Why did Mack have financial hardships years ago while having high quality trucks?

[Jamaican Bulldog]

I have read on here under numerous  topics where people mention Mack having serious financial hardships during different periods such as the 60s and onwards.

However, with such high reputation for high quality, why did mack struggle financially during a period where their innovative products were so well regarded? Where they considerable more expensive than competitors? Did they miss certain market opportunities or failed in some ways to keep up in certain aspects of the market?

Years ago an old timer told me that Mack trucks were too good for their own good. Meaning than the trucks and the parts lasted so long people didn't replace them too often. I remember a factory rep telling me that they were built to last 30 yrs. Not sure if that had anything to do with the topic.

I am actually surprised that Mack didn't have a stronger foothold in more international markets like some of the European competitors did. Especially after their reputation after the 2 World Wars, and having very efficient engines during the oil crisis.

 

[mowerman]

I read a while back they had a big problem with mismanagement in the middle 60s...bob

[fxfymn]

This is my take on it.

Mack like many other old line manufacturing firms started having financial difficulties in the 1970's because of factors that were largely out of their control. The oil crisis stopped a lot of capital investment so truck sales slowed while at the same time massive inflation took hold along with very high interest rates. These factors made it tough for companies like Mack that used a business model of letting customers pay a relatively small down payment while the company carried the cost of building the truck.

The old model worked fine when the cost of borrowing money was stable and manufacturing costs could be reasonably forecast. When interest rates approached 20% and inflation ran to 10% companies could not raise prices fast enough to compensate, nor afford to borrow money to ride out the storm. My guess is that Paccar had enough money in the bank to ride it out while almost every other builder went out of business or was bought out by a competitor. 

3 hours ago, mowerman said:

I read a while back they had a big problem with mismanagement in the middle 60s...bob

That may be true, but the arrival of Mr. Hanson appeared to fix that. My personal belief is he just didn't have enough time to completely right the ship before outside factors took over. I think if he had the time to amass some cash they could have come out of the era as an owner of other firms, not a part of Signal Co.

[41chevy]

Also the Haywood, California plant had an employee / quality control problems with the "California" attitude of employees there. Similar to the problems Grumman had in Stuart Florida back in that time frame. People would go to lunch and not come back because of a good wave or good fishing in Stuart, same deal in Haywood from the line workers to engineering not returning or just not coming in.

Mack had a presence in Europe, South America and the Middle East, but the European makers caught up technologically wise, to be very competitive.

Edited December 15, 2017 by 41chevy

[hatcity]

1 hour ago, 41chevy said:

Also the Haywood, California plant had an employee / quality control problems with the "California" attitude of employees there. Similar to the problems Grumman had in Stuart Florida back in that time frame. People would go to lunch and not come back because of a good wave or good fishing in Stuart, same deal in Haywood from the line workers to engineering not returning or just not coming in.

Mack had a presence in Europe, South America and the Middle East, but the European makers caught up technologically wise, to be very competitive.

will let you know Sunday pm

[41chevy]

3 minutes ago, hatcity said:

will let you know Sunday pm

Boat or surf?  Paul

[hatcity]

31 minutes ago, 41chevy said:

Boat or surf?  Paul

BOAT!!! Sailfish and dolphin are in the area...maybe get some dinner

[david wild]

Dolphin ??? Haddock or Flounder that's fish, not Dolphin, Swordfish that's fish. grouper ????? 

[Jamaican Bulldog]

13 hours ago, fxfymn said:

This is my take on it.

Mack like many other old line manufacturing firms started having financial difficulties in the 1970's because of factors that were largely out of their control. The oil crisis stopped a lot of capital investment so truck sales slowed while at the same time massive inflation took hold along with very high interest rates. These factors made it tough for companies like Mack that used a business model of letting customers pay a relatively small down payment while the company carried the cost of building the truck.

The old model worked fine when the cost of borrowing money was stable and manufacturing costs could be reasonably forecast. When interest rates approached 20% and inflation ran to 10% companies could not raise prices fast enough to compensate, nor afford to borrow money to ride out the storm. My guess is that Paccar had enough money in the bank to ride it out while almost every other builder went out of business or was bought out by a competitor. 

This makes sense, but I also wonder too that while Mack built a great reputation of quality by designing and building their own truck and components, it may also have sapped capital and spread themselves thin. Most heavy truck makers designed and built the  cab and chassis but relied on suppliers for the powertrain components.

 

[hatcity]

12 hours ago, david wild said:

Dolphin ??? Haddock or Flounder that's fish, not Dolphin, Swordfish that's fish. grouper ????? 

Not Flipper dolphin-that's a mammal, these are fisheseses-known as Mahi mahi, or dorado

If we can find a good spot may grab a grouper

[fxfymn]

8 hours ago, Jamaican Bulldog said:

This makes sense, but I also wonder too that while Mack built a great reputation of quality by designing and building their own truck and components, it may also have sapped capital and spread themselves thin. Most heavy truck makers designed and built the  cab and chassis but relied on suppliers for the powertrain components.

The ironic thing is that all of the major builders have followed the Mack model by becoming vertically integrated with their own proprietary power trains.

The fact that Mack had their own power train manufacturing is probably the thing that saved the brand from passing on to posterity. Volvo needed and wanted that to do what every other builder has since done.

[david wild]

Mack for years was ahead of everyone in truck engineering, air to air, air ride cabs, and drive trains

[Timmyb]

On 15/12/2017 at 11:07 AM, Jamaican Bulldog said:

Years ago an old timer told me that Mack trucks were too good for their own good. Meaning than the trucks and the parts lasted so long people didn't replace them too often. I remember a factory rep telling me that they were built to last 30 yrs. 

 

Makes sense. I mean freightliner are having great success selling truck that last 5 years. 

[Jamaican Bulldog]

14 hours ago, fxfymn said:

The ironic thing is that all of the major builders have followed the Mack model by becoming vertically integrated with their own proprietary power trains.

The fact that Mack had their own power train manufacturing is probably the thing that saved the brand from passing on to posterity. Volvo needed and wanted that to do what every other builder has since done.

Yes, that is so true especially since modern components need to be able to 'electronically talk' with each other. It is not  easy to mix and match components like used to be. 

[Jamaican Bulldog]

19 hours ago, david wild said:

Mack for years was ahead of everyone in truck engineering, air to air, air ride cabs, and drive trains

Yes and I thought the 70s would have been a boom time for Mack especially with their technology hat allowed greater fuel efficiency.

[blackdog2]

Mid 80s they were shipping trucks with out tires to dealers and 5-th wheels.

[Jamaican Bulldog]

1 hour ago, blackdog2 said:

Mid 80s they were shipping trucks with out tires to dealers and 5-th wheels.

Wow. I did not realize it was that bad.

[david wild]

Yeah during the jimmy carter peanut days things got rough, 20% interest at the bank, yes sir them were the good old liberal days, not much different than today, but like today along came our savior,  lets hope we can get the job done and fix the mess.

[mackey58]

Kinda like the Reagan  years and his economic s poor guys get the shafts rich get richer

[mackey58]

Not going political on this Web site this is a site  about and for the greatest truck in the world 

[fxfymn]

On 12/15/2017 at 3:03 PM, 41chevy said:

Also the Haywood, California plant had an employee / quality control problems with the "California" attitude of employees there. Similar to the problems Grumman had in Stuart Florida back in that time frame. People would go to lunch and not come back because of a good wave or good fishing in Stuart, same deal in Haywood from the line workers to engineering not returning or just not coming in.

Mack had a presence in Europe, South America and the Middle East, but the European makers caught up technologically wise, to be very competitive.

I always think that it is pretty disingenuous to blame employees for failing to properly do their jobs when it should be up to management to make sure that happens. The "worker bees" who actually get stuff done do not set the organizational culture, management does.

When the coach thinks its OK for a team member to show up late for practice it doesn't take long for everyone to start showing up late. Assuming the stories are true, which I doubt, If you go to lunch and don't come back then you don't get the opportunity to do it again. The inmates should never be able to run the asylum and real world actions should have real world consequences.

And don't give me that crap about how the union would not let management do their jobs. That is just an excuse for a lazy manager who did not want to cross the "t's" and dot the "i's" to get the job done properly.

[james j neiweem]

According to a member of this site one of the reasons Mack Western left California was poor worker motivation and quality of work. Reason why Peterbilt left California also.

[41chevy]

7 hours ago, fxfymn said:

I always think that it is pretty disingenuous to blame employees for failing to properly do their jobs when it should be up to management to make sure that happens. The "worker bees" who actually get stuff done do not set the organizational culture, management does.

When the coach thinks its OK for a team member to show up late for practice it doesn't take long for everyone to start showing up late. Assuming the stories are true, which I doubt, If you go to lunch and don't come back then you don't get the opportunity to do it again. The inmates should never be able to run the asylum and real world actions should have real world consequences.

And don't give me that crap about how the union would not let management do their jobs. That is just an excuse for a lazy manager who did not want to cross the "t's" and dot the "i's" to get the job done properly.

You're right! I'm lying and made it all up. Grummans didn't move my father and us to Stuart Florida in 1965 for 1 1/2 years to undo the employee issues.

Haywood had a high turn over rate of employees fired for the lax attendance and work ethics. Grumman was not union and did fire or suspend those who took half days for recreation after the existing leadmen and foremen were replaced or demoted.Stuart in the early mid 60's also had racial issues at the facility too.  As for me giving you "crap" on union involvement, I MADE NO MENTION OF THAT OR EVEN HINTED AT THAT. SO DON'T BAIT.

[Maxidyne]

Lots of other factors involved- For example competitors like Daimler that was buying market share and Navistar that was desperate to generate cash flow. Thus they would ruthlessly underbid Mack and other competitors. Another factor was the huge changes in the market in the late 70s and 80s brought on by deregulation and the end of overall length regulations. In the 70s Mack had the most elegant solutions to fit a 45' trailer into a 55' overall length with the U model conventional and the F and Cruiseliner cabovers, with the MH on the way. Suddenly length didn't matter and regional carriers became nationwide carriers and wanted sleepers instead of day cabs. U model sales disappeared, and having spent millions to develop the MH it never sold well enough to justify those expenses. While Mack only had narrow box sleepers to offer, Freightliner and Paccar had conventionals with big sleepers ready to go, and Volvo put the Integral Sleeper White had developed into production. It wasn't 'til the late 80s that Mack caught up with the CH series and it's integral sleepers.

[HeavyGunner]

On December 17, 2017 at 2:49 PM, mackey58 said:

Kinda like the Reagan  years and his economic s poor guys get the shafts rich get richer

I was listening to the Dave Ramsey show recently and when he finds an interesting article he shares it on the show. It was a study done by a reputable financial publication (Forbes or the Wall Street journal I think) that showed 80% of the millionaires in the US are first time millionaires. That means it wasn't inherited or handed to them it means they did the work and saved their money. The only people in this country are screaming income inequality are rich democrats and that is the truth. Most people don't know how to save, they always have to have a new tv, new furniture, home remodel, new car etc etc and it's nearly always bought on credit which means you're too broke to buy it. Did you realize the US citizens are nearly a trillion dollars in car debt? Another  neat fact that Dave Ramsey put out on his show was the average car payment is about $485.00, so instead of the mentality of ill always have a car payment save cash buy a car within your means. If you did that and banked the $485/month into a good growth stock mutual fund it would grow (based on the average of the last 70 years or so) to $9.5 million yes million if you put that payment in that mutual fund every month for 30 years. To quote Dave "...even if I'm half wrong on this it's still five million dollars".  So people being the victim by claiming can't get ahead because everyone else  is (insert reason here) is going to keep them where??? In the poor house. I'm not perfect by a long shot but I do live within my means and do aspire to be one of those rich guys you claim gives everyone the shaft.