The 15 percent drop in U.S. Class 8 heavy truck sales this year has left the industry's Tier 1 suppliers feeling like they've been run over by an 18-wheeler.
Heavy truck sales are closely watched by the auto industry and federal government as an early indicator for the future direction of the nation's economy.
Diesel engine manufacturer Cummins Inc. reported a 49 percent drop in sales of heavy-duty truck engines in North America in the third quarter of this year.
To compensate, Cummins, of Columbus, Ind., said in late October that it would lay off as many as 150 hourly workers by year end. A total of 350 salaried workers will be eliminated by the end of November.
Frank Sheehan, vice president of sales and marketing for Dana Corp.'s heavy truck group in Toledo, Ohio, said high inventory levels and high diesel fuel prices are to blame for the downturn. The cost of fuel, he said, is a truck fleet's second-largest cost, next to the cost of drivers.
'We're going to have to clean out inventory and lower builds next year,' Sheehan said. 'After we clean out inventory and fuel prices stabilize at about $1.40 or $1.45 a gallon, we'll start to come out of it. We think in the fourth quarter of next year, things are going to start to pick up.'
One of Dana's challenges is dealing with the variety of ways that truckmakers are cutting production.
'They are stopping production for weeks at a time,' Sheehan said. 'That is very hard to gear up when your customers are taking out different weeks. If they were all taking out the same week, it would be OK.'
Since July, Dana has laid off about 20 percent of its hourly and salaried work force, or about 1,300 people, in the heavy-truck division. The supplier has not closed any plants.
ArvinMeritor Inc.'s commercial vehicle systems sales of $631 million for the quarter ending Sept. 30 were down 19 percent from the same period in 1999, on a pro forma basis.
ArvinMeritor, of Troy, Mich., already has laid off 240 salaried commercial vehicle systems employees and eliminated 99 contract and unfilled positions since October, part of a companywide cost-cutting campaign related to the merger in July of Arvin Industries Inc. and Meritor Automotive Inc.
Eaton Corp., of Cleveland, has also cut jobs in its heavy-truck business but could not be specific.
'It's a far cry from 1999, when we were hard-pressed to meet demand,' said Don Alles, marketing manager for Eaton Corp.'s heavy truck business.
However, Alles said, the downturn in the United States has not stopped the company's plans to move ahead with construction of a new plant in Mexico.
'We are very much business as usual, other than adjusting our production capacity,' Alles said. 'We don't see terrible doom and gloom in the future.'