Backed by decades of experience, John O’Leary—in his new role as president and CEO of Daimler Trucks North America—is quick to point out that he isn’t DTNA’s star player. Rather, he sees himself as the head coach who is willing to push himself and his team to be better.
O’Leary replaces Roger Nielsen, who retired in April after 35 years with the company. O'Leary started his career at DTNA with Freightliner in 2000, before leading the U.S. school bus business at Thomas Built Buses. From 2010, he was the senior vice president for the aftermarket business before becoming the CFO of DTNA in 2012.
Since September 2020, he had been the chief transformation officer for Mercedes-Benz Trucks in Germany, where he led the organization until the start of Karin Radström in February 2021. O’Leary returned to lead DTNA in March.
He takes the top job at North America's largest manufacturer of heavy-duty trucks amid surging fleet demand complicated by production challenges: a global shortage of semiconductors and raw materials, the lingering effects of the COVID-19 pandemic, and workforce shortages. In a wide-ranging interview, O'Leary recently spoke about these current market conditions; the benefits to North American customers of the recent reorganization of Daimler's global truck business; and truck electrification, including why DTNA is well-positioned to compete with "newcomers" to truck manufacturing.
Question: As you get settled into your new role and as we’re coming up on 100 days at your new post, how is the transition to this leadership role been for you over the last few months?
John O’Leary: You know it's been interesting. From a personal standpoint, it's fairly comfortable obviously having been the CFO and kind of the number-two guy for a long time here. There wasn't a lot that I hadn’t already seen in that role. Having time over in Europe as the head of MB Trucks was a good experience in a lot of ways also.
My time as CEO of Thomas Built was really good practice to be a CEO—at a young age, in a place where I was kind of off the radar. So, I think I was pretty well prepared for it. Obviously, there is a lot going on with things like chip shortages and other supplier-related issues. The nice thing is we're starting to come out of COVID. We had our return to office [recently], and we had about 800 people show up for a lunch that we served. Now that the masking rules allow it, it was great to be able to have everybody back in the office and seeing each other. In a lot of cases, many hadn't seen each other for 14 months, so there was just an amazing amount of energy.
Q: Let’s talk about your extensive experience with Daimler and some of the roles you've served in, most recently taking the lead transitioning the global Mercedes-Benz trucks division. How have these past experiences, and this global perspective with Mercedes-Benz Trucks, helped prepare you for this new leadership role?
JO: I'm a big believer that when you get into jobs like this, it's a culmination of a wide variety of experiences, successes, and failures along the way. In my case, I have 30-plus years of learning, so it all kind of comes together.
I just really feel like to be a great CEO, which is what I want to be, I just challenge myself super hard. It doesn't matter what I do in life, I'm pretty relentless in trying to challenge myself to be the best I can be—whether it's athletics in my younger days or now in what we can do as an operating committee team here. I think the future for us is extremely bright.
I really look forward to pushing people, helping them, coaching them, and like I said in a recent note to our people, I'm not the star player, I'm the head coach, and my job is to put our star players in positions to win. We've done a really good job of winning over the years, and we're not done. We still have a lot to do. We have a lot of challenges, and we have a lot of tough competitors. We don't rest on those laurels. We have to stay hungry and humble every day, and that’s what we’re going to do.
Q: Speaking of the global Daimler Trucks restructuring, what’s going to be the benefit going forward both operationally and for DTNA customers?
JO: It starts with the focus that we're able to bring now on trucks and buses. When you talk of DTNA, we can focus exclusively on trucks now in our markets, and we don't have to worry about trying to convince an operating committee of largely passenger car guys about why this investment is a good one, or why this truck market is different than that passenger car market. I think it'll make us faster, and it'll make us stronger globally.
Our performance here is pretty strong, but we can still be better, and there is still room for us to improve. It's about challenging the organization to not settle for just the status quo but always trying to be better. Our customers are delighted by better products and better, safer capability. With all the advancements in the technology right now, we have a great opportunity to extend our lead in our industry.
Q: Let’s pivot now and talk about the supply chain. Equipment demand is strong and the ability to supply the market with trucks at demand levels has been challenging due to the various supply disruptions, raw materials and component shortages, and, of course, the lingering effects of COVID-19 globally. How is DTNA working to overcome those challenges and keep up with customer demand?
JO: I always liken it to a knife fight. Every day, supplier management and purchasing people come in and have a list for vehicles we want to build, not tomorrow but, three, four weeks out. And they'll see that list of shortages and they’ll go to town trying to source those parts. Daimler brings with it a lot of regional and global capabilities in terms of sourcing things, and we've been utilizing all of that to the fullest extent possible.
We understand that customers, especially when their businesses are going strongly, want those trucks, so we're doing everything we can to get those trucks in their hands with the minimal amount of disruption. I think our team has done a really great job. Our interruptions have been limited to a day here, a few days there. I almost have become immune to the bad news because the team is so talented that they usually resolve it by the end of the day or a few days later.
But it's a huge challenge for us, for the industry, and for a lot of industries right now. All you can do is just take it one day at a time, one part at a time and go after it, and do your absolute best.
Q: A lot of the news these days is electric vehicles (EVs), of course. But less than a year ago, you launched the Western Star 49X. What can we expect from DTNA in terms of your internal combustion engine (ICE) investments, product cycles, and refresh in the coming years?
JO: That's kind of the magic calculus that everybody's looking for. It's not going to be a linear plus $1 here minus $1 there kind of thing. But certainly, over 10, 15, 20 years, as you point yourself toward 2039, where a lot of people say there won’t be many, if any, ICEs left, it will be more investment into zero-emission vehicles and less in diesel or whatever else.
There is going to be a trend down one way and up in another way, and what that looks like is really driven by customer demand. We don't sell electric or diesel or anything based on some social type of expectation that we have personally. It's all about what our customers want.
When I have conversations with CEOs of big fleets, they're highly interested in electric, and they want to know what is it going to be like operating electric vehicles. And they want to know as soon as possible, even if they can't imagine running them for another five to 10 years, because they have a lot of lead time that they have to put in place for infrastructure, for training, and for everything else.
It's one of those things that we'll see accelerate. There's a lot more pressure in the political system now for funding, certainly for infrastructure and some of the other bills that are out there right now have money set aside primarily for battery-electric infrastructure.
It’s going to continue on, but it's not an either-or thing for us. We make tremendous numbers of ICE diesel-powered trucks today, and as long as there's a great market for that we'll continue it. We did a deal with Cummins on the medium-duty side to help with the developmental costs of that, which I think is a great win-win for both Cummins and us. It's emblematic of some of the creative thinking that we have to employ going forward to be able to manage our way through this.
Q: Let’s discuss infrastructure and how the anticipated bill may be a boon for the vocational market. As you mentioned during the Strategy Day meeting, DTNA's plan is to grow its share by 15% to achieve 45% share of the vocational market. What are some additional insights you have on how Daimler has prepared for this anticipated uptick in the market, as well as some of your expansion plans?
JO: The timing is good for the launch of the vocational products. [The bill] is still being negotiated, but there's going to be some large amount of money that's earmarked for infrastructure. Whether it’s building roads, bridges, or whatever, obviously, vocational trucks are doing the lion’s share of that movement of parts, materials, and dirt. I think we're very well positioned for that.
The infrastructure needs to be in place. We can build 20,000 electric vehicles, but if there's no infrastructure in place then nobody's going to want to buy them. I think, ultimately, there'll be some additional investment put into infrastructure as part of these bills. But I think that will just help fuel the ultimate move to a greater percentage of those vehicles.
I don’t know what the slope of that line is going to look like over time, and I am somewhat ambivalent. I love the fact that people still love diesel trucks and want them in massive quantities, and we are going to keep building them. If it turns out that there is also a market for battery-electric vehicles in very large numbers, as long as the infrastructure is there and the demand is there, then that’s great. We will pivot and flex to that. I feel like we're in a really good position.
Q: In terms of the vocational market, what are the challenges you see for equipment manufacturers and upfitters as we move to electrification?
JO: That's a great question because it gets to the crux of a lot of things. There are a lot of companies out there that are, let's say, kind of dabbling in electric trucks. I call them 'science projects.' They're developing them, but they’re not existing players in the truck market. However, they’ve decided this looks like a very nice, addressable opportunity for growth and for revenue in the future, so they're just going to do it. In my mind, where that starts to sometimes fall down is when you get into things like the variety of customization that's required because of the upfitting requirements, the locations of the PTOs, and the draw of power that's required to operate the bodies—it gets pretty complex in a hurry.
The one thing that I always tell people is we've mastered the art of mass customization. When you're talking about building close to 200,000 trucks a year and buses just in North America, those are not cookie-cutter trucks; there's a huge variety. That's something that some of the newcomers to the industry still have yet to even think about—they’re still thinking about just how to commercialize the technology—but mass producing that technology is a whole different problem, and a much bigger problem in a lot of ways. I feel good about where we stand.
You will see in some applications and some parts of the truck industry, there'll be early adopters and then there will be kind of late and reluctant adopters. I can imagine some parts of truck equipment manufacturing or a piece being early because it’s easy, but there are others that are going to be slower because of the complexity.
Q: Outside of the electric vehicle itself is the infrastructure charging. What strategies is Daimler planning to address these added variables when it comes to considering that technology adoption, and are there any plans to facilitate a common standard of infrastructure charging across the industry?
JO: The answer to that one is there is, right now, and we’re part of that. It's called CharIN. They're working on a common standard for charging. That's really critical, especially when you’re talking about fleets that operate a lot of trucks. They don't want to have to worry about charging their Freightliners over here or their brand X over there because of the charging. That would be a disaster. I don't think every new OE sees it that way, but I do think most people do.
In terms of the (charging) infrastructure, we have a team that is involved in e-consulting with customers and local utilities to really help customers sort out their needs. We're actively working there because we're finding that there's a lot of knowledge that's required. And we've got our Electric Island here that we built that is a series of chargers from different suppliers, so we can test out all those and have some experience with vehicles. We're trying to be as active as possible outside the vehicle, understanding that it's going to take that entire ecosystem to ultimately drive the success of it.