As you know by now, Daimler, Mack, and Volvo recently announced layoffs at manufacturing facilities, and Navistar closed its Garland, TX plant ().
This is my take on this news: I’m mildly surprised, but still not overly concerned about long-term conditions. These layoffs are most likely a reaction to revised short-term order forecasts. Most media outlets have neglected to mention that the layoffs are not permanent – manufacturers are free to call the workers back once order activity picks up.
As we all know, new truck buyers have been following an extremely conservative investment strategy since mid-2012, due mainly to uncertainty about the fiscal cliff and debt ceiling. The Legislative and Executive branches should come to some agreement in the next month – most likely a combination of compromise and postponement of deadlines. The business community will most likely be mildly unhappy with the compromise, but guess what – the economy’s going to continue to recover, and at an accelerated pace once further progress has been made on these issues. And no one is going to sit that out.
Also, most analysts report continued tightening of freight capacity. The driver shortage and continued conservative acquisition strategy will make this situation more notable as the year progresses.
These are the main factors prompting most analysts predict a strengthening new truck market in the second half of the year. I agree with them.