Stream Audio "State of Super Lawn Trucks and Availability of Isuzu Chassis Units"
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As of 3-10-22
Background
Since 1998, Super Lawn Trucks has been building highly customized work trucks specifically designed for lawn and landscape contractors. We are a final stage body builder and a truck dealer who provides financing and delivery to the door of contractors nationwide. A number of our unique products are patented and cannot be found elsewhere.
We thought it would be a good idea to share an update on the availability of trucks, truck bodies and the process of acquisition of trucks for 2022. For reference, approximately 90% of the truck chassis units we use/build each year are on the low cab forward Isuzu chassis. So, our experience and comments are guided by our work with Isuzu Trucks of North America in most cases.
As of today, we buy/build/sell around 150 work trucks per year. Our typical inventory of unsold chassis units is around 30 units of Isuzu cab chassis units. This amounts to less than 60 days of inventory in process of assembly. The chassis units we have in inventory are ordered approximately 12 months in advance of our need.
Since early 2021, we have been warned that availability of the Isuzu cab chassis supply was going to get smaller and smaller. They knew that demand had surpassed their ability to build trucks. Part of this was because of a variety of supply chain issues from parts to assembly workers to the delivery drivers.
Further, the two primary competitors in the low cab forward space, Fuso and Hino, ceased truck deliveries in the USA. We estimate that removed approximately 5000 to 10,000 trucks per year from the USA marketplace. Isuzu became the only supplier of low cab forward trucks to the USA in 2021. Demand for Isuzu trucks skyrocketed.
To try to meet the new challenge, Isuzu changed to a policy of “allocation” based on prior year orders. Availability was restricted to about 75% of prior year orders for dealers and fleets.
At that time, we increased our orders of our most popular models by leveraging new relationships with a larger pool of dealer support partners. This allowed us to increase our 2021 order of inventory scheduled for delivery in 4th quarter of 2021 through early 2022.
By the end of 2021, our company had delivered our largest number of completed Super Lawn Trucks in our history.
To top off a great year in deliveries of completed trucks, we closed the year on Dec 31, 2021, with our largest backlog of confirmed orders in our history.
Unfortunately, the majority of orders for chassis units we placed in April 2021 have not been delivered as of today. Supply chain issues continue to delay delivery of gas powered and diesel-powered Isuzu chassis units.
We typically receive 10 to 15 Isuzu chassis units per month through our fleet allocation. In December of 2021, we received 5. In January, we received 3. In February, we received 4 units. In order for our company to survive, that is, generate enough income to cover our overhead, we must deliver a minimum of 10 units per month. We count on delivery of cab chassis units as much as you do. Further, we are confident the current supply chain issues will improve through the next 12 months or so.
Current Conditions
In January of 2022, we were only able to deliver 7 units. In February we delivered 8 units. Although March looks like we will be able to deliver enough units to cover overhead, we have now found ourselves dealing with supply issues for our body components and a number of accessories that enhance the Super Lawn Truck system.
Throughout 2020 and 2021 we had been changing from a just-in-time inventory management system to evaluating our supply chain partners and increasing our target inventory of parts and supplies to allow us to meet demand.
During the calendar year 2021, we faced massive cost increases in our supply chain.
To begin with, the average cost of the chassis units increased 10% in less than 12 months. As we expanded our dealer partner network to gain access to Isuzu inventory, we were unable to get the same level of fleet discounts that we have passed along to our customers for the past 24 years.
Shipping costs increased $1000 per truck meaning the average COST increase for chassis units went up $5000 to $8000 within 1 year. It did not matter how many units we were trying to buy nor how many units we had purchased in the past, our costs increased in a big way between the 2021 and 2022 year model changeover. Since the cab/chassis represents the largest portion of costs in the Super Lawn Truck package, this increased truck prices in a significant way.
Further, within our own supply chain of raw materials, we faced price increases of 300% on raw materials. For example, a sheet of checker plate steel went from $67 to $199. A sheet of plywood went from $29 to $89. Aluminum, steel and wood all increased around 300% within 12 months. To secure our workforce, our average wage increased 20% in 12 short months. Although we operate a very low overhead company, we were unable to adsorb these price increases.
We began to adjust prices on all trucks and components in October of 2021. The net result of price increases led to an average increase of approximately 20% per truck for the 2022 year model compared to early 2021 model year deliveries.
2022 Forward
In January of 2022, it became clear that promises for scheduled deliveries for the first quarter of 2022 (made by the chassis manufacturer) would not be kept. So, we got on the phones and called over 50 Isuzu dealerships across the USA trying to purchase additional Isuzu cab chassis units via the retail network. This effort got us quotes for 6 chassis units.
Price quotes we received from dealerships that actually had trucks in inventory, were quoted for MSRP to $13,000 over MSRP. Unfortunately, we were unable to get a quote for a chassis model unit that we typically use in a Super Lawn Truck build. Either the GVW was too low or the wheelbase was too short to support the required body packages we build.
We attended the National Truck Equipment Association annual meeting on March 8-10, 2022. We met with the leadership of Isuzu Trucks of America where we received an apology from Sean Skinner, President of Isuzu North America.
His words, “We’re sorry we have let you down on truck deliveries this past year. We know we had an opportunity to sell more trucks. But the fact is we built and delivered more trucks in a single year than any year in our history except one year, which was 2018. The supply chain issues are still impacting our ability to build trucks. We expect the availability issues to linger through 2022.”
To help keep the scale of the problem in perspective, Isuzu Trucks of North America built and delivered 23,000 trucks in calendar year 2021. They do not have the ability to instantly ramp-up production capacity to meet the potential supply shortages of 5,000-10,000 low cab forward trucks the market supply has been buying in past years.
Knowing this is the world we live in today, we acknowledge that we must adapt our operating system to survive the low/no inventory and inflation crisis.
Basically, Super Lawn Trucks can only exist if we have access to the chassis units built by Isuzu Trucks of North America. And, as we have outlined above, the demand for Isuzu chassis units has exceeded their ability to build trucks.
If our company had not been buying Isuzu trucks since 1998, we would not have access to any chassis units, period. They are not able to accept new customers at this time.
Here is our current plan to help supply our customers with the trucks they need to grow their business and support their customers at reasonable prices:
- We are asking our clients to think further into their future truck needs. Based on 2021 results and 2022 forecasts, we recommend ordering a minimum 6 months ahead of your need.
- We are asking our clients to consider substituting “available” or “in stock” units for their preferred chassis models for the next several months. This is especially important if your need for a truck is less than 6 months.
- We understand that truck dealers have fewer chassis units to sell each month. Therefore, they are forced to raise prices just to cover monthly overhead. We have asked our dealer network to treat us as kindly as possible through this time of limited inventory. But we have also explained that as inventory builds over the next few months, we will be returning to a competitive bid price quote system on chassis units. As of today, we purchase what we can, even if prices are higher than in the past.
- When you receive a written, personalized price quote from our company, the quote is good for 20 days. The price quote is good for 20 days AND, if accepted, we will hold that price until delivery of the truck. Even if it takes us 90 to 120 days to build your body package, the price quote is good.
- We encourage our new customers to check with their local Isuzu dealership and ask about chassis availability. If you can get access to a chassis, your dealer can drop ship to our plant and we will be happy to build the Super Lawn Truck body package and install it on the properly sized chassis package.
- We want to make sure all of our repeat clients understand that past year quotes and past year purchases must be updated BEFORE we build your next truck. We have always provided transparent and affordable prices for our trucks. But as this inflationary economy moves forward, we must adapt our pre-quote processes to prevent misunderstandings or surprises to price changes. We will provide written quotes good for 20 days for approval prior to building trucks.
- The SLT team is hard at work evaluating our supply chain to help keep costs under control. Further, we continue to invest in training our team to implement LEAN business practices throughout our manufacturing and administrative processes. The addition of advanced tooling, jigging and training processes will help us reduce cycle time as we move through 2022.
- In January of 2022 we began an expansion to our building facilities to accommodate an increase in body assembly. We expect this space to come online in the 3rd quarter of 2022.
- Our company continues to provide delivery to your door at a zero-mark-up price. In other words, our delivery service is priced to cover direct costs of labor, fuel and return trip travel costs. This service is NOT a profit center for our company.
- We encourage our clients to ask any questions you may have about our operations and pricing. We know that good communication is the foundation of long-term business relationships.
We appreciate your interest and past business with Super Lawn Trucks. We hope this summary report gives you some help and understanding about what we are doing to support our clients.
Tony Bass, Founder and President
866-923-0027
