Body Building market to face challenging times

Commercial vehicle body building in Ireland is reminiscent of a ship at the mercy of the ocean. It rises and falls on the back of economic peaks and troughs, yet despite the choppiest of waters, it always manages to keep afloat.

The industry in Ireland dates back more than 100 hundred years to the turn of the century. The commercial vehicle body builders of today have their roots firmly planted in an era of the horse, plough, blacksmith, forge and rudimentary farm machinery.

The mythical Celtic Tiger and the resulting contruction boom of the past five years has spawned a proliferation of companies eager to enter the market. Copycat companies have sprung up like mushrooms on a balmy September morning.
The annoucement of the National Development Plan (NDP) in 1999 drove the industry into seventh heaven. It promised an unprecedented spend on Ireland’s infrastructure, roads, housing, sewerage, rail networks etc.. with obvious down stream benefits for the body buildng sector.

However, the Tiger has departed and there years into the National Development Plan, the outgoing Government has hit a funding speed wobble. The more optimistic economic analysts predict the Tiger has just taken an overdue holiday and will return with a pocket of NDP cash. The pessimists, and there are many, feel he has retired to a warmer climb never to tread these shores again.

The prospects for an economic recovery lies somewhere between these polar positions in the hazy world of guesstimates. What is certain though, is the fact that the body building market is undergoing irrevocable change. The ship will continue to float. The question is: how many of the crew will be lost?

As an indigenous Irish industry with relatively small export scope its rise or fall is solely dependent on Irish economic factors. The recent downturn in Ireland’s economic fortunes has set off more than one or two alarm bells around the country.
In a climate of economic uncertainty only the leanest and the fittest will survive. Natural wasteage is an inevitable consequence and the law of the jungle will prevail. Owners, planners and production managers will scrutinise the new LCV and HGV monthly sales statistics is search of solace. Unfortunately the stastics don’t make pretty reading.
Sales of new HGV’s slumped by 6.5 per cent in 2001 to 4,588 units, a reduction in units terms of 319. The 2001 figure is more than 11 per cent down on the 1999 high of 5,160 units.

There is little comfort for the body building sector in the LCV statistics. Sales for 2001 slumped by 6.77 per cent to 38,273 on the previous year and by 14.34 per cent on the 1999 high.
The statistics show that the market is contracting at a significant rate. However, anecdotal evidence suggests that 1999 was an exceptional year for new HGV sales as hauliers geared up to meet the transport requirements of the National Development Plan, while 2000 was bouyed by Millennium fever and the desire to have “00” registrations.
Further anecdotal evidence suggests that there was under capacity in the body building market in 1999 and 2000. This led to a plethora of aspiring companies entering the market to meet soaring demand. The arrival of the new entrants coupled with expansion by existing companies mopped up the excess demand in the market.

In the space of just three short years the market has gone almost full circle. The term over capacity may soon be applied to the commercial vehicle body building market. The shrinkage in the market will represent a threat to some companies and an opportunity to others.

Faced with over capacity in the workshop, maufacturers will look at a number of options to boost their order books. Some will consider lay-offs and a general down sizing of operations. Others will look to lateral diversification into related areas such as trailer manufacture in a bid to boost faltering sales. A direct consequence of over capacity in the market will be increased competition which is good news for the haulier and a general softening of prices can be expected.

However, price isn’t the only determining factor in the buying decision. Issues such as lead-in times from order to delivery, quality of service and product and good old fashioned customer loyalty all play a vital part in the buying decision.
As in life, there are leaders and followers in the commercial vehicle body building sector. Those who have invested in research and development, the latest manufacturing equipment and who continually bring new products to the market will survive the current economic slow down. Indeed there might even be room for expansion within a contracting market.

They will ride out the current sea of economic uncertainty and be ready and able to take advantage of the inevitable economic upturn when it finally arrives.

Those who are content to follow market trends, to ignore research and development and to avoid capital investment may find they are cut adrift on the sea of economic uncertainty.
There are challenging times ahead for the industry.