If there is one lesson Dean Engelage has learned during the time he has spent with North America’s largest privately held transport equipment brand, it is that a wrong decision made during tenuous times can dramatically impact a company’s ability to bounce back when demand is going up again.
According to Engelage, it is important to understand that no company is facing a slump alone – most often, both associates and customers are riding the same wave. In fact, failure to strengthen a company during low tide can leave it crippled when it is time to swim again, especially when growth is still occurring selectively and not in a continuous movement.
“As a prudent business, we continually re-align our capacity to keep pace with cyclical swings in market demand,” he says – revealing that Great Dane has not yet fallen for the do-or-die attitude many have adapted as the US shambled through a string of crises in 2013. Retaining a staff of more than 5,000 and continuously investing anti-cyclically, the Chicago-based company actually exited the somewhat murky 2013 on a strong foot.
One reason why the Great Dane President was able to stay true to his course while the Unites States were entangled in the National Security Agency spying scandal, the inept implementation of ObamaCare, and a government shutdown that made them look uncertain, unmoored and even untrustworthy to some parts of the world, is the fact that Great Dane is not publically traded.
“In a cyclical business such as trailer manufacturing, it’s a real advantage to be privately held, with no artificial short-term goals and shareholder pressure to distract you from focusing on critical long-term objectives,” he explains. “We also have a lot more insight into the operations of our publicly traded competitors than they do of us, which can be a competitive advantage. As a result, we can keep our focus on the long-term rather than scrambling to respond to short-term movements in the market. We’ve got a lot of experience in riding cyclical swings out.”
After half a decade of low performance, the US transport market is now approaching healthy territory again, but many in the industry are still not sure whether the cart is just being dragged uphill again before the next sharp fall on the economic rollercoaster they got on in 2008.
“There is definitely a high correlation between the health of the US economy and the health of the trucking industry,” says Engelage. “What growth we’ve seen has [subsequently] occurred in starts and stops rather than in a continual period of economic expansion, a trend we expect to continue. Until we actually have a meaningful recovery and there is confidence of future profitability, most of the demand we will have is replacement demand of old equipment as opposed to real growth demand.”
Despite the challenges in 2013, Great Dane is still on track to finish the year on a positive note. “We’re cautiously optimistic about 2014; and expect it will be similar to 2013/2012 given some recent strength in key areas such as manufacturing, housing starts and automotive production,” Engelage adds. “Industry reports showed us producing approximately 45,000 trailers in 2012, and we are on pace to produce comparable numbers in 2013.”
According to Engelage, who was appointed President in October 2013 after joining Great Dane in 2011 as Executive Vice President of Sales and Strategic Planning, Great Dane’s positive development is the result of the company’s long-term focus and on-going investment, even in the face of adversity. “This year, we focused on completing our first full year of operation in our new, state-of-the-art reefer manufacturing facility in Statesboro, Georgia. We also announced plans to construct a new innovation campus in Savannah, Georgia that will greatly enhance our ability to conduct world-class research and development in the fields of trailer and truck body design, corrosion resistance as well as thermal efficiency,” he says. “On the technology front, we also began implantation of an ambitious, multi-year technology enhancement program in 2013 that we expect to provide significant improvements in operational efficiency and customer service for the upcoming decades.”
But there is more to Great Dane’s success than just continuity on the home market. Without much fanfare, the company has established itself as a global brand that is expanding in both South America and Asia. In China, Great Dane is part of a joint venture with Henan Bingxiong Refrigerated Truck Co., also known as Ice Bear, while its Latin American business is driven by the US head office.
“While the Chinese economy is slowing from its earlier frenetic growth rate, there is still absolute growth occurring there,” says Engelage. “We see a lot of opportunity to upgrade the country’s out-dated refrigerated transportation infrastructure in both the near and long term.
“[That’s why] we’re very excited about our joint venture in China, as it is proving to be mutually beneficial for both us and our partners. In addition to the obvious opportunities to join in the growth of refrigerated transportation in that market, it also keeps us close to competitive trends in manufacturing.”
While China’s commercial road transport market is still dominated by rigid trucks with attached bodies, logistics companies slowly recognise the weight savings and efficiencies associated with the use of articulated transport equipment. “The Chinese market should experience significant growth in the refrigerated truck body segment as well as all categories of semi-trailers for that matter. Great Dane, through our partnership with Ice Bear, will participate in this growth. However, the Ice Bear brand has strong brand equity in China so at this time there are no plans to use the Great Dane brand or logo.”
Interestingly, Great Dane’s involvement in the Asian market has also strengthened the brand’s commitment to the US market. According to Engelage, there is no plan to outsource manufacturing and re-import prefabricated kits to the US, nor is there concern about competing businesses planning to do so.
“A significant percentage of the cost of a trailer is the raw materials, which are global commodities. In large part, this limits the impact of lower cost Asian labour,” he says. “I am confident our product innovation and quality more than offset any marginal labour advantage derived from imported kits designed to be assembled in the USA. That being said, having a foothold in China allows us to keep a close eye on the situation.”
A much more concerning challenge is the on-going fleet consolidation process back in the US, where growing economic and regulatory pressure has created a range of lean and efficient ‘mega fleets’ that are starting to dominate the domestic market, in all categories of trailers. According to Engelage, that trend could potentially reduce overall demand as compared to the record high the industry experienced before the GFC hit in 2008.
In addition, classic manufacturing businesses in the US still struggle to attract and retain a skilled workforce – a trend not likely to change over the next decade. “The problem primarily results from changes in our educational system, which have reduced the number of students being prepared for factory jobs such as welding and steel fabrication. Additionally, the growing number of governmental regulatory requirements in areas such as healthcare and the hours of service laws impacting our customers are making it more difficult for companies in our market to compete. Whatever may affect a trucker’s profitability will also affect us as a business.”
Given the strong headwind on the home front, Great Dane has, again, bethought of the company’s key advantage – a long heritage paired with the operational freedom of a privately held entity. “We’ve been making trailers for more than a century and are extremely proud of the pioneering role we’ve played in the development of our industry. While keeping up with technological progress will continue to be important, it’s only part of the equation,” says Engelage. “It’s important that as we grow, we don’t lose sight of our fundamental values of building the best product while maintaining productive long-term customer relationships at the same time.”
Following the tried and true ‘quality over quantity’ mantra, North America’s second-largest transport equipment company is all about providing the highest value for money. “Great Dane regularly ranks as one of the top two producers of trailing equipment in the markets we serve, including dry vans, flatbeds and refrigerated transport equipment.
“However, we don’t always strive to sell the most trailers in any given category, as there are always competitors who will focus more on volume than we do. Our goal is always to provide the best product and the best support, even if it costs a little more up front. Sophisticated buyers realise that the total long-term cost of ownership is the most important measure of a sound investment, not just purchase price.
“We strongly believe that if we build the best product and are a good partner to our customers, employees and suppliers, success will come. Of course that is easier said than done, but we firmly believe that the plans and processes we’ve put in place will help us achieve these lofty goals.”
The result is a global brand with an authentic American feel to it. Conservative and prudent, but also innovative and unafraid to take a leap of faith when it has to – somewhat resembling the Great Dane itself, whose large and imposing appearance may belie its noble and friendly nature.
“As we continue our growth in Canada, Latin America and even China, Great Dane is increasingly becoming a global brand. However, our focus clearly remains on the US market – a fact that is certainly important to our long-time clientele. We also source the vast majority of building materials locally, but will occasionally seek an international source when it makes more sense,” says Engelage, who is well aware that any international organisation is only as good as the foundation it is built on back home. “As we grow into new geographic markets, there is no inherent requirement that we limit our manufacturing to the US. We’re always exploring additional possibilities that would complement, not replace, our US production.”
In fact, the most recent economic shake-up taught Engelage and the management team at Great Dane a valuable lesson – that gearing production back up after a downturn can be as challenging as scaling it down. “Although the most recent few years have been relatively stable, and 2014 is expected to be the same, the trailer industry has been and will continue to be a cyclical industry. Yet, we believe that our 100 years of experience have equipped us well to work through challenging times such as those of the past decade. Our goal as a company is to deal with these inevitable ups and downs as everyday business management issues rather than just crisis management issues.”
That’s exactly why Great Dane acquired fellow US company Johnson Truck Bodies in 2010. “Sharing a common corporate ownership with other manufacturers in the transportation industry helps us leverage our buying power. This is important as it helps us keep our manufacturing costs as low as possible without sacrificing quality. Plus, the acquisition also diversified the segments we compete in to include truck bodies – leveraging both our scale as well as refrigeration capabilities.”
According to Engelage, a forward-thinking mind-set is what enabled Great Dane to cope with the stress of uncertainty and helped build contingency planning into the company – even though a political argument over health care and the role of Government caused the entire US government to grind to a halt mid-way through 2013.
Unfazed by the turmoil, Great Dane’s new President is a strong advocate of remaining positive, actively encouraging staff to seek new approaches to doing business while keeping up the brand’s long-standing heritage. After all, innovation and success are often born in times of uncertainty – if there is openness to change and freedom to act.
“We are going to relentlessly chase perfection, knowing full well we will not catch it, because nothing is perfect. But we are going to relentlessly chase it, because in the process we will catch excellence,” says Engelage, quoting NFL legend Vince Lombardi, one of the most successful coaches in the history of American football as head coach of the Green Bay Packers and Washington Redskins. “That’s what we are attempting to do at Great Dane – chase perfection and hopefully attain excellence in everything we do.”