South African trailer manufacturers look set to emerge from the 2008/2009 economic recession in reasonable shape but there is still a long way to go before it is on an even keel writes Andrew Parker. A number of leading trailer builders approached by FleetWatch for a status update on what is taking place in the local market report that the industry has taken a seriously hard knock in recent times with at least nine companies going to the wall and quite a few more surviving month-to-month. One thing is quite evident, this sector of the road transport business will never quite be the same again.
Trailer manufacturers are reportedly currently cutting each other’s throats in an effort to secure enough business to stay in the game. Customers, as is their wont, play one off against the other. It is an open market and nobody is breaking the law.
A positive aspect of this new recessionary market is that while customers are shopping around, they have become quite circumspect over what they like and dislike. They are demanding trailers of the highest possible quality and reliability; equal to anything you will find in most developed countries and which will withstand the rigours of the operation they are intended for. They also want high quality, reliable aftersales service.
Moses Naidoo, marketing manager at Henred Fruehauf, which is currently operating at around 80% of total capacity, says one of the difficulties manufacturers are facing is that market uncertainty is making it difficult to maintain healthy order books. This means producers are unable to plan too far ahead in terms of hiring staff, buying materials and so on.
Also, because of this and the fact customers are indecisive, by the time they do commit themselves to place an order, the original costs may have gone up. Frustrating though it may be, Naidoo says for its part, the company is managing these challenges head on.
While no particular market segment is overly dominant, Naidoo says they are picking up a fair number of orders and enquiries for side tippers and flatdecks of which a fair number are for the export market.
Flatdecks are one thing but seeing as there was a reported glut in the market for side-tippers just a year ago, the news that this sector is now buying new trailers comes as a bit of a surprise.
Naidoo explains that since the side-tipper market really took off some five years ago, a lot of developments have taken place in terms of hydraulic systems, certain chassis modifications and even the shape of the actual tipper body, or bin, itself.
He says unlike previous years, they now plan their manufacturing strategy according to movements in the commodities markets. “It is a total departure from the past and there are no comfort zones or room for jobbing as their used to be.’
Further to this, he says a large number of side-tippers are now reaching their replacement date.
Unlike most trailer derivatives which have a useful economical life cycle of up to ten or fifteen years , that’s if they are properly serviced and maintained – side tippers operate in harsh conditions and, according to Naidoo, generally need replacing within three to five years.
Refurbishment an option
Leon van der Wetering, marketing manager at Pretoria-based Afrit Trailers, notes that refurbishment as an alternative is increasingly being looked at by fleet operators. He says that depending on the condition of the trailer, it may be possible to replace just the load body. It all boils down to what the refurbishing will cost compared to that of a new trailer.
FleetWatch also spoke to Bloemfontein trailer manufacturer Trailord. MD Rui da Silva has been in the trailer game for over three decades and apart from having a number of international design awards under his belt, is a very astute operator and a well of information about the local trailer business.
Before he discusses recent developments in the marketplace, he reports that Trailord, which he founded on a shoe string some years ago, actually closed down last year and only recently re-opened for business.
Da Silva, who says business is picking up nicely, notes that customers have become more discerning of late. “A lot depends on how the market perceives you and what kind of service you can provide.’
He confirms that truck operators are also more concerned with the overall quality and finish of the final product than they were in the past. “These are definitely positive developments and should go some way to eliminating the rat and mice trailer builders which have plagued the industry for years with poor quality and service,’ he says.
“Of course the market is depressed,’ Da Silva continues, “it is not easy for anyone, but you must be pro-active and get out there and look for opportunities and market yourself.’
Da Silva says trailer builders must look and exploit niche markets. “The geographical location also plays a role. In KwaZulu-Natal, for example, there is a demand for cane and timber and container trailers. In the Free State, it is cattle and grain carriers.’
While exploiting niche markets, Da Silva says it is important to keep the company’s design and manufacturing capability as flexible as possible. This, he says, pays dividends in a slow market environment like South Africa is currently experiencing. “When the market slows down you have to be able to adapt your operation to suit the demands of the day.’
Labour issues played havoc
Commenting on the closure of the Trailord factory last year, Da Silva says in spite of sitting on a number of lucrative contracts, circumstances made it impossible for the company to continue operating. He says that among other things, labour issues and militant unionisation played havoc with the company’s production schedules.
“Trailord is not alone in this,’ he says. “Unfortunately, much of our unionised laws in South Africa are not designed for productive employment. Quite often, a small group of corrupt employees influences and intimidates the rest of the work force often leading a “go slow’ or strike. These same employees are protected by labour laws and often use union agendas as an excuse. For a small company, this can have devastating consequences.
“This is evident in every sector of commerce and industry; mining, engineering and even within the government and civil service. Quite simply, there is an over abundance of union politics on the shop floor and business has allowed itself to get snookered into this situation. In the end, the masses win and the company owners get penalised in spite of the fact that they are trying to create jobs.
“I understand the unions are here to protect the employees and I welcome that. We must ensure that the abuse of labour such as occurred in the past is never repeated. However, I do not always agree with their approach, especially in a recession and recovery from recession. One would think that in hard times, they would be more lenient in their demands but they are not. Instead of creating havoc on the shop floor they should be offering bursaries and creating jobs.’
Moving on from this, while some players have had – or are still having – a tough time and others have vanished off the map, one trailer manufacturing organisation appears to have come through the recessionary monsoon season smiling all the way to the bank.
Charles Lovell, business manager for the KearneyGroup, claims the company has been enjoying a successful run of good fortune so far this year.
Lovell, who reached a 50 year milestone of service to the South African road transport industry this year, says while Kearney’s streamlined its operations by closing its Pietermaritzburg facility and moving it to Durban, this has not affected production.
“We are manufacturing PBS (performance based specification) trailers for Mondi as well as a large number of tautliners, flatdecks, side tippers and coplyn end tippers. Our production lines are working at full capacity.’
Asked how Kearney’s manages so well in a depressed market, Lovell says the company enjoys a good reputation in the market because “it is a big company with small company ideals. In other words, while we have paid a lot of attention to ensuring the quality and reliability of our trailers as well as our after sales service is as good as it gets, we have also maintained a close, hand-on relationship with our customers.’
While Lovell makes it sound easy, he admits that the market is extremely tough and serious discounting is the order of the day. “Customers are well aware of this and they like to play the trailer builders off against each other,’ Lovell says with equanimity
Chinese are coming
Looking into the future, Lovell says depending on what happens with production costs in this country, it is not impossible that trailers will be imported into South Africa from places like China.
“They are producing some good trailers over there and at about half the cost of what we can currently produce them in South Africa, so don’t be surprised if you see them running around southern Africa in the not too distant future.’
Asked why he was so confident that this scenario could transform into reality, Lovell replies: “If you had asked me 10 or 15 years ago if we would ever buy an Indian manufactured truck, I would have thought you were crazy. Well I can tell you now that Kearney’s recently took ownership of its first Tata truck and are very happy with it as well.’
Van der Wetering also believes imports could soon become a reality in the South African market. He says he has seen a number of Chinese manufactured trailers operating in Malawi and was pleasantly surprised at the high quality of the products.
“Just like anywhere else in the world, China has good and bad suppliers. I have, however, heard from some operators that these Chinese trailers did not perform as well even over a long period of time.
In the meantime, while we are waiting for the Chinese trailers to arrive, South Africa’s trailer builders such as Afrit and Henred and Kearneys have been establishing a strong market presence across southern and central Africa including, among others, Botswana, Zambia, Malawi, Mozambique, Angola – and even as far away as the DRC (Democratic Republic of Congo), Kenya, Nigeria and Ghana
While South Africa struggles to gain momentum in what is actually a growing domestic market, it seems the rest of Africa is providing the bread and butter for South Africa’s trailer manufacturers – and that is not a bad thing at all.