The Cycle Has
Turned, and its Down*

By Bill Paul
STN Editor & Publisher

STN's Annual School Bus Manufacturing Survey for the 2000-2001 school year found that school bus manufacturing is down at least 6.5 percent from a year ago.  That's the finding of a survey, conducted by editors of the magazine of 10 school bus manufacturers and seven companies that manufacture school bus chassis.

More importantly, the survey found a market in turmoil.

The survey was conducted early in September, and captured manufacturing data for the 12-month period of September 1, 2000 to August 31, 2001.  That period was selected because it most closely approximates the just concluded school year.  Since all manufacturers are computerized, it is fairly simple to tabulate the data by date range.

1. School Bus Manufacturing 2000-01

Overall, school bus manufactures reported building 44, 757 school bus bodies of all types.  A year ago they reported building 47,670 units.

"Going into the year 2001, (all bus manufacturers) had the same perception that there would be a continuation of the year 2000," said one OEM who asked to remain anonymous.  But that’s not how matters turn out.

Chassis
Before we examine what may account for the downturn it is helpful to examine the three main categories of school bus chassis: small Type A buses built on cutaway chassis, larger Type C buses built on conventional chassis and larger Type D or transit style buses. 

Interestingly, the data shows that fewer chassis were manufactured than bus bodies.  OEMs report a total of 43,681 chassis compliant with school bus regulations were manufactured.  That's approximately 1,000 fewer chassis than completed school buses.

	2. Type A Bus Production
Some of that decline can be accounted for in the Type A market. (see Chart 2, right) Chassis manufacturers reported building 8,785 Type A cutaway chassis, about 1,000 fewer than completed Type A buses Meanwhile, school bus body builders reported manufacturing about 9,600 Type A school buses.

The president of a small bus builder thought that figure was high.  “I think about 8,500 Type A units were built,” he said.

Gary Plumton, vice president of sales/USA for Corbeil, points to two other factors.

“Coming off last year everyone was over-optimistic. Plus (dealers) had high inventories.”  He added that of the more than 10,000 Type A units reported by this survey a year ago, “15 percent or more were sold into this year.  The inventory levels of the Type A vehicle are quite high, particularly in the east coast.” Shifting last year’s inventory into the current year would certainly account to the disparity between chassis and bus body production.

Nevertheless, nearly all small bus builders reported an increase of interest from the Head Start community. One said, “There’s been a boom due to the non-conforming van issue.”

3. Type C School Bus Production
	As chart 3 (left) shows, the conventional chassis remained the most popular, accounting for 54 percent, or 25,106 units.  That compares to 24,420 Type C chassis manufactured a year ago, an increase of nearly 700 units.

In the Type D category only three companies offer Type D chassis and all three — American Transportation Corp., Blue Bird, and Thomas Built Buses — manufacture these heavy-duty chassis only for their own use.

	4. Type D School Bus Production
For the 12 months ending August 31, 2001, these three companies (Chart 3, right) reported building a combined total of 9,790 Type D chassis.  That represents 14.3 percent decline of 1,612 units from a year ago in this category	.

School Bus Bodies
In summary:  Overall, there were fewer chassis than bus bodies manufactured.  Conventional buses were up about 700 units over 1999-2000, transit style chassis were down 1,612 units, and there were about 500 fewer Type A cutaway chassis manufactured — 9,722 vs. 10,181.

Three builders from the large bus and large chassis segment pointed to state funding cuts as a prime factor in the downturn.

“In places like Alabama, they had a 6.2 percent state budget cut half way through the year.  That translates into a 12.4 percent decline in spending for the year,” said one sales executive. “Moreover, when school districts got the signal earlier this year that their 2002 budgets would not have as much money, they delayed going out to bid.”

“There seems to have been more cutbacks in purchasing in the Southeast where they are reliant on sales tax,” said another.

Another way to account for these discrepancies is to understand the white bus market. 

When small bus manufacturers order their allotment of cutaway chassis from GMC/Chev or Ford, the only two companies that offer a cutaway chassis, they essentially have to guess how many they need.  Once the order is issued there is little chance of getting additional chassis.  Then, as orders come in, it is easy to use a cutaway chassis with the school bus option for a commercial bus.  Often the commercial bus buyer is unaware his vehicle has the extra benefits of school bus construction.  But it is impossible to convert a commercial cutaway chassis to school bus use.  The commercial market for small buses has grown steadily in recent years.

“I would estimate that at least 10 percent of the cutaway chassis that come with the school bus option are used for commercial bus application,” he said.

Another factor is a decline in orders from national accounts.

Due to its continuing financial struggles Laidlaw has cut back its bus procurement.  Plus there was little activity from the major players in the childcare market.  One builder who saw a 20 percent decline over the previous year blamed the drop on this factor.  “Our dealer sales remained quite level.  But the national accounts weren’t buying,” he said.

Predictions
Bus manufcturers estimates of a production decline for the coming year ranged from eight percent to as high as 20 percent.  They all acknowledged that the terrorists attacks in Washington DC and New York City added an unknown element to next year’s procurement.

“We think the market is down 8-9 percent this year and we’re looking for a (further) similar drop next year,” said one sales executive.

Another builder thought the market could be down as much as 20 percent.  He noted the school bus market is cyclical, and now appears to be returning to the pattern of 1981, which saw approximately 28,000 units of all types, manufactured.  He noted however that production increased annually for the decade of the 1980s.  “I think we are at the bottom and will see some small, minimal growth next year.”

A chassis manufacturer estimated a 15 percent decline for the past year, and an additional 15 percent decline for the coming year.

Meanwhile, Type A builders optimistically point to new laws in places such as Kansas that will soon eliminate non-conforming vans from school district, contractor and child care markets.

While the estimates vary widely, nearly everyone contacted for this article agreed the recent events in Washington, DC and New York City will have an effect

One other development that is sure to affect the market this year is the introduction by both GMC/Chev and Ford of larger Type A cutaway chassis. With GVWR’s ranging up to 19,500 lbs any bus body builders can now put bodies of up to 65 seating capacity on these chassis.  That’s up in the Type C range, and invades the turf traditionally reserved for Blue Bird, International/AmTran, and Thomas. 

*Source: STN Buyer's Guide, October 2001