Hope for best, plan for worst

The new CEO of UD Trucks SA advises businesses to plan for what could be a difficult year in 2015, writes Mark Smyth

THE start of the year allows for the truck companies to present their vision on the year ahead. This year Rory Schulz, the new CEO of UD Trucks SA, said that “the market has weathered the storm well over the past few years”, but he said there are some serious warning signs.

“The Eskom situation has the potential to damage the economy in the same way as the economic downturn,” he said at a media briefing. How bad could it really be?

Well, according to Schulz the Eskom crisis could cause the truck market to drop by as much as 50% in the worst case scenario. He advised that a potential water crisis is also a concern when it comes to new and existing projects.

The construction industry had a good year in 2014, contributing 16.2% to GDP, but it is not expected to have a good 2015. Declines are expected this year and in 2016 as projects come to an end and some even fail to be completed.

The exchange rate is going to continue to put pressure on the South African economy in 2015, which will also hamper sales as the possibility of further increases in truck prices looms.

Schulz says he is expecting an improvement in the dollar exchange rate towards the end of the year but this view is not echoed by many economists. Econometrix is predicting further weakening of the rand against the dollar by year end.

While many of the predictions and indicators are based on the worst case, the market is already feeling the pinch. The medium commercial vehicle (MCV) market declined in 2014, but Schulz said that this merely reflected a similar decline in the passenger car market.

It was better news last year for the extra heavy market, with sales up 7.68%. Schulz attributed this to slow progress in improvements to the country’s rail system, which has seen many companies continuing their reliance on road transport.

For UD Trucks 2014 was a run-out year for many of its models but, in spite of this, the company managed to see an increase in sales of 9.29% over 2013. It is busy developing new models that will need to meet the new legislation being implemented this year including legislation that will address the issue of safety by requiring ABS braking systems to be fitted to new trucks.

Also on the issue of safety, Schulz noted that the industry was in the headlines far too much in 2014 as truck crashes such as the one on the N12 in Gauteng caught the public’s attention. He stressed that the entire industry including manufacturers and operators need to work on this and, to this end, UD Trucks will be focusing more on driver training in 2015.

2015 will also be a milestone year for the company as it cel- ebrates its 80th birthday. Locally it will introduce its new Quester range next month and it will also announce plans to bridge its gap in the MCV market until a new product arrives in 2016-17. It will also open a new regional parts distribution centre in Jet Park, Johannesburg this year.

So there is lots for both the industry and transport operators to think about this year. Schulz concluded by saying the big question is how long businesses can survive in a crisis.

In order to do so, he says, they need to be planning now for any eventuality.