Rough road doesn't jolt Paccar

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It says something about Charles Pigott's career that he got a film tribute and a round of applause from shareholders in the middle of his company's biggest downturn in a decade.

Despite the trucking industry's slump and Paccar's 71 percent drop in quarterly profit announced earlier yesterday morning, shareholders at the annual meeting in Bellevue were in the mood to honor Pigott as he reached the board's mandatory retirement age of 72.

A sort of lifetime-achievement tribute was given to Pigott, who served 40 years on the Bellevue company's board of directors. He was chief executive from 1967 until 1997 and chairman from 1986 to 1997, when he was succeeded by his son, Mark.

Along with his family, the elder Pigott has long been active in civic affairs and local charities. He is a former president of the Boy Scouts of America. He is retiring next week as a director of Boeing and continues as a director at Chevron and The Seattle Times.

During his tenure at Paccar, "Chuck" Pigott helped steer the company away from structural steel and rail cars, and more toward heavy-duty trucks with its Kenworth and Peterbilt brands.

He emphasized quality, led efforts to expand overseas, moved into truck financing, accumulated very little debt, added cash and made production cuts to weather several economic downturns.

With a conservative and publicity-averse style, he was able to lead a profitability streak that has stretched 61 years.

"I'm very proud of the company and all of its people," Pigott said.

That satisfied many Paccar shareholders, even on a day when the numbers weren't rosy.

Yesterday, the truck maker reported profit of $44.3 million, or 58 cents a share, on sales of $1.5 billion in the first quarter. That compares with $154.9 million in profit, or $1.98 a share, and $2.3 billion in sales a year earlier.

Still, Paccar's earnings per share beat Wall Street's expectations of 47 cents, and the company's stock closed up 26 cents at $47.74.

Despite Paccar taking its biggest financial hit since the recession of 1990-1991, the company's stock is higher now than a year ago. It had $786 million cash on hand as of March 31.

The slowdown has been blamed on a new- and used-truck inventory glut, higher fuel prices and insurance costs. The recent economic slowdown hasn't helped, pushing more small fleets and owner-operators into bankruptcy, causing used-truck lots to fill up.

The availability of fairly new and cheap used trucks has hurt new-truck sales, Mark Pigott said. Industrywide, heavy-duty truck sales are expected to be off 40 percent to 50 percent for the year, to between 130,000 and 150,000, he said. Truck sales in Europe, which helped counter last fall's North American downturn, are now dropping about 10 percent, he added.

Historically, Mark Pigott said, the company has used cash reserves to maintain shareholder return, invest in facilities and look at possible acquisitions, said Pigott, although he said Paccar has no specific target now.

The company will make slight production cuts in Europe next week, and already has made deep cuts at plants in North America.

At its peak in 1999 and 2000, the Kenworth plant in Renton had 1,000 workers producing 50 trucks a day. Now it has little more than 200 workers making 12 trucks a day, said Dan Morgan, business representative for the International Association of Machinists District Lodge 160.

Jeff Parietti, a Kenworth spokesman, confirmed the current production level.

Those moves have largely satisfied Wall Street, although analysts have sometimes criticized Paccar for operating like a private company concerned more about the long term than quarterly earnings.

Charles Pigott recently sold or proposed selling more than $125 million worth of Paccar stock. That leaves him with about 1.9 million shares, according to Thomson Financial/First Call. Charles Pigott said he's sold mainly for estate planning purposes, but that the family still holds "well more" than 10 percent of the company stock, he said.

Those who track the stock say the family's influence shows.

"They just do their job well, do it quietly and make a lot of money for shareholders," said Robert Toomey, managing director of Dain Rauscher in Seattle.

Paccar's board yesterday declared a quarterly cash dividend of 30 cents a share payable June 5 to stockholders of record at the close of business May 21.

Luke Timmerman can be reached at 206-515-5644 or ltimmerman@seattletimes.com.