PACCAR Inc. is forestalling downtime from the semiconductor shortage by parking unfinished trucks and reinserting them on assembly lines when chips become available.
So instead of slowing production and missing potential sales like other manufacturers, PACCAR (NASDAQ: PCAR) is only delaying deliveries from its Kenworth, Peterbilt and DAF Trucks brands. About 3,000 builds across the divisions were delayed — but not lost — in the first quarter.
“We’ve been able to build trucks all the way through the process and then stage them for those parts,” Kenworth General Manager Kevin Baney told FreightWaves.
Daimler Trucks North America is taking rolling downtime at two medium-duty plants in North Carolina and Mexico through June. Volvo Trucks North America and its Mack Trucks sibling expect to take downtime this quarter.
Automakers and truck manufacturers canceled chip orders a year ago when plants closed during the first wave of the pandemic. Lead times required for chips used in vehicles, and everything from washing machines to televisions, are six to nine weeks. Semiconductor manufacturers redirected supplies to consumer goods when car and truck makers balked.
Matching chips with trucks that can be completed
“Right now we’re not losing production,” Baney said. “We’re really fortunate. Order intake has been really strong. Since January, we’ve had a series of build rate increases across PACCAR. We’ve implemented those. And we’re holding that level for most of April and May.”
Rather than direct chips to specific models, such as higher-profit Class 8 models. PACCAR is working with Tier One suppliers to match chips with trucks they can finish.
“What we don’t want to do is send parts in for a truck that’s only going to miss other things,” Baney said. “We’re evaluating to make sure we’re keeping things balanced so that we can get as much stuff out the door as possible.”
Baney hopes maximizing builds can avoid downtime.
“All indications are that this global shortage starts to fix itself in the second quarter,” he said. “If we can get supply caught back up, hit the trucks that we do have parts for, then we can start evaluating build for the second half.”