Production workers. Service technicians. Parts depot staff. Daimler Trucks North America (DTNA) is short of all of them, exemplifying how hard it is to keep up with a hot economy following a pandemic, recently named CEO John O’Leary said.

“It’s really a problem end to end,” O’Leary told FreightWaves on Wednesday. “We have difficulty getting workers to build trucks and to work in our parts warehouses. Our dealers have difficulty getting techs to work on trucks. Our customers have difficulty getting drivers and service techs in their shops.

“So, it’s really a problem that is very widespread, and I know it’s not unique to our industry.”

The worker shortage is just one issue DTNA is dealing with. An ongoing shortage of microchips that control various functions of today’s technology-laden trucks is another. But in that case, DTNA benefits from being part of a multinational company.

“We have a pretty strong global reach to be able to source chips from all over the place,” O’Leary said in his first interview since succeeding Roger Nielsen as DTNA president and CEO. He oversees Stuttgart, Germany-based Daimler AG’s (OTC:DDAIF) most profitable unit. 

“I have days where sometimes I’m looking at a note in the morning that says we’re going to be down for the next three months and then later in that day … ‘Well sorry, we just found [chips]. Your heart rate can go back to normal.’”

Managing shortages of plastic parts and skyrocketing prices of raw materials like steel and aluminum is akin to playing whack-a-mole.

“There’s a lot of issues out there that we’re dealing with, not just constrained capacity,” he said. “It’s very much an emotional roller-coaster. I think we’ve done a really good job of being able to keep things going and getting trucks in the hands of customers.”

Intimate familiarity

O’Leary joined Daimler in 2000 after an 11-year career at PACCAR Inc. (NASDAQ: PCAR), Daimler’s main rival for North American market share. The two companies account for about 70% share between them. DTNA brands are Freightliner, Western Star and Thomas Built Buses. PACCAR’s U.S.-based brands are Kenworth Trucks and Peterbilt Motors.

O’Leary served eight years as DTNA chief financial officer before a seven-month stint as chief transformation officer for Mercedes-Benz Trucks in Germany. He also ran aftermarket operations and the bus division.

As Daimler Trucks AG prepares for its spinoff from Daimler AG, the parent company of the truck organization and Mercedes-Benz passenger cars, O’Leary runs the business unit that is the envy of Daimler’s far-flung truck operations.

“DTNA within Daimler world is considered the benchmark from a financial performance, from a low fixed-overhead standpoint,” O’Leary said. “You try to stay one step ahead of your boss. And I try to have higher targets than even my boss can imagine dropping on me.”

Daimler Truck CEO Martin Daum ran DTNA before Nielsen. Counting O’Leary, the three men oversaw the growth of a juggernaut that claims a 40% market share in Class 8 trucks.

Escaping the car shadow

The rest of Daimler Truck likely will absorb headcount reductions and other cost cutting in the split-off from Daimler AG.

“One of the opportunities they have is to match up their structure, their cost basis to ours over time,” he said. “It’s not something you can easily do, but now I think they have the desire to do that.”

Gone will be the overwhelming influence of operating a commercial vehicle business within an organization dominated by passenger vehicles.

“The guys that really run Daimler are basically seven-eighths passenger car-driven,” O’Leary said. “We get into a lot of discussions trying to explain to people the difference between the car industry and the truck industry and why we need this investment and why we shouldn’t do this particular policy.

“Just to be able to laser-focus on trucks is extremely powerful and will really unleash us in ways that we haven’t before,” he said. “I don’t see so much benefit for DTNA, some for sure, but where it will really make a big difference is for Europe on the Mercedes-Benz Trucks side.”

Electrification leadership

DTNA also expects to lead in electrification of commercial trucks. It has lent 30 Class 8 and Class 6 battery-powered trucks to NFI Industries and Penske Truck Leasing in Southern California. Those trucks are nearing a combined million miles of real-world driving. 

An additional eight eCascadia and eM2 trucks are part of a Customer Experience Fleet lent for six to nine months at a time to help fleets understand how electric trucks differ from diesel-powered models that will dominate DTNA’s product portfolio for many years.

“It’s not just that we’re deciding on our own to throw a bunch of money at electric vehicles,” O’Leary said. “The discussions with our customers indicate that they are planning to buy a lot of those vehicles. It’s kind of a chicken-and-egg thing with all the infrastructure that has to be out there that isn’t there yet. But there is definitely a race to the market and we’re engaged in that.”

DTNA has begun taking orders for its Class 8 eCascadia and Class 6 eM2 models for production in late 2022 in Portland, Oregon

“For sure, the interest is accelerating,” O’Leary said. “The curve has tilted upwards in the last two years in terms of what people were expecting at this point in time. I think that’s continuing. There’s just a lot of pressure out there whether it’s from the political side, the social side [or] just people interested in the technology.”

Daimler Truck posts modest recovery from COVID-impacted year-ago Q1

9 questions with Daimler Trucks North America CEO Roger Nielsen

Daimler Trucks gets new CEO with Nielsen’s retirement

Click for more FreightWaves articles by Alan Adler.

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