School Bus Transportation News at STN Media

School Bus Manufacturing
Hits Stratospheric Heights

By Bill Paul
Editor & Publisher

When the data was finally tabulated, the numbers were enormous! Not only was the Type A market up significantly -- 29 percent -- the overall market reached a level never seen before.

This according to the 7th annual School Transportation News School Bus Manufacturing Survey.

Conducted annually for the 12-month period that approximates the just-concluded school year, the survey found that 45,694 school buses were manufactured between Sept. 1 1998 to Aug. 31, 1999.

The survey tabulates manufacturing data for all four types of school buses: Type A, Type B, Type C and Type D. The STN survey does not examine the number of school buses sold as sales are subject to variables such as final payment, and stocking policies both at dealerships and at the factory. Moreover, data is presented in the aggregate as some companies agree to participate only if their data is kept confidential.

The data this year represents a huge 12 percent increase over the 40,532 units reported a year ago, which, in turn, represented a 7-percent increase over the 1996-97 school year. Clearly, school bus sales have reached stratospheric heights as the last decade of the century draws to a close.

The nadir of the industry's 10-year replacement cycle occurred during the 1991-92 school year at 28,564 units. That means school bus manufacturing is up a whopping 59 percent in less than a decade!

As noted above, the greatest increase occurred in the Type-A market. Overall, this segment increased to 10,475 units from 7,227 a year ago. "This is a significant jump," said one manufacturing executive who, like all his colleagues, declined to be identified. To a person, bus builders, analysts and others interviewed for this article agreed the surge in Type-A production was attributable to the growing public awareness of the dangers to children of the non-conforming vans.

Several bus manufacturers in the survey first predicted the surge a year ago. Some manufactures had estimated the new, non-traditional market for small school bus vehicles could amount to an additional 25,000 to 30,000 buses. In 1999, few, if any are surprised at the robust new market that has emerged.

"We have to look at the Type-A market today as being a vastly different market then in the past," said one builder. "Typically we all just sold the public school districts and private contractors serving the K-12 sector. Now, with the van awareness we are into the Head Start, pre-school, daycare, and church markets. This new Type-A market has gone way beyond the typical Type-A market of the past," he said. Another builder added, "I don't think we have seen the full effects of the non-conforming van issue yet." He noted that many states continue to allow vans to operate in regular route school service.

According to data from the 1997 NSTA Transportation Survey posted to the STN Online website, 41 states allow the use of 10-or-less passenger vans for school transportation and 22 states allow the use of 11-15 passenger vans for school transportation purposes. "This is potentially a huge market for us," he said.

The unknown element of the new market is funding. Head Start, private daycare schools, and others in the non-traditional market rely on different funding streams than the traditional school bus market.

As this new market will likely be woven into the warp and woof of school bus manufacturing in coming years, it becomes incumbent upon the industry - perhaps at the forthcoming 2000 National Conference on School Transportation - to carefully define the vehicles destined for the non-traditional market. The entire pre-kindergarten market is diverse enough and already does not require compliance with all school bus regulations (for example, Head Start does not require that all its vehicles be painted school bus yellow, etc.) that to simply rely on traditional school bus definitions will ensure confusion in coming years about the true size of this new market. There is already some confusion, even among some segments of the bus manufacturing community, about the distinction between a Type-A1 and Type A-2 bus to not compound matters further by not clearly defining "non-traditional" Type A buses.

Others factors are at work in the record year too. For example, for several decades school bus production has followed a 10-year replacement cycle based on an average 10-year life for Type C conventional school buses. Since the Type C unit is the predominant vehicle in the nation's fleet of school buses, its replacement needs set the cycle for the industry.

This year, manufacturers reported building 24,610 Type C conventional school buses. This represents a 10 percent increase in the Type C segment. With the exception of the transmission allocation problem, it is a number that didn't surprise any of the bus manufacturers. The major bus builder contacted for this report said the figure was "realistic", "legitimate", or "right on track."

One manufacturer's appraisal of the 10 percent increase breaks out as follows: 2-percent to Head Start agencies and private schools buying larger buses, 3-percent attributed to the backlog from the previous year's manufacturing due to transmission allocation, and the remainder split between a modest increase in the regular demand for Type C buses and more aggressive replacement practices due to America's robust economy.

A condition that continues to affect the Type C market is transmission allocation. More than two years ago Allison, which supplies nearly all transmissions to the Type C and D school bus markets, put all its customers on allocation. School bus manufacturers are barely able to get enough transmissions for their needs, and even then sometimes pay a premium to obtain them.

Moreover, there are only three companies that manufacture Type C chassis. Navistar, Freightliner and GMC. General Motors builds chassis exclusively for Blue Bird under a private label agreement. With Freightliner a comparatively new entrant into this market segment, these three companies - though heretofore GMC has worked exclusively through Blue Bird - are now engaged in ensuring they get their share of new business, shoring up their marketshare against the competitors, or raiding each other's customers. Freightliner has muscled its way into the market and secured a strong foothold through its ownership of Thomas. But it was also forced to back off its early assertion that within a year or so it would only mount Thomas buses on Freightliner chassis.

These three builders reported manufacturing 26,561 Type C chassis. That leaves about 2,000 units unaccounted for by bus body production. While that number was puzzling to some of the manufacturers, each insisted their data did not include sales data but only manufacturing data. Interestingly the same phenomena - 2,000 more chassis built than bodies mounted upon - was reported in last year's survey.

Meanwhile, the Type D market has leveled off with manufacturers reporting 10,357 units compared to 10,164 a year ago. Again, three Type D manufacturers - AmTran, Blue Bird, and Thomas - continue to jockey for marketshare.

A major unknown in the Type C and Type D markets is what influence, if any, the British and Swedes will have on the U.S. school bus market. Now that Henley's of Great Britain (partially owned by Volvo) owns Blue Bird, what changes can be expected?

At the moment it is too early to tell. At this writing, meetings between Blue Bird and Henley have occurred at high executive levels but not at operational, working levels. A clue can be garnered from the Volvo/Henly's ownership of Prevost, a motorcoach builder in Canada, and Nova Bus, a transit bus builder in Canada. There, the European owners have kept a hands-off policy on day-to-day management and marketing but brought in new technology, engineering and design strategies and techniques. The next several months will reveal their strategy for Blue Bird.

Similar questions were raised a year ago when Freightliner/Mercedes acquired Thomas. In the interim, Freightliner management has remained in U.S. hands, though the companies have engaged in engineering and technical talks at the operational level.

Clearly, with the non-traditional Type A market continuing to look promising for the coming few years, and continuing school-age population growth in the so-called "baby boom echo," it appears that school bus manufacturing will remain a robust industry during the 1999-2000 school year.

What about manufacturing for the coming 1999-2000 school year? Overall, bus builders estimated between 23,000 and 24,000 Type C units, 9,000 Type D units, and up to 10,000 Type A units.