PACCAR Information Technology and “Green” Initiatives

August 25, 2006, Bellevue, Washington PACCAR has significantly increased capital investment in advanced information technology to deliver increased efficiency at its 50 major facilities worldwide, including research and development centers, manufacturing plants, parts distribution and customer support facilities.  The pace of technological innovation at PACCAR continues to accelerate, enhancing PACCARs competitive advantage in products and services, said Mark Pigott, chairman and chief executive officer.  PACCAR has invested $1.6 billion in the last decade to strengthen its industry-leading global technology platforms and establish itself as a leading environmental company.

Technology investments have enhanced new product and services time to market, increased production efficiency and capacity, improved quality and strengthened aftermarket customer support.  PACCARs shareholders, customers, employees, suppliers and dealers all benefit from these strategic investments, added Pigott.

PACCAR Information Technology Manufacturing
PACCAR Information Technology (IT) is critical in generating improvements in supply chain management, quality, productivity and product development cycles.  Over the past decade, PACCAR has focused its investments toward projects that result in a 30 percent reduction in time to market for new products and annual 5-7 percent manufacturing productivity improvement.  These technology investments have also contributed to the excellent reduction in selling, general and administrative (SG&A) costs from 8 percent of sales in 1994 to 3 percent of sales today, said Ron Armstrong, vice president and controller.

PACCAR has installed more than 1,600 computers in assembly facilities to expedite critical line-side information to employees.  Tablet PCs and WiFi networks are standard in PACCAR facilities worldwide.  The company collaborates with leading IT organizations including Dell and Microsoft to leverage best practices, noted Janice Skredsvig, vice president and CIO.

More than $100 million has been invested in sophisticated robotic systems including automated chassis paint at the Leyland, U.K. plant, and robotic cells for aluminum fuel tank welding at the Peterbilt Denton, Texas facility both firsts for the commercial vehicle industry.  Increased capital investments and the completion of 5,600 Six Sigma projects have led to a dramatic improvement in industry-leading quality, said George West, vice president.

PACCARs engine manufacturing facility in the Netherlands has been updated with sophisticated transfer lines, automated assembly and rigorous quality control.  PACCAR has increased manufacturing capacity by 7 percent annually and improved inventory turns by 50 percent in the last five years due to IT investments, added West.

PACCAR has invested $70 million in the construction of a new Kenworth manufacturing facility in Mexicali, Mexico.  This investment increases production capacity in Mexico by 50 percent, noted Sam Means, KenMex president.  Significant advances in IT and an expanding global manufacturing platform have resulted in PACCAR more than doubling its sales of commercial vehicles in Mexico and export markets compared to ten years ago, while simultaneously improving product quality and employee productivity, added Means.

Environmental Green Development Intensifies
Technology investments at PACCARs research and development centers in Mount Vernon, Washington, and the Netherlands continue to play a key role in the development of environmentally friendly innovative products.  PACCAR has concentrated its resources on delivering the most fuel-efficient commercial vehicles in the world.  PACCARs development of hybrid vehicles, scheduled to be in operation in selected applications in 2008, has established the company as a leader in environmental responsibility.  Ongoing hybrid power and alternative fuel development initiatives at PACCARs state-of-the-art engine test facilities are focused on achieving up to 30 percent improvement in fuel economy.  Bob Morrison, PACCAR Technical Center general manager, commented, PACCAR has increased its investment and research into the benefits of ethanol, biodiesel and hybrid technologies.  It is also important to note that every DAF, Kenworth and Peterbilt vehicle is constructed of 90 percent recyclable components, by weight, with the major commodities being steel, aluminum and copper.

Next year, Kenworth and Peterbilt will offer an alternative energy platform allowing drivers to cool, heat and operate electrical components inside the cab without engine idling.  Kenworth Clean Power and Peterbilt Comfort Class will reduce fuel consumption by 8 percent annually for Kenworth and Peterbilt trucks.  PACCARs investments in these areas provide benefits to our customers and the environment, said Jim Cardillo, senior vice president.

Logistics Operations Streamline Freight and Reduces Solid Waste
State-of-the-art purchasing systems link suppliers with PACCARs Logistics Center to optimize inbound freight traffic to PACCARs North American factories.  This Web-based system has improved both shipment visibility and route optimization generating an 8 percent reduction annually in transportation costs.  Implementation of custom Manufacturing.Net software and RFID (Radio Frequency IDentification) smart tags integrates factory automation tools to improve productivity.  Vehicle electronic programming has been simplified through instrumentation upgrades which enable wireless connectivity from the vehicle to PACCARs proprietary Electronic Service Analyst (ESA) tool.

PACCAR has made major advances in the reduction of packaging material, such as cardboard and wood, in its manufacturing facilities through the implementation of recyclable returnable containers.  Since 1996, PACCAR has eliminated over 650 pounds of dunnage material for every vehicle it has built in North America by utilizing improved packaging techniques and coordinated logistic programs with suppliers.  Tom Lundahl, vice president, commented, PACCAR has reduced total packaging material by approximately 30,000 tons annually.  Our goal is to eliminate another 300 pounds per truck in the next five years.

PACCAR is a global technology leader in the design, manufacture and customer support of high-quality light-, medium- and heavy-duty trucks under the Kenworth, Peterbilt and DAF nameplates.  It also provides financial services and information technology and distributes truck parts related to its principal business.

PACCAR shares are listed on NASDAQ Global Select Market, symbol PCAR, and its homepage can be found at www.paccar.com.