Weak North American truck market
The low demand for heavy-duty trucks experienced in the second half of 2007 continued in the first half of 2008, driven by ongoing weakness in the U.S. economy and a continuing decline in housing construction, and it was then exacerbated by an unprecedented escalation in fuel prices.
An anticipated start to a turnaround in the second half of the year failed to materialize as the U.S. economy remained sluggish and then grew markedly weaker with the onset of the global credit and liquidity crisis. With the existing population of trucks quite old by historical standards, there is pent-up replacement demand in the market.
After several years of steady growth, Mack’s international business volumes were slightly lower in 2008 primarily due to challenges experienced in two key markets - Venezuela and Australia. Mack export business outside these two countries increased approximately 37%. But there is a degree of uncertainty moving forward with the impact of the credit crunch being experienced around the world.
An increased focus on government and military business resulted in a series of contracts with the U.S. Army totaling approximately SEK 300 M over the next three years.
The negotiations on a new agreement with the United Auto Workers that were launched in the third quarter of 2007 continued through the end of the year.