Careers at PACCAR
PACCAR’s mission is to be a global technology leader in the design, manufacture, and customer support of trucks.
PACCAR is a provider of trucks and related parts and services. The firm operates three reportable business segments:
- Truck Segment – Designs, manufactures, and distributes light-, medium- and heavy-duty commercial trucks.
- Parts Segment – Distributes aftermarket parts for trucks and related commercial vehicles.
- Financial Services Segment – Provides finance and leasing products and services to customers and dealers; activities are principally related to PACCAR products and associated equipment.
In 1904 William Pigott built a steel foundry in Washington State, near Seattle. At the time shipping and forestry were the major industries, and neither had much demand for primary steel products. Consequently, Pigott founded Seattle Car Manufacturing Company in 1905, and built a factory for the production of finished steel products. It made steel clasps to secure logs to railroad flat cars.
Not long afterwards Seattle Car began manufacturing railroad cars. It merged with Twohy Brothers, its only West coast competitor, and changed its name to Pacific Car and Foundry Company. Over the next two decades it developed a wide range of transportation equipment, while still remaining focused on railroad cars. In 1924 it was acquired by the American Car & Foundry Company.
Keeping its Pacific Car name, the company began manufacturing refrigerated box cars in 1934. The cars were used by railroads and agricultural combines to transport perishable goods to far-off locations. The vehicles were highly profitable, providing enough capital for the acquisition of Heisers in 1936, a producer of motor buses. Later, Pacific Car supplied transportation equipment for WWII.
When the war ended, the company recognized a sizable opportunity. Transportation needs had increased greatly in the western U.S., but it had become uneconomical to build new railroad lines. Customers sought heavy-duty trucks able to cross long stretches of land and climb steep mountain grades. Pacific Car bought Kenworth Motor Truck, a provider of diesel trucks, to address this need.
Over the next decade the company acquired many more firms in order to diversify its operations. These included the Seattle facilities of the Commercial Ship Repair Company in 1953; the assets of the Dart Truck Company manufacturer of large "off-highway" construction equipment such as earth movers, in 1958; and the Peterbilt Motors Company, another truck manufacturer.
In the 1960s Pacific Car began placing an emphasis on truck sales and steel production. Even as railroad car sales declined, it experienced higher earnings. In 1971 it formed a holding company called PACCAR. In 1972 PACCAR absorbed Pacific Car. In the next few decades PACCAR entered the automotive parts and accessories retail market. It now focuses on trucks, parts, and related services.
Business model of PACCAR
PACCAR has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at all consumers who want to purchase trucks.
PACCAR offers four primary value propositions: accessibility, risk reduction, performance, and brand/status.
The company creates accessibility by providing a wide variety of options. It offers light-, medium- and heavy-duty trucks under the Kenworth, DAF, and Peterbilt brand names. It also provides advanced diesel engines, financial services, information technology, and relevant truck parts.
The company reduces risk by maintaining high safety standards. All of its vehicles have near-zero emissions of NOx, a smog-causing compound. They are also compliant with all relevant standards, including those established by the California Air Resources Board (CARB), Environment Canada, the European Commission, and the U.S. Environmental Protection Agency (EPA). Lastly, PACCAR uses Ecodesign, a software program, to identify lighter-weight, less hazardous materials for use in product design. This serves to increase the recyclability of its trucks and reduce their environmental impact.
The company has demonstrated strong performance through tangible results. Its Kenworth and Peterbilt products enhance aerodynamic efficiencies by up to 10%, resulting in annualized fuel savings of as much as 950 gallons per vehicle in an over-the-road application. PACCAR is also working with the U.S. Department of Energy to develop an advanced truck able to achieve ten miles per gallon in real-condition testing, higher than the industry average of six miles per gallon.
The company has established a strong brand due to its success. It sells its products in over 100 countries and continues to expand its presence globally, with half of its revenues coming from outside the U.S. Its Financial Services division provides its offerings to customers in more than 22 countries, with a portfolio of over 175,000 trucks and trailers and assets of more than $12 billion. Lastly, it has won many honors, including the following:
- The Information Week Elite 100 Award fifteen years in a row
- Recognition of the Kenworth T880 as Truck of the Year by American Truck Dealers (2015)
- The PACE Innovation Partnership Award from Automotive News (2014)
- Manufacturing Leadership Awards from Frost & Sullivan for its engine and truck factories (2014)
- The Founder’s Award today from J.D. Power and Associates for customer satisfaction (2009)
PACCAR’s main channel is its network of independent dealers in 2,000 locations across 100 countries. The company promotes its offering through its website, social media pages, and advertising.
PACCAR’s customer relationship is primarily of a self-service nature. Customers utilize its products and services while having limited interaction with employees. That said, there is a personal assistance component. Its Parts segment provides distribution centers offering aftermarket support to dealers and customers, with call centers operating 24 hours a day.
PACCAR’s business model entails designing, developing, and manufacturing its products for customers.
PACCAR’s key partners are the suppliers that provide it with the materials and parts it needs to manufacture its products. These include raw materials, partially processed materials such as castings, and finished components manufactured by independent suppliers.
PACCAR’s main resources are its human resources, who include the engineers that design, develop, and/or manufacture its products, and the customer service personnel that provide support. It maintains important physical resources in the form of:
- Manufacturing plants it owns and operates in five U.S. states, three countries in Europe, and Australia, Canada, Brazil, and Mexico
- 17 parts distribution centers it owns and operates in these and other locations
- Product testing and research and development facilities it operates in Washington state and the Netherlands
PACCAR has a cost-driven structure, aiming to minimize expenses through significant automation. Its biggest cost driver is cost of sales and revenues, a variable cost. Other major drivers are in the areas of sales/marketing, administration, and research/development, all fixed costs.
PACCAR has two revenue streams: revenues it generates from sales of its truck and parts products and revenues it generates from interest income from the provision of related financial services.
info: Mark C. Pigott earned a degree in Business and Engineering at Stanford University. He previously held several senior roles at PACCAR, including Chief Executive Officer and Executive Vice President. He also previously served as a director of Franklin Resources, Inc.
info: Ronald E. Armstrong earned a B.S. degree in Accounting at the University of Central Oklahoma. He previously held a number of leadership roles at PACCAR, including President and Executive Vice President, and was a senior manager at Ernst & Young.
info: Robert J. Christensen earned a Bachelor’s degree in Finance at Washington University and an MBA at University of Puget Sound. He previously held many leadership roles at PACCAR, including Executive VP and General Manager of its Kenworth division.
info: Gary L. Moore earned a Bachelor’s degree at the University of Wyoming. He previously held several leadership roles at PACCAR, including VP and General Manager of Kenworth Truck Company and Assistant General Manager of Sales and Marketing.
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