Truck & Bus Manufacturing
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Industry Overview
The US heavy truck and bus manufacturing industry includes about 80 companies with combined annual revenue of about $15 billion. Major companies include PACCAR (Peterbilt and Kenworth); Navistar International; Daimler Trucks North America (Freightliner); Volvo Trucks North America; and the commercial truck division of Ford. The industry is highly concentrated: the top 20 companies account for about 95 percent of revenue.
The industry includes companies that manufacture and assemble complete vehicles and companies that supply vehicle chassis to assembly plants.
Competitive Landscape
Heavy truck demand is driven by growth in the agriculture, manufacturing, construction, and retail sectors. Bus demand is driven by growth in the number of school-aged children and investment in public transportation systems. The profitability of individual companies depends on volume and sales of high-margin options. Large companies enjoy economies of scale in purchasing. Small manufacturers can compete by offering highly customized products. The industry is capital-intensive: annual sales per employee are about $700,000.
Companies in the industry compete with makers of transportation equipment such as trains and planes, which also move freight and people over long distances. New trucks and buses face competition from reconditioned and used vehicles, since equipment may have a useful life in excess of 1 million miles.
Products, Operations & Technology
Trucks and buses can be classified by gross vehicle weight rating (GVWR), a measure of the total allowable weight of a vehicle when fully loaded. Generally medium and heavy-duty trucks include Class 4 (GVWR of 14,001 to 16,000 pounds), Class 5 (16,001 to 19,500 pounds), Class 6 (19,501 to 26,000 pounds), Class 7 (26,001 to 33,000 pounds), and Class 8 (GVWR of 33,000 pounds and over). Class 8 trucks account for about half of industry revenues; class 4-7 trucks for about a quarter of revenues; and buses for about 20 percent of revenues.
Class 8 trucks, or tractors, pull detachable trailers and are equipped with a fifth wheel, the coupling that connects the trailer to the back of the tractor for towing. These rigs are frequently known as 18-wheelers due to the combined number of wheels on the tractor and trailer.
Heavy trucks and buses are typically produced on assembly lines, much like auto manufacturing. Parts are received from outside sources (either third parties or other company-owned plants), usually on a just-in-time basis. Beginning with the assembly of the basic frame of two steel beams with cross-members for support, the product proceeds from station to station where components are added to complete the finished chassis. Axles, a suspension system, an engine, a drive train, and a transmission are part of the completed chassis. Fuel tanks, fans, coupling, and hoses are connected to the chassis. The truck cab, hood, and sleeper compartment are assembled separately and lowered onto the chassis assembly after painting. Final components are attached and the truck is tested using a dynanometer, an instrument that measures engine power while the truck wheels spin on rollers. Additional quality control checks are performed before the truck is driven off the assembly line for a test drive. Some manufacturers provide chassis to other assemblers that outfit the completed rig.
Almost all heavy duty trucks have diesel engines. Some truck manufacturers produce their own engines; others buy them from suppliers such as Cummins and Detroit Diesel. Raw materials include steel, aluminum, plastics, glass, and rubber. Metal parts are a combination of forgings, extrusions, and sheet products. Aluminum and plastics lessen vehicle weights and improve fuel consumption.
The heavy truck and bus industry uses computer modeling extensively to optimize raw materials, engine performance, and aerodynamics, all which affect cost and fuel efficiency. Technology-enabled safety equipment is available to help reduce heavy-duty vehicle accidents on the nation's highways. Suppliers offer systems that include collision warning, lane departure warning, vehicle stability, and brake monitoring. Vehicles can be equipped with wireless computers and GPS to help navigate and communicate with drivers. Computer and radio frequency identification (RFID) systems are also used to optimize supply chains, connecting manufacturers with suppliers, distributors, and customers. Operational improvements made possible by computers can take the form of electronic leasing and service functions, improved robotics, and logistics systems.
