Market Overview

Kenworth And Chillicothe Proving That American Manufacturing Is Alive And Well

Kenworth And Chillicothe Proving That American Manufacturing Is Alive And Well



Chillicothe, Ohio, is the 76th-largest city in Ohio, and had just 21,901 residents in 2010, according to the U.S. Census Bureau. Yet, the city that sits approximately 45 miles south of Columbus along the Scioto River has a unique history.

The city was both the first, and third, capital of Ohio. Its name comes from the Shawnee word Chala·ka·tha (Chillicothe in English), meaning "principal town," because it was the chief settlement of the Shawnee people. Native American history in the region reportedly dates back to 200 B.C.

The city is also important to the trucking world. For the past 45 years, the community has been home to Kenworth Truck Company's assembly plant. The first Kenworth produced at the plant rolled off the assembly line in March 1974.

During its 40th anniversary celebration in 2014, then-plant manager Judy McTigue noted that 3,000 customers annually visited the plant.

"Our dedicated, well-trained employees take a great deal of pride in each and every high-quality Kenworth truck that comes off the line. And we provide the plant and our employees with leading-edge technology, production and logistics systems to produce The World's Best trucks for our customers," she said.

Today, the plant employs 2,300, many of them Chillicothe residents, and during a groundbreaking ceremony on April 24, 2019, for a new paint facility, it was noted how important  Kenworth and its parent, PACCAR (NASDAQ: PCAR), are in the community.

"Since the opening of the Chillicothe plant in 1974, the Kenworth team has been building the ‘World's Best' truck," Mike Dozier, PACCAR vice president and Kenworth general manager, said, noting the continuing investment PACCAR has made in the facility.

In the past five years, said Harrie Schippers, president and chief financial officer of PACCAR, the company has invested over $200 million in the plant, and that doesn't include a $30 million robotic cab assembly system being installed this summer and the $140 million paint facility that will be operational in early 2021.

"Chillicothe is a great place for Kenworth to build trucks because it is close to our customers and suppliers and has [access to talented employees]," Schippers said, adding that the paint facility "will support Chillicothe's continued growth and… represents the future that lays ahead for the entire Chillicothe team."

The latest investment is welcome news to Chillicothe Mayor Luke Feeney, because it indicates PACCAR's plans for a long stay in the city.

"Not only are they staying, but they are growing and that says something about our workforce," he told FreightWaves. "That sends a message to other [potential] employers."

Schippers said that 85 percent of Chillicothe trucks produced are sold in the United States, with the remainder sold in Canada. The plant produced a record 39,800 trucks in 2018, which represented 20 percent of PACCAR's global total.

Jay Timmons, president and CEO of the National Association of Manufacturers (NAM), grew up in Chillicothe, although he now lives in the Washington, D.C. area, so he understands the importance of manufacturing in Ohio.

"I know first-hand what manufacturing means to communities," he said. "When manufacturing succeeds, Ohio succeeds."

Timmons went on to praise PACCAR for making the decision to add the paint facility to the Chillicothe plant.

"You can call me biased," he said, "but you could have made this investment anywhere, but you made it here, and I know it is because of the [outstanding people] in Central Ohio.

Feeney also noted PACCAR's continued investment in the community.

"They are a great corporate citizen," he said, noting involvement in the local United Way, employee fundraising efforts for local causes, and the PACCAR Medical Education Center down the street from the Chillicothe plant. The center provides medical training and educational programs to assist the local Adena hospital system and opens its doors to residents to hold meetings in community rooms.

During its operation, the Chillicothe plant has produced a number of milestone vehicles.

In 2010, the plant launched the first PACCAR MX engine for the Class 8 market and produced a record 150 trucks per day by 2011. A state-of-the-art, robotic build cell was installed for Kenworth's new 2.1-meter cab, which was introduced in conjunction with the launch of the Kenworth T680 in 2012.

In 2013, the plant launched the Kenworth T880, which would be named the plant's 40th anniversary truck a year later. Production on the 52-inch sleeper for the T680 also began in 2013 as well as introduction of the PACCAR MX-13 engine into Kenworth production.

As many of the speakers noted, it's the people of the Chillicothe region that make the plant what it is.

Rod Spencer, plant manager, said employee turnover is just 1 percent, and during times when the plant has needed to staff up, Ohio residents have answered the call.

"We are very fortunate that when we need to staff up, we have a lot of applicants and a lot of quality applicants," he said.

Timmons added that Chillicothe is proof that American manufacturing is not dying.

"I think Kenworth and PACCAR are demonstrating to the people in the Chillicothe area that manufacturers are keeping their promises, he said. "There are over 500,000 open manufacturing jobs in this country. We hear stories of small towns all across the country that are being left behind, but that's not happening here."

Image sourced from Pixabay

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