Rush Enterprises CEO Rusty Rush and COO Mike McRoberts respond to questions.
Photo: Canva/Rush Enterprises/HDT Illustration
Predictive maintenance driven by artificial intelligence and growth in mobile service and maintenance are key trends identified by Rush Enterprises executives in a recent interview. Other hot technology trends, they said, are going to take longer to develop.
Rush Enterprises Chairman, CEO, and President Rusty Rush and COO Mike McRoberts fielded questions from trucking industry media and provided their insights on the market outlook, trends, technicians, electrification, and more in an interview with reporters attending the annual Rush Enterprise Tech Skills Rodeo.
The event awarded more than $310,000 in cash and prizes to the winners. More than 3,100 Rush employees had taken a qualifying test in their respective areas of expertise, but only 250 produced the top scores, thereby earning the chance to compete at the event last week in San Antonio, Texas.
The competition is for more than just Rush’s service techs. The top Rush collision center technicians, truck sales reps, aftermarket sales reps, and parts reps from across the country were challenged in their areas of specialization.
The following interview has been edited for brevity and clarity.
Truck Orders and the Freight Recession
Question: Do you think the truck order backlog is playing a role in sales remaining pretty strong at this moment? Is there any concern that we may catch up on the backlogs and see a decline in sales?
Rush: The backlog has already shrunk way down. Even though people have been taking orders, the first quarter I think is full right now. Remember, when someone buys, say, 500 trucks, it’s spread-out delivery. So, we were still selling into the first quarter a week and a half ago.
If you go back to the last two years’ allocation, I don’t believe there’s true allocation out there right now. There is, but there isn’t. It’s not like there’s a long wait. Most OEMs, other than large deals, have tried just to price through the first six months of the year. I believe we’re going to have a little tougher summer. I mean, I’m baffled a little by what happened this last year. In my mind, we’ve been in a freight recession for 18 months.
We understand supply shortages, etc. I would have thought we would have slowed down sooner and wouldn’t have sold as many trucks as we sold. And that’s one of the big problems we are having. There’s an oversupply. Some of the smaller carriers and such are getting weeded out.
McRoberts: I do think you’ll see some smaller carrier fallout into 2024. In the smaller carriers, the interest rates, the used truck pricing, they haven’t fully been impacted. There’s going to be a lag between the Feds’ activity and what’s going to happen in the market.
Rusty Rush jokes with former NASCAR driver Tony Stewart during the awards ceremony.
Trends and Challenges in the Trucking Industry
Question: Over the next year, and also the next five years, what trends and challenges do you see for the industry?
McRoberts: Probably the one thing I don’t have a good feel for is the age of the fleets. If you look at the larger fleets, that run around 18,000 to 20,000 trucks, whether it’s a Waste Management or a Ryder or a Penske, they’ll tell you there’s still a little bit of age there.
As far as trends, we’ve done a pretty good job at growing our technicians. I think you’ll see a greater mobile [maintenance] trend. I think you’ll continue to see, I won’t say a flight to mobile, but (focus) on customer experience and customer service. We’ll continue to grow on the mobile side of the business.
No, I don’t think it will displace what’s going on with the on-premise stuff, but we’ve got a very aggressive plan to be 1,000 trucks four years from now. This year, we’ve added almost 100 mobile techs.
And this year, we’ve had a pretty good growth. We’ve grown our techs by 220 something this year, about 8%, which is a pretty good year. I don’t see that going away. More mobile [service] and the demand for techs will still be high.
As far as electrification and electric vehicles, I’m not the most read on the subject. I’m probably more skeptical than everybody else. We’ll see what happens in 2027. I don’t think it’s going to be as rapid of an adoption as people may think. And if we did, it’s going to just drive all kinds of economic craziness.
Autonomy was the big, big deal here the last year or two. You’re still going to see autonomous, but the rate of investment is gone, it’s just going to be a little bit slower on that on that. Autonomy will continue to evolve. It’s not going to be at the rate that kind of once was, and the days of a [true] driverless truck is not going to happen in our lifetimes.
Rush: But when it comes to electrification, we got a grid to fix, folks. We don’t even have a grid or the infrastructure, while they’re electrifying all the automobiles at the same time. It doesn’t make a lot of sense to me. And, you know, the dollars just don’t play out. You can’t subsidize everything forever. Eventually, it has to stand on its own two feet.
Question: If electrification isn’t exactly the speediest thing that we’re looking to be doing, is there any focus that you want to have on any other kind of technology?
Rush: We believe that natural gas will have a place in truckload for the next decade. I can see it getting 7% or 8% of the market, somewhere in that range. And as folks have to green up some, what we’ve got works. People say if you go RNG there’s a negative carbon footprint. We invested in that with our clean fuel technologies.
I don’t see hydrogen or electric taking truckload.
Question: You mentioned that you don’t think anyone really does predictive maintenance all that well yet. What do you think it’ll take to do that?
McRoberts: As the engine spits out a barcode, some companies have done a nice job at putting a hierarchy and prioritizing fault codes to actionable fault codes. That space is evolving pretty fast, and they’re able to discern what needs to come in now, what can finish the day, and you’ll get the data that will tell you, “Hey, instead of the catastrophic failure you’re about to have, let’s do this, we’ve seen it on a bunch of other trucks.” We’re playing in that space, we’re pretty excited about it.
And you’ll continue to see AI enter into that deal. [Artificial intelligence] is kind of the big deal, and we’re ready, the industry is ready to embrace that, and on multiple fronts.
Question: When you make decisions, as far as your business or any business in this industry, how do you decide what trends you’ll chase?
Rush: At the end of the day, I have got to be able to get a return out of it. That’s one of the things we struggle with when you’re talking about connectivity. How do you get the returns you need? We’re going to have to get that through our customers bringing more work to us by, driving and predictive stuff, because you’re cutting costs for people.
Autonomy wasn’t us. I’m not a manufacturer; that’s going to be driven by the OEM and the manufacturers. Ours is going to be more customer-touch related. That’s what we chase. The manufacturers are going to drive technology, whether it’s electrical, or it’s hydrogen, or whatever. We’re not going to have a lot to do with that.
We are that conduit to that customer to be able to communicate and drive efficiency. I use that word a lot. Whether it’s through changing technologies, whether it’s through all the things we’ve been talking about here. You know, everybody talks about time, right? It’s the same word, everybody uses it. I’m going to say it four different ways from Sunday, but it’s the same thing. But truly, that’s what it’s about.
McRoberts: There’s stuff that just worked for us. Mobile services, a perfect one. We can compete in the E-commerce space, we can integrate with our customers directly and save them lots of time and efficiency, and really make the customer stick with us with the integrations. Then there’s just stuff we’re just not going to play that is too cost-prohibitive, too emerging.
Technician Recruiting and Retention
Question: You’re proud of your people. What characteristics and what traits make a great technician for you. What do they need to bring to the role?
McRoberts: I would say first of all, it is a commitment. Believe it or not, some people really aren’t committed. A good portion of our turnover is people leaving the industry. So that commitment is a big part of it. It manifests itself in terms of just the desire to learn. So, I would say commitment, desire to learn, capability, and work ethic are probably the big, big things we’re looking for there. There’s not one single characteristic that we’re looking for, but we’re not just looking for warm bodies either.
Rush: It’s getting them to stay. Once you get past Level 2 technician, our turnover rate goes way down. The perceived notion of what it is to work in a shop, it’s not the same as it was years ago. It’s not a glamorous job, but it’s a damn good job and pays really good if you’re good at this.
McRoberts: And you’ve got to be a little bit of a self-starter in our business. If you are just looking for an hourly job, this isn’t really the organization. We probably have to get a lot better at discerning who just wants a paycheck and who wants to grow pay, grow responsibilities. Career-wise there’s an unlimited amount of career opportunities that are there, so that self-starting piece is probably as big as any of the ones I’ve mentioned.
A Rush Truck Centers technician competes in the annual Skills Rodeo.
Question: What is the coming year looking like for mergers and acquisitions, with Rush and in general?
Rush: Well, typically you see an acceleration in M&A when you’ve got a downturn. For right now, we’re doing some bunt singles. There’s not a big acquisition out there. Last Monday we closed on a Ford store in Chicago. I’ve got one or two others, but I can’t talk about them because I haven’t done them. They’re not big deals, they are small. But they are important.
The difficult piece is when you’re the largest [dealer group] for Peterbilt, International, Hino, Isuzu, and you’ve got 10 Ford dealerships, it gets harder to be the largest for everybody. We’re not going to be able to buy Freightliner deals and Volvo deals, so we’re pretty limited. And we’re 30% of Peterbilt’s market.
We’ve got some opportunities on the Navistar side still, in areas that we’re at, but they’re not really the large opportunities.
It takes a willing seller, not just a willing buyer. So, we’re always wide-open listening.
We would love to find congruent industries that still revolve around what I consider the core expertise of our organization, and we’re looking at those types of opportunities.
McRoberts: I know we still want to consolidate a little bit, so there’s that piece of it. A couple of them (dealerships) have proven that large, well-capitalized dealers are way better than a bunch of undercapitalized small dealers who are taking business and driving down margins.
Credit: Source link
