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Focusing on the future

14th October 2010
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Page 16, 14th October 2010 — Focusing on the future
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The chairman and CEO of Paccar rarely gives any interviews, so it was with some trepidation that CM took a seat in front of him at the recent IAA Show

Words: Andy Salter

WE'RE NOT SURE whether our interview had been granted as a result of yours truly being a soft touch, or if Paccar boss Mark Pigott was looking for some cerebral stimulation at 3pm on the first day of the giant truck show. No matter, in a climate where we sense the old market focus on Western Europe and North America is shifting east and south, it's good to see CM can still command some time with a star of the industry.

Paccar owns iconic North American brands Kenworth and Peterbilt, while here in Europe its interests are in DAF Trucks, Leyland and Paclease, a major European rental organisation it created through the acquisition of Truck Center Hauser (TCH) three years ago. Earlier in the day, at a press conference, DAF Trucks president Harrie Schippers gave an upbeat update on the Dutch truck firm's progress. outlining how it is now in second spot in the European market share league table for truck sales above 15-tonne GVW — a meteoric rise from the bottom of the table just 10 years ago.

Paccar acquired DAF Trucks in 1996 as the Dutch company was taking its first tentative steps following bankruptcy just three years earlier. Admittedly, the company was debt-free as a result of the turmoil, but it was by no means a sure bet. Hindsight has demonstrated this was an astute purchase.

Merging with the US

While there has been plenty of component sharing between the brands across the Atlantic over the years, we're now seeing real synergies emerge between the two. A version of the DAF MX engine equipped for the stringent US EPA10 emissions regulation was displayed on the DAF stand at Hannover, and a new factory has been built in Columbus. Mississippi, to produce this and the European-designed 9.2-litre engine for the Americas. "We've made a $400m [£251.4m] investment in the new facility," Pigott explains."In my opinion, this is the most sophisticated engine factory in the world. Currently, the 12.9-litre MX engine is running at 25% of installations in Kenworth and Peterbilt. Within a couple of years. I expect that we'll have 50% of the Kenworth and Peterbilt trucks equipped with a Paccar MX engine."

Such pronouncements will no doubt create some mild turbulence at Cummins, although Pigott is quick to make the necessary reassuring noises: "Cummins is a worldwide partner of ours," he says. "We buy a lot of its products over and above the engine supply, such as filtration, exhaust technology and other componentry. Kenworth put the first Cummins product in its chassis in the 1930s. We have an 80 year-plus relationship, and we work together in many areas. It is a valued and excellent partner supplying components, systems and development expertise."

Reaction to the MX engine has been positive in North America, Pigott explains: "The 13-litre unit is becoming an attractive proposition for operators thanks to the fuel efficiency benefits. DAF has more than 50 years' experience in engine development and technology, and the new unit has been very well received, exceeding customer expectations:' With engines and rear axles also in the company's amioury. it begs the question: when will Paccar go the whole hog and add its on transmission to the line-up? "We've indicated it's a long-term goal of ours to have a Paccar-branded powertrain." confirms Pigott. "As you point out, we currently have the engines and the axles.Together with partners, we are now investigating on how to proceed. Whichever way we go. it will need to be a reliable and durable solution."

Heading to Copacabana

While product development is an obvious key strategic pillar, so is market development, and Paccar is now beginning to spread its wings in a co-ordinated global manner with some clear ambitions in Brazil. Pigott explains the logic: "We've been in South America for more than 50 years on the Andean side of the continent," he says. "but now with the success of DAF and the Paccar engine, we are pushing into Brazil. We've been in Brazil in a small way with Kenworth off-highway vehicles for mining applications, but the current product line-up now gives us a vehicle for on-highway and vocational applications. Brazil is more suited to a European-based product and the DAF CF and Paccar engine gives us this combination. The market is comparable in size to North America, and we are confident we will he successful there."

While we're on the subject of global dominance, we ask about China, and sense it's not a high priority: "We were in China 100 years ago in 1910 when my great grandfather sold Nanjing Railway railcars." Pigott explains, demonstrating Paccar's undoubted heritage in world markets."We'll keep looking at China."

The Paccar success story is remarkable: the company has registered net profit for the past 71 consecutive years, which is a major achievement. Indeed, the latest results are of a robust and apparently durable organisation.

Pigott's success appears to be down to a straightforward focus: "We deliver the highest quality products, at the lowest possible cost of manufacture."

With market leadership in the UK, a growing European share and now ambitions across the globe, those guiding principles will ensure Paccar remains at the head of the game. •

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Locations: Columbus, Hannover

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