Wabash CEO leverages military training in transforming trailer business

“What that program really goes through is incredible attention to detail and incredible process-driven outcomes,” Yeagy told me. “There’s a high degree of risk management that goes into managing and running a nuclear reactor overseas in another country’s port. 

“So, the precision and the attention that you have to have to manage that asset where it can have catastrophic, geopolitical outcomes cannot be measured in simple terms.”

And that helps explain why the program’s graduates are sought after by industry when they leave the Navy. Think utilities and a host of other engineering fields.

Yeagy and I talked about the carryover value of his three years as a nuclear machinist’s mate and how it has influenced his tenure as CEO.

What particular value do you associate with your military service at Wabash?

It has always been a part of the various roles that I’ve had, but I think being a chief executive officer where you’re leading a company by setting a vision, you’re helping them work through ambiguity. You think about the pandemic and the uncertainty and what came along with that. I think I was uniquely prepared to be able to lead a group of people through it in a way in a conflict-oriented world.

It’s understood that ambiguity can paralyze a business. How did you handle it?

I really did rely on officer training and experience and translated that to lead people through to the end, to get us in a place where we could keep continuing the mission. I am surprised how much it came back.

You are converting a Wabash reefer plant to make dry vans. How is that going?

We are completely on target to full production by midyear 2023. We’ve been able to navigate it through all the supply chain issues to be able to execute to this point.

Hiring enough people has been an industrywide challenge. Any improvement there?

Labor has become more available and more stable within our manufacturing locations coast to coast. So whether it’s the economic environment or whatever, we are absolutely seeing a more enabling labor atmosphere.

Any update on how Wabash is addressing first-to-last-mile products?

We really do feel good about where the strategy’s going and how those assets are enabling us to have new and different conversations with some of the largest first-to-final-mile companies, which is a growing list. But we’re not using it in the same way that a traditional truck body manufacturer would use it.

Can you expand on that a bit?

It’s not about building the most truck bodies out there, it’s making sure we build the right truck bodies for the right customer who’s buying a portfolio of Wabash products. It’s refrigerated, cold or dry truck bodies, flatbeds and tanks, parts and service — across the board. So now we can be more selective, more strategic of where we use our capacity.

Does that tie back into the rebranding that you undertook?  

We’re working to position Wabash as a company that’s less reactive to the market and much more forward-thinking about where the market’s going. The branding is about saying we look at the world differently, we’re providing our products differently and we understand your business in a way that we want to go forward with you, not just meet your needs next year.  

So it’s not just placing an order and taking delivery?

By that long-term agreement they get a strong source for a premium product with known capacity for multiple years. We get deeper points of value in terms of parts and service and broader portfolio penetration, and we jointly work on ways that we add value to each other. We can do that now because we have a runway.

Workhorse settles with shareholders

All it takes to excite lawyers who work on creating class action suits for aggrieved shareholders is a market drop like we’re experiencing — not counting Thursday’s best day since April 2020. Targets are plentiful: TuSimple. Hyliion. Nikola. 

It’s a little worse for one-time meme stock Workhorse Group. The electric van maker, which is hanging on until new products are ready, has agreed to settle certified class actions in California and derivative actions in Nevada and elsewhere. It cost the Cincinnati-based company $15 million in cash from insurance and $20 million in company stock to settle. 

The settlement class in the class action consists of purchasers of Workhorse stock or other securities between March 10, 2020, and May 10, 2021. They are seeking to recover damages under federal securities laws for statements Workhorse made. 

Separately, Workhouse said during this week’s earnings call that it has found more problems in testing redesign of its C-Series electric vans it recalled earlier this year. More work is needed, and the company is trying to decide if it is worth the trouble and expense.

About that discount

Nikola knew what it was getting into when it bought struggling battery maker Romeo Technologies.

“To see that Romeo had high costs is not surprising,” recently retired Nikola CEO Mark Russell told me this week. “Just how high it was is what was surprising.”

Nikola could have allowed Romeo to go under and try to pick up the pieces at a discount. Russell knows high costs for a startup are a given.

“It’s not surprising that in the early stages of production their costs are really high. We have the same thing,” Russell said. “Until you get to volume, you can’t bring your costs down very effectively. You have to automate things, give volume discounts [and] work on the costs over time.”

Romeo discounted each battery pack it sold Nikola by $110,000. Nikola will need the next five quarters to squeeze out those additional costs.

Nikola now has the unenviable task of reducing how much Romeo paid for everything, including wire harnesses built in Los Angeles instead of by cheaper labor in Mexico. The big ticket item was the battery enclosures from China where Romeo was paying about 90% more than it should have been.

“We went ahead and closed on that deal because we think we can bring it down over time,” Russell said. “We certainly learned about those costs early enough in the process that we could have done something differently. But bringing that in-house was strategically the right thing to do.”

That’s it for this week. Thanks for reading. Click here to get Truck Tech via email on Fridays.

Alan