Truck makers maintain production but wary of supply chain issues

Volvo Truck assembly in Virginia

Major truck manufacturers are avoiding production cuts and layoffs due to the coronavirus pandemic as supply chain disruptions so far are minimal.

Orders for new Class 8 trucks are running below replacement demand following two years of near-record sales. All manufacturers expected a rough first quarter before the global spread of the coronavirus beyond its origin in Wuhan, China.

Navistar triage team

Navistar International Corp. (NYSE: NAV) has activated a cross-functional response team to keep track of the rapidly worsening crisis. The maker of International brand trucks and buses is using a third-party vendor to evaluate the supply base and the likely impacts of COVID-19. Air freight and substitutions for affected parts delayed parts have mitigated minor issues to date.

“At this time, we have determined it is a low-severity issue,” Navistar CEO Troy Clarke wrote in a message on the company website Thursday. “We have prepared a triage team to rapidly react to any future supply risk and mitigation plans have been developed for high-risk components.”

Navistar said it does not expect suppliers to come to its headquarters in suburban Chicago for the time being.

Volvo Trucks North America, a unit of Swedish truck maker AB Volvo (NASDAQ: VLVLY), said it is banning travel to areas restricted by the U.S. State Department and restricting noncritical business travel.

Sar far, so good

Volvo sIbling Mack Trucks said it has experienced neither production impacts nor major disruptions from suppliers.

“The situation is very fluid, and we will continue to monitor our supply chain,” Mack spokesman Christopher Heffner said. “We continue to have business-critical meetings, such as dealer and customer visits, if they are not large groups.”

Customer tours at Mack’s Lehigh Valley (Pennsylvania) Operations and the Mack Customer Center and public tours of the Mack Trucks Historical Museum are temporarily suspended. Volvo also is restricting plant tours and customer center visits at its New River Valley manufacturing campus in Virginia.

No show, no go

Navistar, Volvo and Mack all said they are being careful about attending industry trade shows even as events like the Mid-America Truck Show (MATS) in Louisville, Kentucky, have been canceled.

“The decision regarding our involvement in these affairs will be made on a case-by-case basis,” Navistar’s Clarke said. “We will seek to replace physical presence with digital or virtual presence wherever possible.”

The value of connecting with potential customers at trade shows is less important than “the health and well-being of our customers, potential customers and employees,” Volvo spokeswoman Jennifer Edwards said.

AB Volvo said Friday it will hold a scaled-back version of its April 8 Annual General Meeting in Gothenburg, Sweden, and encouraged shareholders to vote by proxy in lieu of attending. Registration will start later, no food will be served, and questions during the meeting will be restricted to issues on the agenda. Some planned speeches are being shortened or canceled.

PACCAR Inc. (NASDAQ: PCAR), parent of Kenworth Truck Co. and Peterbilt Motors, declined to comment on FreightWaves’ questions about impacts to their businesses from the coronavirus. Daimler Trucks North America, a unit of Daimler AG (NASDAQ: DDAIF), did not respond.