Freightliner to suppliers: Cut costs, improve quality

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Freightliner’s Class 8 factories are preparing for a 40 percent to 50 percent decrease in output in 2007, Roger Nielsen, chief operating officer of Freightliner LLC, told attendees at the recent 15th annual Heavy Duty Manufacturers Association breakfast. That anticipated drop will come on the heels of two banner years in North American Class 8 truck sales: 310,000 trucks sold in 2005 and a projected 315,000 sold in 2006.

Those record sales have been prompted by a strong economy and customers’ desire to avoid pricey 2007 low-emissions engines, which Freightliner expects will run between $7,000 and $10,000 for heavy-duty models. But as long as the economy continues moderate growth and fuel prices don’t spike to post-Katrina levels, “we think by 2008 normal market conditions will prevail,” Nielsen said.

Preparation for meeting the stringent 2007 emissions regulations will consume about half of Freightliner’s engineering resources through 2006, so the company must partner only with suppliers whose products bring value to customers, Nielsen said. To that end, Nielsen announced that Freightliner will require all its suppliers to meet Six Sigma standards while offering “best in world” component prices.

“We are looking for a 3 percent annual cost reduction target,” Nielsen told the mostly supplier audience. Partners should “identify solutions and innovations that will help us achieve this goal,” Nielsen said. In turn, Freightliner suppliers “can expect to partner with the largest commercial vehicle supplier in NAFTA,” he said. “You will grow profitably with us.”