Business Sense for Tough Times

By Joe Howard

Weak economic conditions keep managers across the wholesale, retail and manufacturing sectors focused on stretching already tight budgets.

Companies in the manufacturing, retail and wholesale sectors are searching for savings as the economy slogs through the recession. For fleet managers across all three sectors, the pressure is on to conserve cash wherever possible, including extending the life of trucks that in headier times might be up for replacement. In some cases, they’re even shedding vehicles as transportation needs decline.

Whether their companies own or lease their vehicles, fleet managers are adhering to strict maintenance schedules and carefully monitoring business conditions in the hope that the economy will rebound soon.

Against this backdrop, fleet managers are wary of plunking down thousands of dollars on new trucks, and a “pre-buy” of 2009 model-year trucks in advance of stricter federal diesel emissions regulations that take effect next year isn’t top of mind. They’re just taking care of what’s already parked outside.

With sales down and profit margins narrowing, Bob Kislia, national fleet manager for ABC Supply Co., Beloit, Wis., said the wholesale construction supply company’s local managers are keeping older trucks that a few years ago might have been traded away.

“The economy is driving our store managers to squeeze extra life out of their trucks,” he said, noting that local managers struggling with weaker-than-usual sales would rather stretch the life of a truck than allocate money from an already tight budget for a replacement.

ABC has its vehicles inspected every 90 days, and Kislia said store managers are expected to quickly address necessary repairs.

“You can do a lot of maintenance for the cost of one of these trucks,” Kislia said. “If you have 10 vehicles that are 12 years old or older, nine times out of 10, you can get the extra year out of [a truck].”

But age isn’t the only factor to consider. “It’s more about mileage than time,” said Joel Nevens, president of Jomar Table Linens Inc., whose Ontario, Calif., company manufactures table cloths, chair covers, and other fabrics for sale nationwide.

Nevens said that although a few of his five diesel-powered straight trucks are at the end of the five-year replacement window he follows, they might remain in service until the economy improves.

“Maintenance becomes more important as they get older because we may be keeping them longer,” he said, “but if they start giving us headaches, we have to replace them.”

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