Author: Vitaliy Dadalyan

19 Jul by Vitaliy Dadalyan Tags:

Truck Makers Hit With Record EU Fines for Price-Fixing in Europe

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Mercedes-Benz trucks on display in 2012 at a pre-IAA Commercial Vehicle Show event. Daimler, as the largest of the truck makers involved in the EU investigation, also faces the largest fine. Photo by Sven-Erik Lindstrand.

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Mercedes-Benz trucks on display in 2012 at a pre-IAA Commercial Vehicle Show event. Daimler, as the largest of the truck makers involved in the EU investigation, also faces the largest fine. Photo by Sven-Erik Lindstrand.

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The European Union is fining five truck makers nearly 3 billion euros for acting as a cartel to fix prices of medium and heavy-duty trucks and time the introduction of technologies to comply with emissions rules.

It's the highest fines ever imposed by the EU for a single cartel — twice the previous highest amount, imposed in 2012, according to Margrethe Vestager, the European Union's competition commissioner, in a statement.

MAN (now owned by Volkswagen), Daimler, DAF (owned by Paccar), Iveco and Volvo/Renault, which together account for around nine out of every 10 medium and heavy trucks sold in Europe, had been working together for 14 years, from 1997 until the European Commission's investigation in 2011 put a stop to it.

MAN alerted the EU to the cartel's activities and got full immunity from fines. Volvo/Renault, Daimler and Iveco also cooperated with the EU and had their fines reduced.

Paying the fines

Daimler faces the largest single fine, slightly more than 1 billion euros, also a record.

The five truck producers now have three months to pay the fine. However, the case has been under way for some time and most if not all of the truck makers, including Daimler, Volvo, Paccar, and CNH (parent company of Iveco) had already been setting aside funds to cover the anticipated fines.

Daimler had set aside 600 million euros back in 2014, and last week announced it had set aside 400 million for unspecified legal costs, so it already has accounted for the 1 billion.

For instance, in a press release announcing its settlement with the EU, Volvo noted that its 670 million euro fine is mainly covered by provisions made in 2014 and 2016. However, another provision will have a negative impact of 20 million euros on its third-quarter 2016 operating income.

“The Commission case was already more than five years under way,” said Martin Lundstedt, Volvo President and CEO, of the settlement. “Without the settlement we would have been facing many more years of proceedings, with an uncertain outcome. We are now able to look forward and focus on our business.”

“While we regret what has happened, we are convinced that these events have not impacted our customers,” Lundstedt said.

What happened

Senior managers from the truck makers first met in Brussels in January 1997, and for seven years met frequently, sometimes at trade shows or other events, according to Vestager. Starting in 2004, the cartel was organized at a lower level by the truck producers' subsidiaries in Germany.

According to EU officials, the companies were coordinating with each other on increasing the gross list price of trucks, as well as how to respond to the increasingly strict European emissions standards, when to introduce the new emissions technologies required, as well as the pricing for them.

“Delaying the introduction of environmentally friendly technology in agreement with competitors is not my idea of competition,” Vestager said.

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18 Jul by Vitaliy Dadalyan Tags:

Q&A: Eaton’s Kartch Talks About Growing Importance of the Aftermarket

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Amy Kartch director of North America Vehicle Group Aftermarket for Eaton Photo via Eaton

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Amy Kartch director of North America Vehicle Group Aftermarket for Eaton Photo via Eaton

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Eaton Corp. recently announced an increased focus on the aftermarket. Amy Kartch, director of North America Vehicle Group Aftermarket for Eaton, shared her thoughts on the major issues facing the aftermarket, what Eaton is doing to help overcome those challenges, and what she sees for the future.

HDT: Let's talk about why Eaton is increasing its focus on the aftermarket.

Kartch: We are continuing to get more understanding and awareness of what our customers are looking for, not just in their original purchase vehicle but also in what their needs and expectations are for our product as they use it. We start to understand where else we can better serve the customer, and better develop products that are more focused on their needs as they evolve. We understand it is not a one-size-fits-all-approach any more. If we look at it from a customer's perspective, it is really how we can help solve more of their problems with our products, whether it is reducing maintenance or having more differentiation for later in the life cycle. All of those things, as we get deeper into it, are helping us understand what else we can do beyond what we have done traditionally. The closer we are to our customers, the more we see what other areas of value we can bring them.

HDT: What are the major issues facing the truck parts industry?

Kartch: Fleets are really a key driver to what is going on at the dealer and distributor level. Everyone wants to be able to serve the end user or the fleet and address what they are looking for. The primary concern we see for fleets continues to be around making sure they can eliminate unplanned downtime, whether that is doing preventive maintenance or increasing their focus on utilization. That is driving how the dealers and distributors react.

We continue to see the request for product availability. Our distributors and dealers are really focused on having the right products when the fleets need them. Some of the other things we continue to see are first fit replacements really has changed and moved past the first owner. If a fleet keeps their trucks between four and five years they may not be preventively switching out or doing some of the maintenance they need to do. They are really focusing on continuing to pick and keep the right technology that is going to meet their life cycle needs and reduce their fuel costs.

As we look at a lot of national accounts, many have outsourced the major repair, rebuild, or overhaul work to a third party. Some of the clutch jobs, brake work and tire work may still be in house, maybe managed by a third party at the fleet location, but still in house.

HDT: What is Eaton doing to help make sure fleets' needs are met?

Kartch: Making sure that we have the products that work across this continuing evolution of how our end customers — our fleets — want to be served, and that we have dealers and distributors with the right products to help satisfy this need that fleets have, is what our strategy continues to be focused on.

One of the things that we are trying to do is make sure that the programs that we are putting out really help dealers and distributors target the fleets' requirements. Are there different things we can do to make the product more available? Are there different types of products we could put out that address different types of fleets' requirements? Do they have the right kind of messaging to go talk to fleets about why our products would meet their requirements? What we can do in terms of value add for them? That includes our products, our Roadranger support and all of our training. It is really arming them to be able to go and have the right kind of discussion with the fleets.

HDT: How has the rapid advancement of technology affected the aftermarket and its ability to repair trucks quickly?

Kartch: One of the bigger pieces is training. Having the availability of technicians who are trained and available to complete repairs as needed is certainly something we have been watching. The products only continue to get more complex, and that trend will continue going forward. We are also making sure that we can get the right product as they become more specialized for fit, application and use along with the right service and software availability. All those aspects will continue to have to come together to make the repairs go as smoothly as possible or even to lessen the need for repair.

HDT: What does Eaton specifically do in terms of training?

Kartch: Depending on who we are talking to, whether it is a parts counterperson, a technician, or a salesperson, we have several different types of training. We have online training that focuses on the parts counterpeople. Training that helps them understand which product to use, who to target and how to sell those products. If it is a technician, we have both in-person and online training available to help them understand how to repair, how to troubleshoot, and what to look for. It is much more technically focused. And then we have a lot of content online that can walk anyone through how some of our products work, what to look for, etc. We try to address training from various different levels and standpoints.

HDT: What is your solution to the technician shortage?

Kartch: Our solution continues to be helping make our products trainable and available to technicians as they continue to get hired. Obviously we support the focus on recruitment, but our job as a supplier is really to make sure we can get our product information to them in a way that is accessible, memorable and really easy for them to remember how to repair or replace a product.

HDT: How do you think the recent signing of the memorandum of understanding between engine makers and the independent aftermarket will change where maintenance and repair work is done?

Kartch: That remains to be seen. The industry certainly is moving toward some of the practices that Right to Repair will drive. I don't know that the Right to Repair piece alone will be strong enough to override the complications, the increased difficulty in doing repairs now on the more advanced technologies. I think we have to continue to make sure everyone has access to the right service tools, the right information and the right training, no matter whether you are a dealer, distributor, independent garage or fleet; that has to remain the focus if we are going to continue to drive improvements in industry uptime and keeping trucks running.

HDT: We used to talk about eliminating downtime and now we focus on maximizing uptime. It sounds like a small difference, but to me it signals a significant change in how we look at things. And it puts increased pressure on everyone to keep fleets going. Do you feel that pressure and what are you doing to make sure fleets have the uptime they desire?

Kartch: The focus on utilization and uptime, you are right, it has gone from minimizing downtime to, we do not want any downtime and we have to stay up and running. This means we have to use the information that is available coming off the truck and coming off our products to better predict what can happen or what could be prevented ahead of time. For us it is making sure that we understand how to continue to design for the need for uptime.

We are investing a lot in making sure we can use the data in a way that helps us understand what is going to happen with our product, and then how do we take that and translate it into allowing our customers to have access to that data and understand what that means when their truck is up and running. We need to have all of these different suppliers coming together so the customer can best use the data that is available to them. The data allows us to start getting a much bigger picture of how some of those early detection items might play out, and we can work on ways to prevent them.

HDT: What do you see as the biggest inefficiencies in the maintenance and repair process?

Kartch: There is still a gap in having the information available for everybody to use when they need it. If a truck is waiting to get into a service bay to get a repair done, does everybody involved in the repair have the information on what is wrong with the vehicle? And [work] together so that the wrench-turning time is really focused on what needs to be done as the main portion of the repair and the truck is not just being being parked waiting for the information needed to complete the repair.

HDT: What is the way to get around those inefficiencies?

Kartch: The industry is going to move toward sharing more information so we can be focused on getting the truck up and running. The ability to integrate more systems or have more access and understanding of what is going on while the vehicle is down is critical. How quickly can we share some of that information to come up with a solution to get the truck on the road faster?

HDT: Looking out five years, what do you see in terms of changes and challenges for the aftermarket?

Kartch: We will continue to see a lot of evolution of the trends we have talked about on driving utilization, and making sure we have got the right technology for the right application. From an aftermarket standpoint it is going to be maximizing uptime and more focus on how the solutions will come together vs. just hardware parts. Information sharing — the development of solutions to help solve some of these problems — is going to continue as well. A big piece of that is going to be the impact of telematics and information that is going to be shared.

HDT: Can you share a little of your background and talk about how things you learned in other industries have applicability in the trucking industry?

Kartch: My first passion was always marketing. I took a class in high school, I was hooked and that is what really set the stage for the direction I pursued in college and after that. I went to college at North Dakota University, which is in my home state, and my focus was on business and marketing. I really wanted to combine my love of marketing with all things global. .… I thought in my last summer of college it would be a great idea if I went to Mexico to intern. It was a great summer for me to just start off in a consumer products company working in a different culture in a different language but in a marketing environment, and I really liked it.

I went back to graduate, then returned to Mexico and spent the first several years of my career working in the quick food service division of Pepsi. …You would say, what does food have to do with trucking? It was really about the importance of availability. It needs to be ready when the customer wants it, and how do you develop and use great brand equity to communicate your message and listen to the customer.

I transferred back to the U.S. and then I got into network communications for Motorola where my job there was in the aftermarket. It was putting together service solutions for commercial, government and industrial customers. Our customers ran mission-critical operations and uptime was key. We focused a lot on the importance of product reliability. A product could not fail. We needed to have the right support in place whether it was good service partners, excellent training, or good distribution in order to make sure that we could support our customers' needs.

We were also working with a remote monitoring network. Back then we were using fault codes to understand and prevent downtime of these network communications systems. A lot of the evolution I see now in the trucking industry we went through in the network communications industry 15 years ago.

HDT: If you were talking to young people, what would you say to them about the opportunities that are available to them in the truck parts aftermarket?

Kartch: One of the things I would focus on is the trucking industry for somebody who enjoys marketing and understands how to listen to voice of the customer and drive products and positioning, it is a very good industry to be able to look at and transfer some of your knowledge from different areas. It is an area where you can really grow and see opportunities from a marketing standpoint. I would encourage every young person, whether they are male or female, to consider this industry.

While there are several people in the trucking industry that have been in the industry their whole lives — I consider myself now a trucking professional now after being in the business going on seven years — I think everyone is eager to bring in different perspectives, different talent and make sure that we continue that longevity of trucking as a good career choice, a sustainable career choice. I think it has a lot of continued growth and opportunity. It is going to look different, but I think it is exciting that we are going through an evolution. This industry is going to go through some changes that other industries have already gone through. In terms of it being very dynamic, very challenging and open to new ideas and different ways of approaching problems than in the past. I think that is the exciting message for the trucking industry to share.

HDT: Is there anything else you want to talk about?

Kartch: I would emphasize that Eaton more than ever is focused on the aftermarket and we are really watching, listening and driving some of the industry leading decisions for the customers and making sure we continue to innovate.

My message would be that our focus is on the life cycle more than ever.

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18 Jul by Vitaliy Dadalyan Tags:

Carrier Supports Police with Special Wrapped Truck

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Photo courtesy CTS

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Photo courtesy CTS

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On July 8, after five law enforcement officers were killed by a sniper the day before in Dallas, Wisconsin-based Contract Transport Services shared a message on its Facebook page.

“On such a somber day for our nation, CTS is proud to put in service today our Police Wrapped truck. Too often the men and women that work tirelessly day in and day out to protect us are not recognized for their efforts. We roll out our Police truck today, which will join our Fire wrapped truck already in service. At CTS we thank those who keep our families safe. Our prayers go out to the victims of the Dallas shooting tragedy. We honor the blue and your sacrifices. - Curt Reitz, President."

pPhoto courtesy CTS/p

Following Sunday's Baton Route shooting that killed three police, a local TV station ran a story on the truck. Ashley Barnes with NBC26 in Green Bay, Wis., reported that the truck was something that was in the works before the Dallas and Baton Rouge tragedies.

Reitz told the WGBA TV station, “Very often often there's nothing out there that recognizes the job they're doing day in and day out. … all we ever hear is when the bad happens.”

It's not the trucking company's first truck honoring those who serve. Earlier this year, CTS unveiled five cabs wrapped to honor different branches of the military, and it recently put one devoted to firefighters into service as well. For all its wrapped trucks, the fleet donates to a charity for every mile that truck is driven.

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