Summer days drifting away.....
not the greatest fan of that song or summer days in general. More of a Spring and Autumn fan. But it does bring on harvest and that is only 3 weeks away now, before powering into sugar beet, apples, then potatoes and carrots...
On the trailer scene suppliers are starting to use phrases like 2007 again.... which no one wants to hear. Certainly European manufacturers are on their arse. One French manufacturer is publishing output at about 30% - so guess what is around the corner - price wars - or is it?
Nothing is quite certain in the current cycle. Normally price drops to support wilting sales. But most manufacturers are weak from Covid or still trying to bring their factories back into consistent output. Sub suppliers such as Wabco or Knorr Bremse or axle suppliers have been hit by huge software outages or even factory fires. It is a strange world when a factory would prefer the outcome of a fire to the outcome of an IT hack! But there you go.
So crystal balls are in short supply and no doubt the wheels will rotate - companies will fall out with each other, and some manufacturers get sold to others such as Legras to Benalu. Now that was an interesting one. A strong French manufacturer purchasing a strong French manufacturer. Does that make an even stronger factory or confusion. Certainly the world of moving floors looks fragile with many companies investing in extra capacity just as sales tumble. Ouch.
Just rubbing in the sun cream now.
Posted by Andrew on 16/06/2023
On a similar theme to the last blog. Uncertainty abounds.
Certainly the European Trailer market is bombing at the moment. As much as it is fun to enjoy French pain - this could have onward implications for us too.
The French trailer market is running as low as 30% of normal - and that is a second year of down. This will mean that French manufacturers of tipping trailers and floors will be searching for exports at any price. So the UK could see price pressure building as the European targets us. The flip side of this is that labour price pressure is riding on the wave of alumininium and energy price increases. So there is a squeeze on input prices and a squeeze on selling prices. This has meant some Europeans and UK manufacturers seeing significant losses.
We hear and will see UK manufacturers once again up for sale in both the floor and tipping trailer market. But who would want to purchase small UK manufacturers at a time when the the big Europeans are turning their gaze towards the UK as a possible outlet to dump product?
Interesting times as always.
Posted by Andrew on 16/05/2023
The Fog of The Present
As is normal we would roll with either of the following to sum up the present:
Everyone has a Plan until they get punched in the face.
The Fog of War.
Understanding where the UK Tipping Trailer Market is heading in 2023 is at best a dark art but mostly likely just reactionary to the conditions experienced this week. A statement of the obvious. Anyone with 'a plan' at the moment is really just a gambler in the casino. The long term trajectory for UK PLC is clearly negative over the next 30 years. Our leaders and teachers are not addressing the need for global competitive advantage for the UK to allow us to enjoy a better standard of living than our neighbours. We are simply relying on the legacy of empire - we have built up a world beating amount of capital which is slowly or stepwise being consumed by our population. As economists would put it - we are missing the Y factor. This being, taking the standard resources that we sit on as a country, and by efficiency and clever national thinking getting more out of those resources than the competition could or will.
So if this is true then the purchasing power of the UK PLC tipping trailer and moving floor base will be trending downwards too - unless there are factors to protect our sector as an 'island of excellence'. If our UK haulier purchasing power is tracking downwards then we will be looking towards the lowest price producers of equipment and not top end. So for a while we will hang on to our aspirations of a Top End Scania and a top end trailer. This will drift downwards. So perhaps we should look to the countries that already sit in that mix - Chad or Mali spring to mind - always reminds me of the comfort of the British Armed Forces looking up and noticing the label on their parachute proudly states 'Made in Chad'. More likely we are tracking lower wealth countries such as Romania, Poland, Spain etc. We may also being looking for longer life cycles or greater survivabilty from our products and increased repairability. That might push the other way - buy quality buy once argument - the STAS, Knapen, Titan solution. Arguably the Titan can give 20 years of service in a tough environment. Titan Trailers have evolved in a nasty American waste market where the work is brutal and the distance to repair shops can be high. In my opinion a Titan can outlast its nearest competitors by almost double the life and still remain surprisingly sharp and tidy. I would consider myself bruised by 25 years in this industry and I cannot completely explain how the Titan does it - it just does. If you look at the Fred Sherwood fleet - there are 2004 Titans that from the outside look like 2018 trailers. Clearly satanic rituals must have been performed in Canada to achieve this engineering miracle.
So how big will the market be in 2023 for trailers in our class? Supply side problems have diminished and become less of an issue in Q1. Energy costs are high. Labour costs are actively being negotiated but are unlikely to be less than a 10 per cent increase into Q2 Q3. Probably interest rates rises will decreasing the affordability of large priced trailers will be the larger factor. IMHO we have some more interest rate increases yet to absorb. With joy I might write 'Fuck the Bank Of England'. Despite the clevers of the Bank's Committees their hindsight seems exemplary but their foresight no better than mine or yours. Retail finance rates will still be climbing into 2024 and the pool of providers drying up. The expression that our lending 'is closed to wheels' will start being used again. Banks are fearful of bad lending and in some boardroom or rather plush London restauarant that expression will get used and large lenders will just STOP lending to our industry. This will allow rates of the remaining lenders to rise still higher as scarcity of appetite to lend plus searching for higher BETA will push rates higher. The Gold standard will be 6 percent, Silver 8 to 12 percent and the Bronze just disappear. I would suggest that the market size will be deflated and be travelling about 60% of historic levels. This may not have any real world affect on companies such as Fruehauf who are still in recovery and discovery mode having come out yet again from bankruptcy. (And remember the words of the Chief Economist to Downing Street - 'it took extreme skill to make a company go bankrupt during Covid'. Wilcox, PPG, Aliweld, KBF etc also look to be stuck in limited ruts and unable to change their market positions. So once again it will be the scale professional European manufacturers - who also have their woes - to absorb market share in the UK in 2023 and 2024. There are the cheap end suppliers from Poland and Turkey entering the market for the first time and top end Manufacturers increasing their market share enormously. STAS for example may have had about 40% market share for the first time in the UK.
So to set sale into the second half of 2023 and then into 2024 confidently and with a plan means that you either have a direct line to Mystic Meg or you will get punched on the nose. But I do predit tricky times for our industry and about a 60% market size for the rolling 12 month period. Happy to be wrong!!
God Bless You All - and with the usual sign off this Blog are but the musings and ramblings of a deranged mind and should only be held up in the court of Law as anything other than total drivel. Plenty of other opinions are available - contact me at andrew@newtontrailers.com if you want to chew the cud.
Posted by Andrew on 04/04/2023
STAS have 4 factories (to the best of my knowledge). Originating in a village called STASgem in Belgium they moved to Waregem in the 1950's.
So the original main factory is Waregem - which was state of the art and still is impressive. This is where they now do their signature Aluminium chassis and tipping trailers.
The second factory is in Tournai - about 30 mins from the main Factory in Waregem. It offered a large area of land and more plentiful labour being close to the high unemployment hotspot on the French border. It started in about 2003 and targeted Walking Floor Trailers freeing up more space in the Waregem factory for just tipping trailers. It is huge and has had a 2022 expansion. Highly organised and highly robotified and deeply Green thinking. It is fly by wire from the offices and design team in Waregem. It is a treat to visit due its scale and ambition. It is logic and clever thinking in a bottle.
The third factory is in Freudenberg, Germany. STAS purchased the Luck factory which was a modern site on the edge of one of the most picture postcard towns you will ever see (google Freudengberg Altstadtkern). I worked with the Luck factory prior to the STAS purchase. It is focused on lightweight steel chassis and steel body trailers and is the go to trailer for German scrap metal. Smaller than Waregem and Tournai it is a bit of a question mark factory. Too small to scale, too useful to lose.
The fourth factory is in Medias, Romania. Expansion east is the logic for all European Scale manufacturers. The factory has been rebuilt in 2022 and 2023 and is therefore now STAS's most advanced factory. It benefits from being new factory, new machines, new methods. Clearly it is seeking to make use of lower factor cost of an all Romanian workforce and lower cost foot print. However it benefits from 100 years of STAS methods and CLEAN management. It powers the expansion into the UK market and will be fully on stream Q2 2023.
I have worked with all 4 factories over 26 years and my favourite is Freudenberg, then Medias then Tournai then Waregem. Throughout the evolution it has been fun to witness the DNA of STAS thinking develop - always quality first and thought leading in a way I do not witness in our industry elsewhere.
Posted by Andrew on 11/01/2023
Back to the day job - 2023 - to infinity and beyond
I thought I would do a survey on how optimistic the industry felt on work day 1 of 2023 ....... There is an argument that the number of walking floor trailers and tipping trailers entering the market in 2020, 2021, and 2022 was below the trend replacement line. All for known reasons, Brexit, Covid supply chain shocks etc. Therefore 2023 should be a good uptick year for sales. However price inflation and interest rates changing affordability will dampen this uptick. As Donald Rumsfeld famously hashed - what are the unknown unknowns? Optimism, strikes, and UK viability will work their own factors heavily through Q3 and Q4. The first signs of this will be full order books being peppered by customer cancellations. This could lead to a rout. However I am a natural optimist and I think it will end up an ok sort of year. God bless.
Posted by Andrew on 03/01/2023
