ails off during a cyclical downturn. The company has recorded profits in more than 30 straight years, even through some of the worst industry-wide slumps.Low Fixed CostsLabor-intensive assembly plants hold down capital investments, even as it increases labor costs. The company shuns robots and other automated parts assemblies. When orders decline, Paccar chooses to furlough workers – since March, Paccar has cut output by as much as 30% at three big plants and laid off more than 750 workers in shrinking its payroll to 20,000 – rather than idling expensive equipment. “We don’t size up for the peaks,” says President David J. Hovind. “We can take care of it with extra shifts and some selective contracting.”GlobalizationPaccar has increased manufacturing space and set up new production facilities throughout Europe. Its Leyland and DAF facilities were expanded. Dealer networks were increased, and product synergies were coordinated with attention to integrating product development, purchasing, computer system infrastructure and financial services. In Europe, DAF, Foden, and Leyland account for more than 10% of the Continent’s truck market. Paccar earned over 35 percent of its revenue outside the United States, ranking it as the 88th largest company in the United States based on international sales. The company continues to look for quality investments in its core businesses and to expand its overseas medium and heavy truck market share. DiversificationRecently, Paccar entered the medium-duty truck business, by opening a plant in Ste.-Therese, Quebec. An outgrowth of e-commerce has resulted in an increased demand for medium-duty trucks to deliver just-in-time, single product orders. The $90 million, 425,000 square-foot facility has an annual capacity of 20,000 Class 5-7 trucks. So far, sales of medium-duty trucks account for only 4% of Paccar’s North American market, but through ...
