Daimler Trucks says it is facing enormous pressure in the supply chain

Supply chain turmoil continues to spread across the globe, and the head of the world’s largest truck maker has warned that a shortage of parts is slowing production of thousands of its vehicles.

Martin Daum, CEO of Daimler Truck, told CNBC Wednesday that the current supply chain stress is among the worst he’s seen in his more than 25-year career, creating major bottlenecks across the company’s portfolio of brands.

“We are facing enormous pressures on the supply chain,” said Dom, whose trucks are used in other vital industries such as logistics and construction.

“I would say it’s one of the worst years ever in my long trucking career as sometimes we have to touch a truck three or four times to add the missing parts,” he added.

The Mercedes-Benz truck maker said earlier this month that there were signs that the prolonged shortage of chips was easing. Microchips, or semiconductors, are a critical component of the modern auto industry, and supply of them has plummeted during the height of the Covid-19 pandemic and the resulting factory shutdowns.

But Dom said shortages in other parts also continue to slow production of thousands of trucks across its international network of factories.

“We have, in a couple of plants, more than 10,000 trucks where one or two parts have been lost and we search very hard in the world for those parts,” he said.

Supply chain disruptions are causing production backlogs at the world’s largest truck maker, Daimler Trucks.

Bloomberg | Getty Images

Inflationary pressures also weigh heavily on Daimler Truck production, with energy and raw material costs now much higher – with some price hikes easier than others.

“We are, at the moment, pushing these price increases on the raw materials side, so we can at least keep our margins in this business,” he said. The company is also negotiating a salary increase for employees.

However, the truck manufacturer, whose other brands include Freightliner, Western Star and Fuso, has noticed some bright spots. Dom said that in the United States alone she sees pent-up demand for about 200,000 trucks as it continues to keep pace with supply shortages through 2020 and 2021.

“This, in my opinion, makes me optimistic that we will see 2023 not so bad. Not so bad is a German expression because 2023 could be good,” he said.

Daimler Truck last month posted an 8% year-over-year increase in first-quarter sales, with group revenue increasing 17% over the same period.

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