Paccar Inc.: Driving Innovation Through Tightening Regulations

June 27, 2007
Proactive leadership strategy is key to sustainable manufacturing growth for global truck manufacturer.

There's an old saying about problem solving that the sooner you get out into the road, the more time you have to dodge traffic and get across safely. In these days of carbon caps and energy bills, this well-traveled cliche couldn't be more true for any company, and all the more so in the case of a commercial truck manufacturer like Bellevue, Wash.-based Paccar, Inc.

With manufacturing facilities for its three leading brands (Kenworth, Peterbilt and DAF) stretching across three continents and a distribution network that reaches 100 countries in every corner of the globe, this 2007 IndustryWeek 50 Best Manufacturing Company is an integral part of the burgeoning global supply chain, and therefore subject to the highly balkanized and ever-intensifying network of environmental regulations that, at least in the case of this progressive-thinking manufacturer, dictate a proactive approach to compliance.

As the company's straightforward environmental policy points out, "It is more environmentally prudent and cost effective to identify a problem before it occurs than to correct or clean it up afterwards."

By focusing on both ecological and economic sustainability, Paccar is building a track record of sustainable success, with record earnings of $365.6 million for the first quarter of 2007 compared to $342 million in the first quarter of 2006. The commercial vehicle producer has paid a dividend to shareholders every year since 1941, and has experienced a profit growth of more than 600% in the last decade alone.

Over the past decade, Paccar has taken steps to reduce energy use and the use of toxic materials and other pollutants wherever possible at its own manufacturing facilities. The company also subsidizes "clean commuting" initiatives for employees and hosts competitions for its design departments to constantly offer new and more efficient products to its worldwide customer base. These designers even have an internally generated tool called EcoDesign at their disposal, which provides information on optimizing recyclability of products and materials, minimizing the environmental impact of production and performing a sophisticated product lifecycle analysis.

Paccar's design innovations recently earned the truck manufacturer recognition by the Environmental Protection Agency's SmartWay program for improved aerodynamic applications, including sophisticated roof and fuel tank side fairings, bumpers and mirrors, as well as increased engine efficiency.

Paccar Inc.
At A Glance

Paccar Inc.
Bellevue, Wash.
Primary Industry: Motor Vehicles
Number of Employees: 21,000
2006 In Review
Revenue: $16.4 billion
Profit Margin: 9.09%
Sales Turnover: 1.02
Inventory Turnover: 22.2
Revenue Growth: 17.05%
Return On Assets: 10.91%
Return On Equity: 38.35%

Paccar also recently announced that all three of its major brands will begin production of medium-duty hybrid trucks in 2008. These new vehicles will offer up to 30% fuel economy improvements, particularly in urban and utility applications. These types of initiatives leave Paccar in a positive competitive position both overseas and at home, especially with more stringent fuel economy standards legislation becoming increasingly likely in the U.S. in the near term.

Now that it has invested the necessary resources to get ahead, Paccar no doubt plans to stay out in front of the competition where it can see the open road to further sustainable success.

After all, as any big rig manufacturer can tell you, it's much better to be driving the truck than dodging it.

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About the Author

Brad Kenney | Chief Marketing Officer

Brad Kenney is the former Technology Editor of IndustryWeek and now serves as director of the mobile/social platforms practice at R/GA, a global marketing/advertising firm in New York City.

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