It’s a big job... ...and Damian Smethurst has got to do it

THE NEW MAN AT THE TOP OF PACCAR AUSTRALIA, WHICH manufactures Kenworth and DAF trucks, has a clear view of where the company is going under his leadership.

It’s a direction the new managing director, Damian Smethurst, has formed during 25 years with the company in a variety of roles.

Speaking in the offices of New Zealand agent Southpac Trucks on his first visit as MD, Smethurst says upfront he will continue ramping up the investment in new plant and equipment to improve productivity, output and market share.

After all, it’s a direction he’s helped shape in his previous senior roles. Before his elevation to the top job he was general manager Paccar Parts for five years. Before that he was chief engineer and director of operations for Australia.

Holding the line means Paccar Australia continues its commitment to local manufacture. For 52 years it has been building Kenworth trucks in Australia, specifically so that it can configure them to `down under’ conditions.

It built its 70,000th Kenworth last year and recently built its 1000th DAF truck after beginning Australian production in 2018.

“Our strategic advantage has always been our local engineering and manufacturing capability,” says Smethurst.

“It’s low volume compared to other international markets but [we are building] what our markets need and we see New Zealand as a key market for that as well, not just Australia.”

One of the traditional bonuses of buying a Kenworth had been the practice of inviting new owners to tour the factory to see their truck, or another just like it, being built, sometimes picking it up at the same time. Some owners who had toured the factory before would pass the privilege on to the new truck’s driver.

Despite having a lengthy ‘to do’ list already, Smethurst says the company is getting factory tours going again after Covid had called a halt. He’s well aware of the loyalty that seeing trucks being built on home turf inspires in people.

Demand, though, isn’t the big issue at the moment; Paccar’s challenge is satisfying demand, which shot up during Covid in response to government stimulus initiatives such as instant asset write-offs.

“When I first started, we were building six trucks a day, 25 years ago. We did reach 20 trucks a day for a time in 2007, for very brief period of time.”

Fluctuations in demand have always been part of the picture. It was down to three or four or five trucks a day after the global financial crisis.

“We just haven’t seen this level of demand – certainly in my time. In this recent spike we’ve cycling back up to the 18-20 truck-aday mark but our order-taking is much higher than that. We could probably build 50 trucks a day and still have a bit of a waiting list.

“That’s certainly unrealistic in terms of the investment needed to reach those levels but we think we’re capable of getting up to 20 trucks a shift in the next five years. We’re running two shifts, a day shift and an afternoon shift – if we can achieve that, that will give us some level of capability and capacity. We’ll need to continue to invest in that space.”

Ramping up production per shift would also give flexibility in that the company could scale down production in the second shift, if and when it needed to.

“It’s really just a matter of shifting capacity from afternoon shift to the day shift so I’m not concerned we’re over capitalising in that space.

“We’ve tried to build in capability and I think we have great capability we just haven’t been able to achieve that productivity yet. That’s something given my operations background I think I can help them with in the short term - to get our build rate achieving a more consistent rate and hopefully a higher rate, to get through the backlog of orders. We’ve got a lot of orders to punch through in the next 12-18 months.”

Smethurst plans to continue to build on the $55 million investment package his predecessor, Andrew Hadjikakou, commenced to address the growing backlog of orders.

A 10,000sqm parts warehouse supplying the factory has been added and another 5000sqm is planned, increasing its size by 50%.

Smethurst managed the parts business through the Covid period when the world learned the downside to `just in time’ manufacturing.

“The more reliable and available your aftermarket parts are the more confidence and trust your customers have so that’s really helped us, especially through the Covid period. When things were really hard to come by we doubled down on our inventory to try to maintain a level of availability. That helped our customers keep their trucks on the road and so I think we served our customers well during that period. Yeah, we had shortages but I think we were able to maintain our availability much better than the competition.”

Smethurst now has a wider brief but satisfying customers still comes down to product availability and quality. Managing the logistics to deliver that remains a challenge.

A recent development provides a neat solution to a big problem. The cabs for 410s, 310s, 650s are manufactured in America, put in containers and shipped across the Pacific.

“You are shipping a whole lot air doing it that way, so we’ve just finished installing a robotic cell that will build those cabs for us in the factory in Bayswater.

“We’ll still get the stamped panels but they can be nested and packed much more densely in containers, then we can build those cabs at a rate we need.

“Rather than having to forecast three, six months in advance, we can control the numbers of cabs in our build rate a little bit better so it will give us a win-win. It will reduce some of our logistical costs and give us more flexibility.”

Paccar has also installed new equipment for building the chassis and is adding more robotics to the painting process.

“We’ve got two paint lines so we want to duplicate that robotic capability on the other side of the line so we can build more cabs and more trucks. Quality is a lot better with the robotic paint –there’s a consistency of application. We can design that in through the software.

“We’re also putting in a new wheel aligner and a new dyno, and new touch-up paint booths so we’ve built a new test centre. We did have a lot of those offline operations squeezed into a shed and now we’ve got them in a dedicated building, so that’s really helping the flow and increasing productivity.”

Smethurst’s breadth of experience across the business can only help him to find productivity gains.

“I started my career in operations at the factory, running around as a manufacturing engineer. I never thought I’d be sitting here in this role but it’s a pretty good opportunity.

“I love the local Aussie manufacturing capability that we have and I’m passionate about that.”

As an engineer Smethurst helped develop many of the trucks we see on the road today.

“I guess I worked closely through my engineering phase on the 610, the 610 SAR and the 410, in our product planning team.

“I came into the engineering role at the tail end of the K200 so I didn’t really get a lot of that – other than the plaudits at the end. I was the chief engineer so I had an overview of the project as a whole rather than specific design features but it involved working with all the departments, local and overseas, and dealers and customers and field trials, engine programmes so those ones were probably the highlights.”

If other manufacturers think the Australian market is too small to cater for specifically, New Zealand can consider itself lucky that Paccar Australia and its Kenworth agent here, Southpac Trucks, are responsive to the even smaller New Zealand market’s needs.

“Your trucks and applications are quite different,” says Smethurst. “Your twin-steer applications are through the roof, K200, 610 and 659s – I guess that was another engineering project I was involved in in engineering was in designing the twin steer 659.

“I’m pretty proud of that. It’s done really well in this marketplace. I’ve seen plenty of them around.

“The 360 is the smaller one that you don’t tend to see too many of in New Zealand but that’s been a huge success in Australia. They are probably the ones I worked on the most.”

Smethurst says the new K220 has been well received and Paccar is in the process of ramping up production from the current one truck a day. They are still building the K200 but are not taking any more orders.

While the K220 features more of the driver aids and comforts typical of Euro trucks, Smethurst doesn’t think Paccar is moving too far from the robust Kenworth qualities that buyers appreciate.

“There are traditional guys who don’t want any change and then there’s more progressive people who like some of the creature comforts that we all enjoy in the cars that we drive,” he says.

“There’s always a struggle and a debate about how far do we go with some of these product designs, but the real change is inside around the driver’s seat.”

He says when the 610 was released, customers asked when that technology was going to come to the K2.

“That pull was coming strongly from customers. We’ve also pulled the roof profile forward so you can stand up in between the seats without hitting your head on the vista windows.

“We didn’t want people cricking their necks and ultimately the vista windows have no real function other than exterior form. A lot of people just pull curtains over them and never use them.

“Some of them leak or have other issues as well so I guess we followed through again on the 610 styling design where we removed them from that range. You can paint them on if you really want them.”

The hot topic among customers at the moment is pricing.

“It’s getting harder to continue to compete. We don’t set our pricing on what the competition are doing. We set our price on what our inputs are and perhaps we’ve tried to not pass on some cost increases, trying to protect and absorb a little longer than we perhaps should have done.

“Unfortunately, it got to a point where we did need to pass on some cost increases and I fully understand and appreciate that has impacted a lot of our customers. It’s a topic of most of the conversations we have with customers and we’re not shying away from it. We’re here to have those conversations in person.”

Smethurst says the recent introduction of the K220, and the fact DAF trucks are already running Euro 6 engines ahead of Euro 6 compliance, means Paccar Australia is in a comfortable position on the model front. He believes new product will help to grow the DAF business.

“The new XG cab platform will transition through the whole DAF range but that’s going to be a three or four year journey. We’re working with DAF to make sure our specs standards are met before we make that transition.”

Smethurst noted that while Paccar Australia supports Southpac with DAF parts as required and they work together on projects, Southpac deals with DAF in the Netherlands and orders directly from there.

“They have for a long time so I don’t see that changing in the short term,” Smethurst says.

While Paccar showed an electric DAF LF at the Brisbane Truck Show it’s not in the company’s short term plans for this part of the world.

The same applies to the hydrogen fuel cell Kenworth T680 shown in Brisbane which features Toyota-developed fuel cell technology.

“We really just brought both of those products over to Australia to begin the journey to learn to understand what their capabilities are, what their capabilities aren’t.

“Those two are still very much R&D products. The LF might do a little bit of work to test range, capacity, drive – those sorts of things. I don’t see them being available in the Australian market in the foreseeable future.

“The fuel cell truck is again something we’re learning a little bit about – what it means to run hydrogen, what infrastructure requirements might need to be. It’s raising more questions than answers at this point in time but I guess having those products physically in the country helps us to frame those questions.”

The current Paccar line-up is pretty stable according to Smethurst.

“The product has evolved a lot in my 25 years and in the 25 years before me and it’ll continue to evolve, so it’s still a very, very viable operation doing what we do.

“We’ve certainly had cost pressures like everyone else over the last few years which is challenging everyone through the supply chains but we’ll work through that.”

“At some point in time we might well update the T6 and T4 but right now all our focus is on trying to manufacture the current orders as efficiency as we can. That is really the primary objective for the next 12-18 months.” T&D

What The Politicians Think About Trucking

THE NEW ZEALAND TRUCKING INDUSTRY FACES many challenges – many of them influenced by Government policy.

Apart from the many problems currently created by the COVID-19 pandemic, there’s the ongoing driver shortage, the worsening state of the nation’s roading network and looming emissions reduction legislation…

So, who among our political parties offers any salvation for the industry in these situations?

To have some insight into what politicians are thinking about issues impacting the road transport industry,

NZ Truck & Driver has offered each of the major political parties the opportunity to voice their views on trucking matters each month.

This month we get to hear from the ACT and National party transport spokespeople with the election now only months away. T&D