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Boost in pickup truck sales hints of economic rebound

Sales of large trucks and cargo vans used by construction firms, plumbers and other small-business tradespeople climb as those companies see demand rise.

January 20, 2011|By Jerry Hirsch, Los Angeles Times
  • Keith Hoffman, foreman for Sunwest Air Conditioning, with one of two new trucks purchased recently by the company.
Keith Hoffman, foreman for Sunwest Air Conditioning, with one of two new… (Lawrence K. Ho / Los Angeles…)

In a sign of economic recovery, sales of large pickup trucks and cargo vans — the types of vehicles used by construction companies and small businesses — are at their highest level in more than two years.

The economy has improved to the point where small-business owner Mark Dalessi of Sunwest Air Conditioning in Costa Mesa felt comfortable enough to spend nearly $50,000 on two new Chevrolet Silverado trucks.

For much of the last two years, Dalessi said, he "cut back on all unnecessary expenses." If he had a problem with one of his nine trucks, "I would Band-Aid it."

With business improving and one truck passing the 250,000-mile mark, he decided in late November to replace one — and wound up buying another in December.

Other small-business owners are also getting back into the truck market.

Automakers sold nearly 411,000 large pickup trucks and cargo vans in the last quarter of 2010, up 24% from the same period in 2009, according to auto information company Edmunds.com. It was the best showing since the industry sold more than 491,000 such vehicles in the third quarter of 2008.

Truck body companies say they are also seeing a pickup in orders for custom boxes and beds built for trucks used by plumbers, electricians and those in other trades.

At one point during the recession, All-Pro Plumbing Corp. of Ontario had cut the number of trucks it would send out each day to 24 from 30, said Anthony Pouliot, general manager of the residential and commercial plumbing service company.

"During the last quarter our business got back to close to what we were doing in 2007," Pouliot said.

That gave the company confidence to ramp up its fleet. It recently spent $200,000 on four new trucks and custom boxes that sit on the back of the vehicles and house plumbing tools and supplies.

Sales of trucks and service vehicles to small businesses is an important marker for the economy, said Ken Goldstein, economist at the Conference Board, a business trade group.

"This confirms what's going on in the economy," he said. "The economy had to pick up enough so that these plumbers and electricians had enough business coming in to put out this type of money to replace vehicles."

The vehicles, which typically have custom boxes special to particular trades, are among the largest expenditures these companies make.

Rising sales are helping create jobs at custom body shops.

Harbor Truck Bodies Inc. of Brea is hiring 10 additional workers in sales and its factory operations, which will boost the company's payroll to 50, said Ken Lindt, president of the truck body builder.

Although business is still far below the boom years of 2006 and 2007, when the company had 140 employees, "we have seen some strong upward movement," he said.

At first, Lindt tried to meet the demand by working his crews overtime — something the employees like because they can use the extra income. "But we couldn't stay ahead of demand, and even with the extra workers we will still have some overtime," Lindt said.

In meetings this week, Royal Truck Body in Paramount decided to add six positions in sales and engineering and another six shop workers, said Dudley De Zonia, the company's president.

That would bring employment to 60 workers, a 25% increase but still far below the hundreds of people the business once employed, he said.

"For the last three months we have seen a clear increase in work truck sales in California," De Zonia said. "There is a lot more activity and more optimism."

The business comes from both increased confidence among plumbers, electricians and other trades and from the need by these businesses to replace aging vehicles — sales that were put off during the recession, he said.

General Motors Co. said sales of its Chevrolet brand vehicles have increased for three consecutive quarters, and rose 54% in December.

Other businesses also are benefiting.

Dalessi's confidence in the economy extended beyond buying new vehicles. He paid off his line of credit and spent $4,000 on a new telephone system for his company.

"Last year was better than I expected, but I didn't know if it would last, so I didn't spend a lot of money until the end of the year," he said. "And now 2011 looks like it will be a good year for me."

Although sales of vehicles used by tradespeople and small businesses were stronger than those for the rest of the auto industry in recent months, some of the gains are the result of how low the sector fell during the recession rather than an indicator of a rapidly expanding economy, said George Pipas, sales analyst at Ford Motor Co.

"This segment was so beaten down in 2009. Businesses could not get credit," Pipas said. "People were scared we were headed into another Depression and they stopped spending."

GM officials say the gains signal an economic rebound.

"With the continuing improvement in consumer spending, and improving profitability of these businesses, we're beginning to see a significant influx of small-business buyers to Chevrolet showrooms," said Don Johnson, vice president of U.S. sales operations at GM.

Although Chevrolet and Ford currently dominate the truck and cargo van category, other automakers are expecting growth. This week Nissan North America Inc. launched production of its NV commercial van — its first for the U.S. market — at its Canton, Miss., factory where it also produces a large pickup truck. Nissan spend $118 million expanding the factory.

De Zonia of Royal Truck Body said he hopes business continues to build.

Rising pickup sales are often seen as a sign of a rebounding economy, De Zonia said. "Things are coming back little by little."

jerry.hirsch@latimes.com

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