Leading U.S. economists at the Sept. 15, 2003 National Truck Equipment Association (NTEA) 2004 Economic Outlook Conference (EOC) were in agreement that 2004 will be a substantial growth year that will be shared by industries throughout the U.S. Europe and Asia are also expected to experience growth in 2004.
The improved economic performance will have a very positive impact on truck and truck equipment sales as users replace aging fleets, according to the economists. Particularly good opportunities for improved sales performance specific to the truck sales market include freight forwarding, truck renting and leasing, and the utilities industries.
Kenneth Kremar, a principal in Global Insight's Industry Practices Group, headquartered in Eddystone, Pa., told the 115 attendees at the Hyatt Regency in Dearborn that freight forwarding activity is expected to grow 4 percent by year-end. The freight forwarding industry is expected to continue growing by 5 percent in 2004 and an additional 4 percent in 2005.
"The freight forwarding industry accounts for more than 650,000 trucks," said Kremar. "Growth in that market will create significant demand in Class 8 truck sales (mostly dry freight tractor-trailers) regardless of what happens in the other class ranges."
"Trucks in general, regardless of the industry using the trucks, will need to be more sophisticated in incorporating wireless technology options in the vehicles in order to provide the end-user with better communication resulting in increased productivity," said Douglas W. Clark, founder, president and CEO of AmeriQuest® Transportation and Logistics Resources Corp., based in Cherry Hill, N.J.
Truck buyers have more incentives than ever right now to purchase trucks because of the new tax bill stimulus as well as discount offerings in the light truck market. The new tax bill increased the potential write-offs on the value of purchased equipment from 62 percent to 73 percent.
Under Section 179, business operators can choose to recover all or part of the cost of "certain qualifying property" up to a limit, by deducting it in the year they place the property in service. Businesses can elect the Section 179 instead of recovering the cost by taking the normal capital depreciation deductions over a longer period of time.
In terms of the overall economy, the gross domestic product (GDP) is expected to grow more than 4 percent in 2004, increasing the demand for labor. This will in turn increase national income, putting the U.S. economy in a "virtuous cycle," the economists said.
"The 3 percent to 3.5 percent growth in GDP so far in 2003, has not been high enough to generate increased demand for labor," said Eli S. Lustgarten, managing director of H.C. Wainwright & Co., Inc., New York, N.Y. "However, in the fourth quarter of 2003, and the first half of 2004, GDP growth is expected to exceed 4 percent, and an increase in demand for labor should occur in the second quarter of 2004."
The rate of inflation is forecasted to fall slightly in 2004 but not enough that we need to worry about deflation, according to Dr. Ed Nosal, senior economic advisor for the Federal Reserve Bank of Cleveland. "Productivity is a more important factor in the current slow growth of the U.S. job market than the exporting of jobs," said Nosal.
In other words, U.S. industry is more productive than ever before, requiring less labor.
In terms of foreign trade, there is an increasing amount of importing and exporting, which is a sign of increasing global economic activity, according to Steve Latin-Kasper, director of market data & research for the NTEA, based in Farmington Hills, Mich.
"There are some specific markets in Eastern Europe, China, Russia and Australia that have continued to buy U.S. products even during the recent recession in the U.S.," Latin-Kasper said. "There are growing numbers of truck equipment manufacturers that export and this continues to be good news for them."
Edward J. Sullivan, chief economist of the Portland Cement Association, Skokie, Pa., rounded out the EOC with a construction industries forecast.
About the National Truck Equipment Association
The NTEA was established in 1964 and currently represents nearly 1,500 companies that manufacture, distribute, install, sell and repair commercial trucks, truck bodies, truck equipment, trailers and accessories. Buyers of work trucks and the major commercial truck chassis manufacturers also belong to the Association.
The NTEA says it provides technical information, education and money-saving opportunities through its member programs, publications, services and sponsorship of The Work Truck Show®, which it calls "the only event dedicated exclusively to the Class 1 through 8 commercial truck and transportation equipment market."
The association maintains its administrative headquarters in suburban Detroit and a government relations office in Washington, DC. Its Web site, www.ntea.com
, provides an interactive listing of members and their products/services as well as industry news and resources.
For more information about the NTEA, call (800) 441-NTEA (6832) or (248) 489-7090.