How Freightliner Put The Pedal To The Metal

It seemed the oddest of couples: Mercedes-Benz, known for luxury cars, and Freightliner, a Portland (Ore.) maker of heavy-duty trucks. When Mercedes parent Daimler Benz bought Freightliner for $260 million in 1981, the U.S. company held only 9% of America's big-rig market and ranked seventh of eight manufacturers.

Today, Freightliner Corp. has driven to the top of the market. Its revenues, $2.25 billion last year, are expected to jump 31% this year. That's part of a broader industry trend. Heavy-truck sales are up 36% in 1993. Freightliner has added second and third shifts at its four plants in the U.S. and Canada. And in July, CEO James L. Hebe announced plans to expand capacity 25%, to 60,000 units, by late 1995.

GRUDGING RESPECT. Other makers of heavy trucks grumble that the company used its German parent's deep pockets to buy market share during the recession. But Freightliner has won grudging respect, too. "They're often the first to introduce new components, like new axles and brake systems," says Neil A. Springer, formerly a senior executive at truckmaker Navistar International Inc.

Hebe, who joined Freightliner from rival Kenworth in 1989, gets much of the credit. Starting as head of sales and marketing, he aggressively courted the biggest and fastest-growing trucking companies. During the recession, orders were few and discounting was rampant. But Freightliner--which had decided to aim for the premium end of the market with rigs costing $60,000 or more--picked up share. "At a time when a lot of companies were maintaining the status quo, Freightliner introduced significant product improvements," explains William F. Riley III, executive vice-president of Swift Transportation Co. in Phoenix, which has bought more than 2,000 Freightliner trucks since 1990.

What attracted Swift most was a popular Freightliner design: a unit combining a cab and a two-bunk sleeper, with a raised roof for extra headroom. Freightliner was the first to make electronically controlled engines and antilock brakes standard. And it claims to have superior aerodynamics because of its access to Mercedes-Benz's full-scale wind tunnel.

SEMI SIDELINE. To lure new customers, Freightliner offered to accept trade-ins, and by 1991 it had become the largest seller of used heavy-duty trucks. The company also shortened delivery times, cut costs, restructured its dealer network, and introduced computer software to help dealers and fleet owners with parts cataloging, repair diagnosis, and specifications when they order a truck.

Freightliner's market lead--a 23% share--is thin: Navistar and Paccar have more than 21% each. Breaking away from the pack will be tough--as will finding new markets. In medium-duty trucks--$25,000 to $40,000--Hebe is aiming for 10% market share, up from 2% now. Since Navistar, General Motors, and Ford own 90% of that market, cracking the big leagues could take more than a turbocharged diesel engine. Then again, the Portland company has surprised the industry before.

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