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TAKING A BOD1

After the feast, it seems, comes the famine. More chassis mean more bodies, and that's what has happened for the past 12 months. Orders have been pulled forward big time to avoid the nuisance and cost of being forced to tit digital tachographs to new vehicles and of meeting Euro-4 exhaust emission limits from the beginning of October. And now that October has come the orders have plunged.

Some of the gloomier pundits talk of a 40% drop: even the optimists talk of 15%.There is a general expectation of the market contracting by 20% to something like 46,000 chassis a year.

Operators say they have enough new vehicles to satisfy their updates for a year or two. In any case, lingering legislative and economic uncertainties are making buyers cautious. Borrowing rates are expected to rise again —cost increases, already serious, show little sign of relenting.Transport contracts are at their lowest level for seven years. says the Freight Transport Association. although this is to some extent masking a drift to own-account purchases. accompanied by contracting out transport management.

Rental demand is down too. Last month Hit I lire,a major player in this sector, reported that rental rates were down by 12%. It seems most casual hirers simply do not want trucks with digital tachographs. It will obviously take time for digitachs to rule the roost.

However, at the end of the year their value in terms of working-time records is likely to be appreciated. when drivers will have to keep records for a 29-week rolling period.

In the meantime, the rental and leasing companies are hardly inclined to speculate on new vehicles.This will he quite a drag on the sector for a few months because the leasing sector is thought to account for nearly half of the British market.particularly when it comes to lighter vehicles.

Slowed down by Euro-4 Extra hesitation has been evident with the dawning of Euro-4. Even operators resigned to paying more for the tighter emission control are often in a quandary about what type of Euro-4 to adopt — in-engine (EGR) after-treatment (SCR).

Many are waiting to see how the relative

fuel consumption works out on their particular "titles.

For the bodybuilders this dismal prospect mounts to a double whammy.

Until summer their turnovers were lurgeoning in line with the surge in chassis ;ales. But now their profit margins have lescended to a knife-edge balance.

Jim Gibb. in charge of Boalloy. summarises he situation succinctly: "in the past year steel ms gone up by 50`)/0. aluminium by a third. hut -evenue has hardly shifted because there's ual price benchmarking by cheapie noducers.There have been some prominent lankruptcies, and there will be a lot more next tear when the drop in demand bites."

All the survivors can do is hold on until the parket improves. But it's not going to be easy or bodybuilders because they were weakened ;ven when the orders were flowing.A further ipset occurred duringhly (30% market drop) ind August (down by 19%) because of a ;homage of chassis as the production lines witched from Euro-3 to Euro-4.

In September came a temporary upsurge of IO% in chassis availability —"the last gasp". says a rueful Gibb. Subsequently, the outlook, until February at least, is grim.

At light truck specialist Ingimex. MD Justin Gallen not only confirms this view of the market trends, but also cites the aggravation of suffering a shortage of chassis because of the wave of new models in his 3.5-tonne sector as new models are introduced, A shift in policy "Silly prices,they say at Anglian Developments-lite company's light and durable Anglian van bodies lost profitability in the mainstream transport market following a 34% increase in the price of polyester.This inevitably hit demand;the firm responded by switching its product policy from transport to industrial business.

Fortunately a three-year contract with BT allowed it to maintain an output of 25 van bodies a week in a 50-50 co-operative arrangement with the Papworth production lines But despite the general atmosphere of gloom among the bodybuilders,some sectors are still doing good business— you simply need to look at areas where demand for transport is

running above the general economic trend.

Just-in-time deliveries, home deliveries, service and repair, urban restrictions and freedom from tachographs are all bolstering demand for vehicles up to 3.5 tonnes gross. And this trend is about to be magnified as speed restrictions are introduced on goods vehicles above 3.5 tonnes.

Light vehicles currently account for 12% of total traffic; the I..7K pare now exceeds 2.5 million with 250,000 vehicles being registered every year in the 1.8-15-tonne sector.As ninny 3.5-tonners are registered as in the whole truck sector above 3.5 tonnes.

Little wonder, then, that bodybuilders such as Boalloy have introduced 3.5-tonne production lines to boost volumes and absorb overheads, even though it takes a good deal of careful engineering and expertise in production planning to obtain acceptable profits.

Strong demand for tippers

Vigorous activity in the construction industry looks set to sustain demand for vehicles at a cheerful level, and in this context that means tippers.The 3.5-tonne tipper specialists,such as Tipmaster and Fleet Tip,are poised to take advantage of the expanding demand for tippers in general and 3.5-formers in particular.

Chris Honey at Fleet Tip says the firm's order book is filling again after a slack period when model changes stalled the flow of chassis. Six and eight-wheelers are both benefiting from the healthy construction industry.

Six-wheelers registrations are up by more than .3(Ne and this is not just to meet the construction industry's needs; there's also a growing demand for six-wheelers with mid or tag-steered axles.These vehicles demand careful body design to get axle loads right.

With eight-wheelers, however,a 20% lift in demand over 2005 is almost entirely down to the boom in building and demolition. As well as the seemingly endless demand for tippers there's a strong demand for concrete-mix trucks that can hold 8m3. Eight-wheelers are also seen as a way to extract more productivity out of hook-loaders hauling waste.

In fact this trend towards multi-wheelers extends throughout the waste collection sector. Most refuse collectors are six-wheelers now and some operations are even moving to eight-wheeled RCVs.

Very few bodybuilders catering for these sectors have any fears about demand in 2007; and it's not only multi-wheelers that are in the frame. In waste management there is plenty of scope for compact four-wheelers that can negotiate narrow streets and alleys.Also, more and more waste is being segregated and recycled, bri nging a need for multi-compartment bodies, usually with lifting equipment.

And while construction fever mainly affects the big citiesLondon. Birmingham, Manchester,Liverpool and Bristol — increased demand to cater for the recycling boom is happening all over the country,.

The construction and recycling booms are certainly good news for Daf dealer North West Trucks. Fleet sales director Mike Eden-Smith reports that building activity in Liverpool is frantic, bringing enough business to offset the pronounced slide in tractor sales.

Steady demand for trailers

And even if tractor sales for 2007 look bleak the demand for trailers will stay fairly steady, although more intensive haulage is reducing the ratio of trailers to tractors.

When it comes to bodying trailers the struggle is not so much a matter of numbers as

of casts and prices. Profit can be perilously thin,so long-established manufacturers are expanding their ranges. For exam ple,extendible skeletals are supplementing, Ta utliner curtainsiders at Boalloy,eaterine for the busy intermadal transport sector.

Trailer bodies with a second,li fang, deck inside are also in vogue:the signs are that more than 2,500 will he made next year.They are heavytypically 13 tonnesbut double-deck pacemaker Don-Bur can save a tonne by using of aluminium honeycomb sides.

Bodybuilders deep into double-deckers include Cartwright. Gray and Adams and Montracon; they are now joined by Lawrence David with a lifting-deck installation made by the Ray Smith Group.This is an addition to the company's mainstream speciality of demountable bodies. often with drawbar trailers.These are in demand even in the hard times because that's when transport companies look for ways to enhance productivity by eliminating standing time when loading.

Another path to improving transport productivity is to buy more versatile bodywork.The growth in backloading and reverse logistics is the driving force here, and it is developing a market for refrigerated bodies with multiple. partitioned compartments to take ambient as well as cooled loads. Insulated bodies and special-purpose bodies are in steady demand and seem unlikely to suffer much of a downturn. So it's not all bad news in truck bodybuilding. even though 2007 as a whole is headed for a slump.

No need to panic

This industry has always been cyclical." says Chris Hutt from Ford and Slater of Leicester. Similarly relaxed is Simon Chapman. the Freight Transport Association's chief economist:"The. market will stabilise. Fundamental replacements from a heavy-truck pare of 440.000 mean a norm of about 50,000 registrations a year."

There are hopes that stability might return by the autumn of 2007, but there could then be another spanner in the works. Chapman wat that the possibility of government grants to stimulate purchase of Euro-5 vehicles might resurface next September, because on-boarc monitoring of nitrogen oxides in the exhaust likely to be mandatory by then.

If this cash does become available it could cause a delay in orders for Euro-4 trucks tha are not eligible for grants.

The markets have another year to settle down in 2008 but then the first stage of wholi vehicle type approval will be due. At this poi the last firm in the chain will become respon hie for collating and submitting all the paperwork and photographs that will have been generated at each preceding stage of tf, manufacturing process Could such bureaucracy be that last straw for small bodybuilders? Only for a few of tit( 1,200 or so bodybuilders in Britain, accordin to Malcolm Tagg, director-general of the Vehicle Builders and Repairers Association "Technically, type approval will not be a hug problem," he predicts,"It's the bureaucracy that will be the nightmare.

As for economic hazards,Tagg reckons bit bodybuilders with their bigger overheads might actually be more at risk than the small firms, which often have the financial cushion owning their sites and are not overstaffed.

One way or another there could be a weeding out over the next couple of years, at then maybe a chance to sell on quality rathei than price. Just maybe... •