PACCAR 2009 Annual Report Download - page 6

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cost reductions. After-tax return on beginning
shareholder equity (ROE) was 2.3% in 2009, compared
to 20.3% in 2008. The company’s 2009 after-tax return
on revenues was 1.4%. PACCAR’s long-term financial
performance, even in a turbulent, cyclical market, has
enabled the company to distribute over $3.6 billion
in dividends during the last 10 years and increase
shareholder equity to $5.1 billion. PACCAR’s average
annual total shareholder return was 19.1% over the last
decade, versus a negative 1.0% for the Standard & Poor’s
500 Index. The fragility of global financial institutions
provided a timely reminder of the merits and strength
of PACCAR’s conservative business approach, quality
products and customer service focus.
INVESTING FOR THE FUTURE — PACCAR’s excellent
long-term profits, strong balance sheet, and intense focus
on quality, technology and productivity enhancements
have allowed the company to invest $3.8 billion since
2000 in capital projects, new products and processes.
Productivity and efficiency improvement of 5-7%
annually and capacity improvements of over 100% in
the last five years have enhanced the capability of the
company’s manufacturing and parts facilities. PACCAR
is recognized as one of the leading applied technology
companies in the industry, and innovation continues to
be a cornerstone of its success. PACCAR has integrated
new technology to profitably support its business, as
well as its dealers, customers and suppliers.
Capital investments were $128 million in 2009.
One exciting multi-year initiative was completion of
construction of PACCAR’s engine plant in Mississippi.
The installation of the machining and assembly lines is
underway. Other major capital projects during the year
included investments to meet the exacting 2010 EPA
engine emission regulations, expansion of PACCAR
Australia’s manufacturing and parts distribution capacity,
and installation of Technology Centers in our assembly
facilities.
PACCAR continues to examine business opportunities
in Asia, with its primary focus on China and India.
PACCAR is increasing its component purchases and
powertrain sales in China as a result of its Shanghai and
Beijing offices. The PACCAR MX engine has been
honored as best-in-class at the Shanghai Bus Show three
years in a row.
SIX SIGMA — Six Sigma is integrated into all business
activities at PACCAR and has been adopted at 190 of
the company’s suppliers and many of the company’s
dealers and customers. Its statistical methodology is
critical in the development of new product designs,
customer services and manufacturing processes. Since
inception, Six Sigma has delivered over $1.4 billion in
cumulative savings in all facets of the company. Over
10,000 employees have been trained in Six Sigma and
12,000 projects have been implemented since its
inception. Six Sigma, in conjunction with Supplier
Quality, has been vital to improving logistics performance
and component quality from company suppliers.
INFORMATION TECHNOLOGY — PACCAR’s
Information Technology Division (ITD) and its 639
innovative employees are an important competitive
asset for the company. PACCAR’s use of information
technology is centered on developing and integrating
software and hardware that enhance the quality and
efficiency of all products and operations throughout the
company. In 2009, ITD provided innovative advancements
in new engine manufacturing software and infrastructure
capacity upgrades. Over 20,000 dealers, customers,
suppliers and employees have experienced the company’s
Technology Centers highlighting surface computing,
tablet PCs, an electronic leasing and finance office, and
an electronic service analyst.
TRUCKS — U.S. and Canadian Class 8 industry retail
sales in 2009 were 108,000 units, and the Mexican market
totaled 11,000. The European Union (EU) industry
heavy truck sales were 168,000 units.
PACCAR’s Class 8 retail sales in the U.S. and Canada
achieved a market share of 25.1% in 2009 compared to
26.0% the prior year. DAF achieved a record 14.8%
share in the 15+ tonne truck market in Europe. Industry
Class 6 and 7 truck retail sales in the U.S. and Canada
were 40,000 units, a 36% decrease from the previous
year. In the EU, the 6- to 15-tonne market was 51,000
units, down 36% from 2008. PACCAR’s North American
and European market shares in the medium duty truck
segment were very good, as the company delivered
12,900 medium duty trucks and tractors in 2009.
A tremendous team effort by the company’s
purchasing, materials, engineering and production
employees contributed to improved product quality and