It’s done: On 2 June 2018, after more than a decade at the helm of Wabash National, Dick Giromini has passed on the baton to the next generation. From now on, home-grown talent and previous Chief Operating Officer (COO), Brent Yeagy, will control the fate of North America’s largest trailer manufacturing business.
In part two of an exclusive double interview with Global Trailer Magazine, the two reflect on the state of the US trailer manufacturing industry and explain how Wabash National will navigate the age of autonomous driving and electric mobility.
Q: Dick, do you still think of Wabash National as a trailer manufacturing operation, or has it morphed into an entirely different beast? What kind of company have you handed over to Brent?
DG: That’s a good question. The Wabash National of today is both a trailer design specialist and industrial manufacturing company. Trailer building will always be part of our DNA and what makes us great, but it’s not the only part anymore. As you know, we’ve been consciously trying to transform the business into a more diversified industrial manufacturer over the past five or six years – and successfully so, I might add.
Q: Are you able to quantify which role trailer building plays for the organisation today?
DG: Our objective has been to decrease our dependency on the van trailer segment from about 80 percent 10 years ago to maybe a third of the business. Not walking away from it, not decreasing the presence in that space, but just growing around it – that’s what we have been working to do. Brent will continue those efforts among other growth strategies that he has in mind.
Q: Speaking of growth – the US economy has picked up speed of late, yet there are subtle signs of inflation in freight-related industries and pressures building up in the supply chain. What’s your take on the market right now?
DG: It’s still a tremendous market; demand here in the US is extremely strong. In fact, there are some indications out there that 2018 could be the strongest year in the history of North American trailer manufacturing. Right now, 2015 is the all-time record year, with 307,000 units produced and shipped, but we’re seeing a lot of demand drivers that could help us surpass it this year.
Q: But does the US even have the human resources to move all that equipment and keep the cycle turning?
BY: I think that’s a valid point to take into account when you consider Dick’s observation. As an industry, we need to make sure we have the human capital to handle all the equipment we are going to put on the road. Many carriers are taking dramatic action in terms of wage benefits and compensation packages to make sure we can keep up the pace. If that continues to be the case, we could see a substantial improvement in driver availability, especially in the second half of the year.
DG: Just to add to that: Fleets are more aggressively embracing the ‘drop and hook’ concept now, which not only allows them to increase the ratio of trailers to trucks, but also make the most use of the drivers that are available. That’s just one solution to the driver shortage, and at the same time a demand driver for transport equipment. But you’re right: You need the resources to support the demand.
Q: What’s driving all that demand? Is it mostly off-the-shelf equipment? Or do value-added solutions now play a more prominent role too?
BY: It’s mostly basic equipment still, but times are certainly changing with view to technology and innovation. In the near term we will see features like disc brakes and roll stability become a lot more important, for example, as well as new composite materials and high-strength steel. I’m biased of course, but I would say Wabash is leading that effort and continuing to change the landscape. So yes, we are seeing changes in the way trailers are spec’d. But is it driving trailer growth in 2018? I would hesitate to say that.
Q: So when will the more modern equipment drive growth at a level that does get your attention?
BY: I don’t think we are far off that point. We should certainly position ourselves to be able to manage changes in buying patterns as a result of technological progress.
Q: What does that mean for the customer persona you’ve been working with to date at Wabash National?
BY: When we look at the classic Wabash customer persona – whether it’s in our van trailer, tanker, platform or truck body business, or even the industrial manufacturing segments that we serve – it’s someone in need of a premium product who values a strong relationship with their suppliers of choice. It’s also someone who embraces change and innovation. Our customers are leaders at what they do and wish to work with leaders in trailer design.
Q: Do you lay claim to leadership on a global scale too? In Global Trailer’s annual OEM Ranking, it’s usually a three-way fight between Wabash National, Schmitz Cargobull and CIMC – depending on the way you look at the various brand affiliations. What’s your view on the competition?
BY: We make a very conscious effort to know where we stand in all segments of the trailer industry, globally. We want to make sure that we provide superior value in all markets we operate, but we also keep an eye on the big picture and always are evaluating opportunities for market differentiation and growth.
Q: Does that imply we will see Wabash National on the global stage anytime soon?
BY: Right now we are primarily serving the North American market, but that may change in the future. I think what we said about the typical Wabash National customer before is transferable to anywhere we choose to go. So all I can say is going global may be part of the equation in the future in one or more of the diversified markets we participate in today.
Q: So you feel less vulnerable now when exploring new opportunities abroad…
DG: That’s one way to put it. The financial success we’ve had over these last few years gives us a lot more flexibility, a lot more resilience to be able to take on added risk, to look at growth opportunities outside of the US, outside of North America. We could not have taken on that level of risk six, seven years ago. We weren’t financially stable enough to be able to do it, so we focused on the part that made the most sense to us at the time.
Q: Now would be the time to announce you want to take top spot in our ranking some time soon…
BY: Nice try. We want to be recognised as a company that is able to see the big picture. The industry is changing all the time, just think of the rise of e-commerce, especially here in the US. With the acquisition of truck body specialist, Supreme, we have already reacted to that trend – it will see us morph into a more comprehensive provider of freight transportation solutions. We can now play strongly in the first mile, middle mile, and last mile, as well as dry and refrigerated freight.
DG: And by the way, that’s a global phenomenon, so we’re positioning ourselves to take advantage of the best choice possible to grow our business.
Q: Does that development require more vertical integration?
BY: We’re always evaluating what’s the right choice in terms of how we deploy capital in our business, and vertical integration is always on the table as an option. It has not necessarily been something that we’ve invested in over the last several years, but we see some exciting opportunities to explore it more in-depth – for example by further integrating our composite manufacturing into our product development chain. That’s one example that we think makes strategic sense.
Q: Does electric propulsion on the trailer level make strategic sense, for example?
BY: Potentially. Electric mobility is a highly dynamic space, not only on a North American scale, but globally. We’re definitely in the race in terms of determining the best path forward, but we’re not going to share our future strategy with you just yet. How does electric propulsion integrate into current-day trailer design? Should it be a Wabash generated and installed technology, or should we use more of an open source approach? We’re talking to customers about what makes sense for them, and then we’ll talk about it in due time.
Q: It will be an exciting few years to come for you, Brent…
BY: It already is exciting. You see, a lot of the technology exists today – the issue is what’s the right platform to get it to market. Ultimately it’s all paced by the customer’s ability to translate technology into value. The customer is the critical variable here. The customer is going to determine the adoption rate. Wabash will have to be positioned in way that it is able to serve that need, whether that’s today or tomorrow.
Q: Some in the industry believe trailer builders could be better positioned to push the boundaries of innovation than traditional, slow moving truck OEMs when it comes to electrification and digitation. Can you see a company like Wabash National build trailer drones at some stage down the track?
BY: I think there are many players with the ability to disrupt this space, depending on how freight models begin to disrupt themselves. It’s not out of the realm of possibility that you could see some level of radical change in trailer design in the future. What I mean by that is, being able to create a ‘drone’ in the context of a trailer is not impossible. From a technology standpoint, the industry is close to being able to do that today. But the regulatory framework isn’t there yet. I’m very confident in Wabash National’s position to play once it is.
Q: That’s a remarkable comment.
BY: It would be, if there weren’t so many obstacles in the way. We have a public policy issue that we have to work through. In the United States, we have a complex set of regulatory frameworks – both federal and state – that have to be worked through, and then we need the right infrastructure, too.
Q: That would open up a lot of lobbying opportunities for Dick in the future, wouldn’t it?
BY: We may be writing his consulting agreement right now, you never know.
In December 2017, Wabash National went public with the announcement that long-serving CEO, Richard ‘Dick’ Giromini, would step down from his role on 1 June 2018. As part of a planned succession, Wabash National President and current COO, Brent Yeagy, was announced to become his successor on 2 June. To support the leadership transition, Giromini said he would serve in the role of Executive Advisor through to 1 June 2019.
In late 2017, Wabash National completed the acquisition of NYSE-traded truck body specialist, Supreme Industries. “We are excited to add the Supreme business to our company in order to leverage the urbanization and e-commerce trends which are fuelling a consumer preference for home delivery,” then-Chief Executive, Dick Giromini, commented at the time. “This acquisition is the continuation of our growth and diversification strategy into the rapidly growing final mile space. Wabash intends to be at the forefront of the final mile evolution in the transportation market.”
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