Wabash National Corp.: No Longer Trailing

Commercial truck-trailer manufacturer boosts its market position by acquiring a leading competitor.

Wabash National Corp. has come a long way since its founding as a small startup in 1985. The Lafayette, Ind., truck-trailer manufacturer became the largest semi-trailer maker in North America after acquiring Anna, Ill.-based flatbed and drop-deck trailer manufacturer Transcraft Corp. in March for $71 million.

Prior to the buyout, Wabash National -- one of IndustryWeek's IW 50 Best Manufacturers for 2006 -- was already one of the largest commercial truck-trailer makers in the U.S. with 2005 sales ending at $1.2 billion.

The addition of Transcraft came after a successful 2005 during which Wabash National posted a 90.2% profit gain over the previous year and sold about 56,000 trailers. Wabash National CEO Bill Greubel hopes the addition of Transcraft will lead to further company growth.

"We are excited about the acquisition of Transcraft Corp.," said Greubel when the purchase was announced. "Transcraft, like Wabash National, offers innovative products under a reputable and quality name. This acquisition is part of our commitment to expand our customer base and grow our market leadership."

Transcraft posted 2005 sales of approximately $118 million and has manufacturing operations in Anna, Ill., and Mt. Sterling, Ky. Transcraft added approximately $2.7 million to the company's first-quarter sales. Even so, Wabash National's profits fell 76.8% during the first three months of fiscal 2006, which ended March 31. The company attributes the profit loss to higher raw-materials costs and increased delays in customer pickups.

Over the next two quarters, the company plans to increase production by approximately 20% to better manage its backlog of orders, said Greubel in an April 26 statement. Wabash National ended the quarter with a $610 million backlog of orders, including $42 million absorbed from the Transcraft deal.

Part of its planned production increase includes expanding its semi-automated Alpha line to three shifts. "We believe as our key initiatives are gaining traction, we have seen a bottom to our margin erosion and expect to see incremental improvement over the next several quarters," Greubel said in the quarterly statement.

Wabash National Corp.
At A Glance


Wabash National Corp.
Lafayette, Ind.
Primary Industry: Motor Vehicles
Number of employees: 4,000
2005 In Review
Revenue: $1.2 billion
Profit Margin: 9.15%
Sales Turnover: 2.21
Inventory Turnover: 10.65
Revenue Growth: 16.58%
Return On Assets: 67.50%
Return On Equity: 45.48%

During the first quarter, the company also withdrew from the domestic intermodal container market to focus on more profitable opportunities. The move resulted in a $1.1 million charge during the first quarter to write off related assets. Container sales have averaged less than 3.5% of production volume over the past three years and have been one of the company's lowest-margin products, according to a March 16 statement.

"It has become increasingly clear that corrugated steel boxes from China and Korea adequately satisfy customer requirements at prices significantly lower than our container offering, "Greubel said in the March statement. "As a result, we have decided to focus our efforts on more rewarding opportunities."

In other recent developments, the company said it has joined the American Trucking Association (ATA) in a driver-recruitment campaign. Wabash National initiated the partnership to help its customers find qualified truck drivers. ATA expects the driver-recruitment project to be underway by mid-spring. As part of the program, the partners will match funds for state trucking association driver-recruitment campaigns, a trucking-jobs Web site and other advertising materials that can be adapted by motor carriers to meet their individual needs.


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