Truck Topics

Aftermarket Sleepers: An Industry Coming Back for Another Round

By Jason McGlone
Posted Jul 6th 2010 5:30AM

The economy over the last two years has been undeniably rough for everyone, and it's been especially rough for the expedite market.  The expediter sleeper market, of course, is no exception and its troubles have been reasonably well-documented by publications like ExpeditersOnline.  In a reasonably narrow market, where there aren't very many manufacturers and they're serving a very specific group of people, one might say that it's been especially rough.  Some companies have shut down, and others are waiting out what might be diplomatically called a "slow period."

A first look at the aftermarket sleeper manufacturing and sales industry would deliver the superficial notion that people simply aren't buying, and that's the sole factor that's contributed to these troubles.  While that's true to some degree, a slow sales period, in this case and at this time in our history, would be to discount the depth to which this issue actually goes.

By this point, we all know the story.  The housing market crashed, which caused every company everywhere to tighten their belts.  The same went for banks who had all along been dealing in toxic assets, and this led to a stoppage in credit lines, which also led to companies tightening their belts even more.  This, as we're all aware, led to a dramatic dropoff in freight, rates, and everything else having to do with the expedited shipping market, which caused lots of folks to lose their jobs, which affected truck, sleeper, and any other related sales and manufacturing ventures that you might be able to think of.  So, as of this time last year, all this made things look, well, pretty bleak.

After a market correction or two, and with the government bailout, credit began to come back around a bit, and that's the pickup we're beginning to see right now in the overall economy.  But what of aftermarket sleeper manufacturers and dealers?  What's contributing to their bounce-back, and what are the obstacles they have to overcome?

I asked Phil Madsen, an expedite owner-operator and well-known blogger.  He said there are two things holding the market back: "Credit and the plunge in value of used trucks.  Almost all expediters make monthly payments on their trucks.  They run the truck as long as they can, and buy a new truck before paying off their old one.  As long as the first one has some resale value, they could continue to do that.  When trade-in value hit the skids and buyers couldn't get credit, a lot of folks exited the business because they couldn't buy trucks and sleepers."

Heath Wood of Middle Georgia Freightliner builds on this with, "The economy has taken a lot of good fleets out of the market.  A lot of buyers are now gone.  it's a lot harder for people to get financing to buy one of these trucks.  A lot of banks don't understand the expediting industry."

This is, of course, evidence that the market's still a bit depressed, and even though the economy at large is beginning to turn around a bit, he sees aftermarket sleeper manufacturers and dealers continuing to claw their way out.  According to Mr. Madsen, they've got their eyes on other markets.  "They're diversifying in one way or another," he says, but adds, "I don't know of anything different that's coming out of these companies.  Maybe a little adjustment here or a tweak there.  But I don't think any of them are doing anything particularly differently."

This seems, in fact, to be exactly the case.  I spoke with Donald Bentz of Bolt Custom Trucks & Manufacturing about the matter, and he agreed that there's not a lot of change in terms of grand market expansion schema.  He did, however, note that they are making minor changes here and there to their products: "We've changed some things, but haven't cut corners on anything either.  If anything, we're offering cost-effective upgrades.  All we can do is our best, watch our costs, and improve our product and pay attention to new things that will upgrade our offerings and product lines.  There are new AV systems and new water heating systems coming out daily, as well as power management products; these are things that we're looking at all the time."

Heath Wood agrees: "We have changed some things, but they were things that would better the sleeper itself and didn't necessarily make it cheaper."

Simply changing things in terms of their products, of course, isn't exactly enough for a sleeper manufacturer to do.  Bolt Custom Trucks and Manufacturing is getting by via "Lowering overhead and having fewer employees.  Just being careful in what [we] do.  [We've] just [had] to lower overhead," says Don Bentz.

Heath Wood, in looking at the bigger picture, sees a similar method for many sleeper companies.  "The ones who are left have cut back, kept their expenses at a minimum to be able to sustain until the market comes back."

All this raises the question we've all been asking for, oh, the past year, give or take: when will the market come back?  To be sure, there's no defined answer to that at this point, but there's certainly reason to be encouraged to some degree.  Freight has been on the rise as of late, and while rates are still down, there's no real reason to assume that it won't bounce back once everything else steadies.

A central focus for all sleeper companies is customer service, and while improving their products seems to be what they think the keys to their successes will be, even that comes down to servicing their customers.  In order for a company to know their product is going to sell, they must know what their customers want.  The best way to do this, as it turns out, is the old fashioned way.  "You have to be open to customers and end users, just by staying in touch with them and learning where things are heading."

Heath Wood answered almost exactly the same when I asked him how he keeps track of customer needs.  "We're building for the expedite industry only.  We talk to expediters every day.  That's how we know out what's going on." Knowing what the customer's needs is but one element of the market coming back, and it seems to have been one constant for sleeper manufacturers through this recession.

So, generally speaking, how do things look for aftermarket sleeper companies?  The future may not be completely rosy, but there is a light at the end of the tunnel.  Don Bentz says that business over the foreseeable future will be "Just a slow upward climb to get back to where things were.  It will come back to where it used to be.  Things are on an upward move.  We think productions gonna be moving forward here.  It's right around the corner."

Heath Wood has similar words for the matter: "We've seen an uptick in the last 3 months.  We've definitely seen an increase in sales.  Let's just hope it comes back."

In many ways, aftermarket sleeper companies are solid examples of industries that have taken a pretty hard hit from the economical crash--businesses have gone under, after all--but they're selling products that people want and need.  If there is such a thing as a magic bullet for businesses when times are tough, selling products and providing services that people want and need would probably be just that.  With things beginning to turn around, it only makes sense that we'll see a newly-concentrated, more streamlined sleeper industry live to fight another day.