Autocar CEO Implores Trump To Move On Infrastructure

Even without a trillion-dollar Congressional package to rebuild America’s infrastructure, companies are investing heavily again in the equipment that it takes to construct and maintain a growing economy. Make no mistake about it though, the infrastructure investment is needed.

Autocar, which builds heavy-duty trucks, is in the middle of supplying the behemoth vehicles that are growing the economy across various industries. In fact, the company is going toe-to-toe with better-known brands such as Mack Truck and Peterbilt to expand its approximate 10-percent share of the market for “severe duty” vehicles including those that collect refuse, pump and haul concrete, refuel giant airplanes, sweep streets, and move containers around giant logistics facilities at places like Amazon and Walmart.

“Our approach is different because we take orders from the customer and start from there, customer-engineer it, and build it for the application taking into account exactly what it’s going to be used for,” Andrew Taitz, majority owner and chairman of privately held Autocar parent GVW Group, based in Highland Park, Ill., told Chief Executive. “That’s a pull model, and everyone else in the business has a push model, where they focus on high-volume production for over-the-road and delivery and then modify those vehicles for severe-duty applications. That doesn’t work as well.”

The company has high hope: it expects to sell more than 4,000 trucks this year in segments that total about 45,000 vehicles, which in turn are part of America’s expected 2018 heavy-duty truck market totaling about 340,000 units. When it comes, Taitz believes that President Trump’s infrastructure play will occur and will prove a big boost to Autocar and the industry as well.

“Look at our streets and our airports: A lot of them are dated and even dilapidated.”

“Look at our streets and our airports: A lot of them are dated and even dilapidated,” he said. “You can only kick the can down the road for so long with reduced investment in infrastructure. There’s pent-up need and demand. I see a dire need for it and an administration whose policies are favorable to it. Those two are going to come together at some point.”

But Taitz says that Trump needs to move sooner—such as before the next presidential-election cycle—rather than later, in part because rising interest rates in a robust economy are making any massive infrastructure-spending bill more expensive by the minute.

“We need to take advantage of the moment where we still have low interest rates, that are edging up,” Taitz said. “Doing it at a time when the cost of capital is the lowest in decades is a huge advantage. Government can borrow cheaper than everyone else. But that window is closing, so it wouldn’t be prudent to miss that opportunity.”

When it comes to his own company, Taitz’s confidence in the business model was confirmed when they opened a big new manufacturing plant in Birmingham, Alabama, which supplements its original facility in Hagerstown, Ind., where the company is headquartered.

At the new plant, Taitz has designed work processes to be efficient from the get-go. “When you start something from scratch you can do it the right way the first time,” he says. “So we don’t incur those costs. That was a big opportunity in setting up the new operation.”

The biggest market opportunities, he said, are severe-duty applications where “the level of complexity increases as the requirement for customization increases.” Taitz said that other OEMS “are moving away from complexity and standardizing components and trucks.”

 

Read more: The Infrastructure Of Innovation

Dale Buss :Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other business publications. He lives in Michigan.