequent stops.”

Whether you select manual or automatic, you should choose the rear axle ratio carefully to get the best fuel economy. “Pick something that will provide the startability needed based on the load that will be carried, but also keeps the engine in the most fuel-efficient operating range as long as possible.

“As it is with many of the other specs, it all comes down to finding the right balance,” McTigue concluded.

Auction Innovation The inaugural auction from Cat Auction Services held Nov. 12 in Des Moines, Iowa, was met with great enthusiasm from both buyers and sellers. Buyers got a unique video look at each machine as it was sold — a high-tech approach to a classic format. Dan Ames, Owner of Minnesota Dirt Works Inc., of Lonsdale, Minn., made his first-ever auction purchase, though he typically buys all his equipment from local dealers. Ames went to the auction intending only to be a spectator. “It was a first-class event, and all of the equipment seemed high quality. The pre-sale inspection report on the equipment was a big benefit to me,” Ames said. “I went to the auction with no intention of buying and came home with a small compactor. Seeing the machines on the JumboTron moving and going through all their functions gave me even more confidence in the purchase.” A total of 275 pieces of equipment were sold garnering $8.85 million as 499 on-site and 327 online bidders from 14 states and nine countries, including Mexico, Canada and Egypt, vied for the top-of-the line equipment that featured complete pre-sale inspection reports based on Cat Used standards. Chinese Fortune JLG Industries Inc., along with its parent company, Oshkosh Corp., broke ground for a new manufacturing facility in Tianjin, China. Yet another step in Oshkosh Corp.’s strategic business initiatives to meet the demands of a global economy and the growing demand for aerial work platforms in the Chinese and Asian markets. JLG Industries has been selling and servicing products in the Asian market for decades. The company opened an office in Beijing in 2002 to enhance responsiveness to its Chinese customers in the shipyard, construction, airport, hotel, industrial and maintenance industries. “We have chosen to expand in China because we believe the Asian market holds tremendous long-term potential for our access equipment. In many respects, our Asian customers are just beginning to see the tremendous value that access equipment can provide in construction, manufacturing, maintenance, industrial and shipyard applications,” said Craig E. Paylor, Oshkosh Corp. Executive Vice President and President of JLG Industries. The new facility will produce JLG access equipment specifically for the Asian market. JLG currently has manufacturing operations in Pennsylvania, Ohio and North Dakota and in Maasmechelen, Belgium, Tonneins, France, and Medias, Romania.