In one of their more famous hits, the Rolling Stones declared:
“You can’t always get what you want,
But if you try sometimes
you just might find
You get what you need!”
So it is, if you’re in the hunt for a tree care chassis and body rig.
Most of us are aware of the worldwide shortage of computer chips preventing the completion and delivery of everything from the cheapest commuter car to the big rigs that move America. In the U.S. alone, tens of thousands of vehicles, from passenger cars to commercial trucks, are filling lots, awaiting delivery to customers. They are awaiting semiconductor chips, the electronic brains of modern transportation. Mostly, you’ll hear of the shortage of engine and transmission chips, especially so in commercial vehicles. However, depending on the vehicle and who you talk to, there could be dozens if not hundreds of chips in a single car or truck.
What follows here is a status report on truck inventory, but, as one source states, the situation is so fluid that things can change dramatically in a matter of weeks. The bottom line: If you’re in need of a truck now, plan to get one in the near future or are merely considering it, the smart advice as of early fall is to order now for delivery next spring – maybe.
The root of the problem
As with so much going on in the world, the initial blame for this shortage can be traced back to early in the COVID-19 pandemic and the shutdown of many chip plants, because orders for products containing them just weren’t there – the world was shutting down. Then, bang, the economy picked up, and demand for chips for all walks of life exploded, and the shortage for vehicle chips reared its ugly head.
For a while in spring 2021, it was looking a bit hopeful that there would be an ease in the shortage. But secondary confluences of conundrums struck – a fire in a major chip plant in Tokyo, a monster surge in COVID-19 cases that shut down much of Malaysian chip manufactories, then a surge in competing demand for chip-based consumer electronics – and the overall demand put huge pressure on supplies of raw materials.
In compiling this article, TCI researched numerous sources, from the U.S. government to business publications such as Consumer Reports, and to radio, TV and well-known newspapers, to get to the roots of the problem, of which, it seems, there are many.
The New York Times in April reported that a big reason auto and truck makers were having trouble sourcing chips was that semiconductor manufacturers were favoring makers of electronics such as mobile phones and consumer electronics, because those markets are more profitable.
One of the best explanations came from The Detroit Free Press, which has to keep an eye on this kind of thing – because it has its finger on the pulse of the U.S. auto industry. The chip shortage initially resulted from pandemic-related shutdowns. With people working and learning from home, demand for personal electronics then shot up, consuming most of the world’s output of chips. When auto and truck factories restarted, stronger-than-expected demand for new vehicles further outpaced the supply of chips.
Even the BBC (British Broadcasting Company, the UK’s version of PBS) chimed in, referring to the shortage as “chipageddon.” They blamed the situation on everything from the severe winter storms last winter in Texas, which closed down some U.S. capacity, to some tech companies that correctly saw the inability to keep up with demand and started stockpiling chips, which, in turn, led to an artificial shortage.
In early September 2021, a CNN report talked about an even-worsening chip shortage and that, just weeks after reporting record-high vehicle prices, consumers needed to get used to this as the new normal.
Mostly, you’ll hear of the shortage of engine and transmission chips, especially in commercial vehicles. However, depending on the vehicle and who you talk to, there could be dozens if not hundreds of chips in a single car or truck. The love affair with electric vehicles adds to the problem; an all-electric car, according to a New York Times report, can contain up to 3,000 chips.
The list of causes and who or what are to blame goes on and on. If this has your head spinning, get used to it, because the problem is so widespread, complex and intertwined with other challenges, from raw-material shortages to simple trucking delays, it’s safe to say that not only will there not be a solution soon, but experts say it may take until 2024 or later to sort it all out. The CEO of Intel, one of the world’s largest semiconductor manufacturers, while reporting on the company’s July earnings webcast, told investors, “It will take another one to two years before the industry can catch up with the demand.”
Right after Labor Day, Chevrolet, Ford and Chrysler suspended some production. That made the headlines because it affected mom-and-pop consumers. But just prior to that, and lost in the news of the day, was a report in the Wall Street Journal bemoaning the cessation of new, large, commercial-truck manufacturing, which is of concern to those who make their living in the tree care industry.
“Semiconductors continue to be the component with the greatest prolonged scarcity, but we’ve also seen short-lived constraints for plenty of other components,” says David Carson, senior vice president of sales and marketing for Daimler Trucks North America, makers of Freightliner Trucks, a 12-year TCIA corporate member company based in Fort Mill, South Carolina, and other commercial vehicles. “There’s an old joke in the truck-manufacturing world: ‘Which parts do you need to build a truck?’ to which the correct answer is, ‘All of them.’”
Carson explains the Daimler situation this way. “In all seriousness, parts shortages are an ongoing challenge for our supply-chain teams – who are constantly making magic happen for us, for our dealers and, most important, for our customers – by securing the parts we need to build trucks. In contrast to past experience, when we simply ordered and received parts, we’re now reaching far down into our supply chain to assist suppliers in planning for shortages, navigating constraints and working to help them keep the upstream flow of parts moving.”
He continues, “We’re also working closely with our dealers and customers to communicate clearly and frequently regarding the status of their orders. I’d like to emphasize that, while I know no one wants to hear their truck won’t be ready exactly when they want it, our promise to every customer is to be completely straightforward about delivery times. Our customers, quite literally, help to keep the world moving, and if we can’t get them what they need in the time they need it, we’re not pulling back from having the honest conversations to help them make informed decisions and craft appropriate plans for their businesses.”
Jeb Darhower, sales manager for Bayshore Ford Truck Sales, a 13-year TCIA corporate member company based in New Castle, Delaware, says chances are pretty good you’d see a medium-duty truck in the spring, but that depends solely on a rapidly shifting market. “I think an April delivery would be correct if you ordered now.” The outlook for larger units is a bit gloomy, he says, adding, “If you’re looking for a Super Duty F550 or 600, the order bank is closed for 2022 already, so you cannot order for next year. This is due purely to the chip shortage. This is not only on our end. There are other makes and models that have had to shut down orders as well.”
Things get more challenging. Darhower says, “The weird thing is that Ford has two ordering paths (Ford’s website acknowledges some confusion, because the same vehicle can be ordered either way.).” For certain fleet orders, he predicts the order bank will not open in 2023 due to the uncertainty of chip availability and the inability of auto and truck makers to keep up with demand.
“The impact on business became apparent at the beginning of this year, but started at the end of last year because of the shortage of chips,” he reflects.
Darhower says he had discussed the problem with Ford and was told there are only a handful of vehicle chip makers in the world, and Ford uses one in China that has been crippled by up to 50% in capacity. He also says he’s learned that “chips are being sucked off by a high demand for consumer electronics.”
In early September, Darhower had learned there were up to 1,000 Ford trucks sitting awaiting chips, some 200 to 300 just in the medium- to heavy-duty category.
“There’s not much anyone can do,” he laments. “A lot of our customers have had to settle for vehicles that do not exactly meet their specs just because they’re available. For example, a customer may want a gasoline F500, but will have to take a diesel because it’s available. Or, they usually want a super-cab model, but if we have only a regular cab, they will take it. And a customer who said they would only take vehicles with air brakes now will take one with hydraulic, merely because it is available.”
Darhower also notes that worldwide market dislocations have had other impacts on commercial truck sales as well. “I feel bad that there are rising truck-acquisition costs. Because of chip shortages (often resulting in premium pricing), there are steel surcharges,” which, he notes, have impacted truck bodies, sometimes to the tune of up to $3,500 more at closing. “On top of that, Ford has stopped giving discounts on trucks,” he says, largely referring to market costs and uncertainties.
Darhower says that for the tree care industry alone, typically by the end of the third quarter, his sales would be about 400 trucks for the year. For 2021, he expects to sell 250. That’s a drop of a third, largely due to chip shortages – and at a time when the tree care business is exploding.
When trucks do come in, they move out fast. “What comes in, goes right out,” he says.
“This is the time we normally load up for the year end, and we have nothing. In fact, we are scrambling to get trucks for display at TCI EXPO (in November in Indianapolis). I still do not know what I am bringing to the show, or if and when they will arrive. I ordered trucks in February, and they are still not scheduled to be built. I may have to hold back and not sell something. I need to show something (at EXPO),” he says.
“Used equipment is likewise difficult to find,” Darhower continues, “and good ones cost as much as new ones because of the inventory shortage.
“We supply companies like Southco, Versalift, Arbortech and Custom Truck One Source. I don’t think customers realize the ripple effect of this shortage,” he maintains. “Chassis outfitters like these cannot sell (trucks with tree care bodies or mounted equipment), because they have nothing to put their products on.
“As a business, we are making it through, but I have never seen anything like this,” Darhower concludes, referring to his 25 years in the auto and truck trade.
Bob Dray, senior vice president of sales and marketing for Custom One Truck Source, a 24-year TCIA corporate member company based in Lynchburg, Virginia, and a provider of specialized trucks and heavy equipment, says, “What we are experiencing are supply-chain woes, and things change by the day – if not hourly!
“Two weeks ago, we had no supply-chain issues – no chassis problems, nothing,” Dray said in mid-September. “Now, we are having a bit of trouble with delivery, but are faring reasonably well.”
“We engage our supply years in advance,” he explains. “We have orders in already for all of next year and the year following. The number-one thing in our industry, and it’s never been more important than now, is to advance plan.”
In the past, Dray says, “Everyone in our part of the industry had plenty of stock available, but that is no longer the case. Lead times have become a lot longer to get delivery.
“We are seeing that major tree operators have to be more acceptable of plain vanilla,” he quips, referring to standard versus custom-order units. “To build to order is difficult to come by, such as ordering a higher-horsepower engine or an axle that varies from standard factory equipment.
“How long will it last?” he asks rhetorically. “I talk to major truck suppliers almost daily, and am being told we will be through the worst by the end of September and that we will get exactly what we ordered for delivery when we wanted it.”
Dray agrees that, “Yes, the major choke point is the chips. My understanding is that most truck manufacturers are building and warehousing trucks, but do not have enough engine- or transmission-control modules (ECMs or TCMs – the chips). The backlog is longer than it has ever been.”
But for Custom Truck One Source, the outlook has been relatively good because of planning. “I do not know if it is because the market has grown and there are more orders for tree care trucks, or because people are in the position to buy more or the competition cannot deliver, so we are delivering more because we have trucks.”
He admits that, “If you’re looking for year-end stuff, we are right on the cusp of not getting more units for the forestry side. We have been blessed with a strong supply side, workforce and planning force, and have been able to ramp up significantly to be able to deliver for our customers.”
If the tree care industry has to characterize the challenging commercial truck market, it would be to say, “It’s pretty much all over the place.”
To end with another Rolling Stones lament, if you want a specific truck soon, it may be that you “can’t get no satisfaction.”