NTEA held its 2021 Executive Leadership Summit in October in Columbus, Ohio. This annual event offered work truck industry decision-makers a unique forum to explore important trends, forecasts and insights geared toward furthering company knowledge, growth and profitability.
Robert Fry, the chief economist at Robert Fry Economics LLC and former senior economist at DuPont, opened the conference with an overview of the global economy. Emphasizing the United States, he explained gross domestic product (GDP) has recovered from the deepest recession since the Great Depression, which was also the shortest recovery in U.S. history.
While consumer spending on goods, business investment in equipment and intellectual property products (e.g., software), residential construction, and industrial production in manufacturing have recovered from the recession, consumer spending on services, business investment in nonresidential structures and employment remain well below their pre-recession peaks.
Fry emphasized that light vehicles represent a special intermediate case. Sales rebounded strongly from the recession, hitting a 16-year high in April 2021, but have since fallen sharply because manufacturers can’t complete — and dealers can’t get — vehicles to sell due to the global semiconductor shortage.
He pointed out that even though employment remains well below — and unemployment well above — pre-recession levels, labor markets are surprisingly tight, with job openings at record highs. Labor costs have risen as a result but are likely to climb even more.
While acknowledging the difficulties of making predictions, especially in the midst of a pandemic, Fry forecasts GDP growth will reaccelerate in the fourth quarter, after a weak third quarter, before gradually slowing toward its long-term trend (which is no higher than 2%) in 2022. Monetary stimulus and increased personal saving in response to past fiscal stimulus, prior increases in stock prices and home prices, and replenishment of depleted inventories, will continue to support growth through 2022. However, strong growth will likely come at the cost of inflation that remains above Federal Reserve’s 2% target. Fry emphasized if the Fed waits too long to raise interest rates, it could take a recession to get inflation back down to 2%.
Leading through change
Elise Mitchell, founder of Velocity Collective, shared strategies for getting comfortable with and leading through change.
“Regardless of how you feel about change, it’s going to happen. Life will always bring uncertainty and upheaval,” Mitchell said. “The real question is, what are you going to do about it? And how can you lead effectively during the most difficult times?”
Mitchell provided five questions to help leaders and teams navigate challenges and develop a game plan for moving forward.
1. What is our reality?
In other words — what is happening right now? What changes are occurring and what is the impact? Consider internal and external factors, and get everything on the table (good and bad) to help understand the full scope of change.
2. What can’t we control?
This is a chance to identify and accept factors outside of the team’s control — an important step in the process. Don’t waste time and energy focusing on these things.
3. What can we control?
There should be a significant mindset shift at this point in the change conversation as the team moves from being reactive to proactive; cautious to opportunistic; and fearful to forceful. This shift enables greater focus on levers to pull and changes to make to design a new path forward.
4. What do we want to achieve?
What does a win look like? What benefits would be realized from success? Be specific about what the team hopes to achieve through the change. Write it down, and let that vision guide priorities and plans.
5. How does our strategy need to change?
This is the hardest part. The team can’t get to its destination without a plan, so what does the team need to do to get where it wants to go? It’s important to listen carefully to achieve the desired results.
Once the team agrees on how to move forward, focus on the future. Success becomes more achievable when you work together and stay committed to the goal.
Industry and end use market forecasts
Steve Latin-Kasper, NTEA senior director of market data and research, provided a work truck industry outlook. He shared U.S. GDP is expected to continue growing through next year, but the rate of growth will likely decelerate to about 2.5% as of fourth-quarter 2022.
“This is how economic cycles typically progress,” explained Latin-Kasper. “After all recessions, annual percent change tends to be quite high relative to cyclical averages because the year after the recession is being compared to the recession. Growth rate deceleration after that is normal.”
He continued, “What isn’t normal this time around are the supply chain disruptions that started third-quarter 2020, and are ongoing. Those are occurring primarily because the recession was exacerbated by a pandemic. COVID-19 breakouts are still happening around the world, and in a global economy, that means all national economies are subject to the impact of any other economy having to shut down plants that ship their products to the rest of the world.”
In particular, the North American commercial truck industry has been negatively impacted by a semiconductor shortage — although shortages of other materials and intermediate inputs are also problematic, Latin-Kasper said.
In concluding his presentation, Latin-Kasper highlighted current influential market dynamics. Positive factors include GDP growth, low interest rates, and personal and capital equipment/plant expenditures. More challenging issues involve chassis availability, supply chain disruptions, semiconductor and other input shortages, labor market imbalances, and political uncertainty.
Leadership blind spots
Erik Meier, president & CEO of Sandler Training by EAM Consulting, talked about common leadership blind spots, including the following:
- Being in recruiting mode
- Establishing a hiring process
- Not tying corporate goals to personal ones
- Losing focus on lead generation
- Fostering a culture of learned helplessness
- Neglecting to share the vision with those tasked with implementation, and more
He detailed how the Six Ps — a proven leadership model incorporating planning, positions, people, processes, performetrics and passion — can help companies improve in each of the 13 blind spots.
Manufacturing a new world
To conclude the event, Peter Zeihan, president and founder of Zeihan on Geopolitics, shared insights on navigating the increasingly complicated geopolitical landscape directly impacting the work truck industry.
He emphasized disruptions to global supply chains are in their early stages, adding the earliest he anticipates returning to a more normal environment is the end of 2022.
“The situation is far more complicated with the labor market,” said Zeihan. “The baby boomers are retiring and taking their skills and money with them, and follow-on generations are simply not large or skilled enough to fill the gap. It will be quite literally decades until this shakes out.”
In summary, for equipment and labor, Zeihan advised attendees to get used to the environment of today.
However, it’s not all bad news, he reported. “Our Mexican partners are expanding their industrial plants as quickly as they can. Inflationary? Definitely. But once the United States and Mexico build out their collective manufacturing capacity, we will become considerably more resistant to the ebbs and flows of the chaos that is increasingly taking hold around the world.”