Tatra chief executive describes last year as ‘disastrous’ for the truck manufacturing industry
Posted: February 24, 2010
By Philip Heijmans
Czech truck maker Tatra announced an estimated 2.6 billion Kč ($138 million) drop in sales for 2009 compared with the year before – a 45 percent decrease.
Tatra Chief Executive Ronald Adams told The Prague Post that 2009 was “disastrous” for truck makers. “The global financial crisis came quickly, and we had very little chance to prepare for it. It was a very painful crisis for the truck manufacturing industry,” he said.
Heavy truck sales in Europe were down 44 percent in 2009 according to a market analysis by auto interest group Verband der Automobilindustrie (VDA). New truck registrations dropped 55 percent in the Czech Republic for 2009 compared with 2008, according to PricewaterhouseCoopers, with domestic production down 60 percent and German production down 66 percent, the lowest in more than 30 years.
Analysts say the abysmal drop in sales last year was an industry standard among truck manufacturers.
“I think Tatra’s results are comparable with other truck producers,” said Cyrrus analyst Karel Potměšil. “The whole market was depressed due to economic decline, and all producers reported decreases in their sales or new orders by about one half during 2009.”
As a result, Tatra had to lay off almost 1,400 workers, bringing its work force down to 2,300 employees at its plant in Kopřivnice.
“The crisis most directly affected production workers because, without orders to build products, we have no work for them to do, and we cannot keep them around,” Adams said.
Last year, Tatra wrapped up the last 30 vehicles of a 588-truck deal with the Czech Army, which brought in a total of 2.7 billion Kč. Without further big state orders, Tatra suffered diminished sales. Potměšil believes the government did not do enough to provide subsidies to the troubled truck industry during the crisis.
“This segment wasn’t subsidized at all. There weren’t any programs like the car-scrapping subsidy,” Potměšil said. “Nor were there massive programs seen in Germany or other countries for the industry. … Truck producers were left to their own devices.”
Customer movement also slowed as trucks have longer life spans than passenger cars, and customers, including many fleet managers, simply postponed making purchases until the end of the recession, with European truck producer’s orders down 92 percent last year, according to Adams.
However, Adams believes Tatra has seen its worst days.
“The storm is not over, but the clouds are clearing, and we do see bright spots on the horizon,” he said. “Tatra operated at a net profit for December and January, and our backlog has stopped decreasing.”
Analysts also believe the market is beginning to see an upturn, although it will be a long road to recovery.
“Despite certain positive developments, I do not expect a recovery earlier than by the end of the year or in 2011,” said Jiří Zouhar, an automotive expert at PricewaterhouseCoopers.
For the time being, Tatra will continue to contract operations and costs on the level of orders and is considering divesting its daughter companies.
In the past month, Tatra has expanded its sales interests, tapping into the international market in order to find new buyers in the Russian, Azerbaijan and Australian markets, with Tatra’s Indian business remaining very strong. The company has also established a relationship with U.S. truck company Navistar Defense that could produce results later this year.
“We are also preparing to move into South America, Southeastern Asia, the Middle East and possibly China during 2010,” Adams said.
Philip Heijmans can be reached at
pheijmans@praguepost.com