School bus manufacturing tends to follow a 10-year cycle. Look at production a decade ago and you've got a good idea of what to expect next year. It appears as if the cycle-theory is holding.

By Bill Paul
STN Editor & Publisher

It comes as no surprise that school bus production over the past year is down. What is a surprise, however, is how little!

For the better part of the last year the industry has heard a steady drumbeat of pessimism. The pessimism was fueled largely by the budget deficits of state governments. Indeed, at one point more than 40 state governments reported deficits, led by California with a whopping $38 billion.

While these deficits resulted in reduced funding for education generally, and fewer bus procurements overall, surprisingly not that many fewer buses were ordered. The trend over the past year does not tell the full story, however. Still, let's look at the most recent year first.

STN's annual School Bus Manufacturing survey reveals that total school bus manufacturing is only off 3.5 percent! Total production for the 2002-2003 school year for vehicles manufactured to school bus construction specifications was 41,305 units, including Types A, B, C and D school buses and 460 AAVs and 32 MFSABs. (see Chart 1) That translates to 1,479 fewer units than a year ago! STN tabulates data from Sept. 1 through Aug. 31 to approximate the school year.

STN Research is not alone in these findings. A.C.T. Research Co., which tracks Class C and D school bus manufacturing, reported a 10.7 percent decline in the Class C and D segments through the first three quarters of 2003. A.C.T. reports by calendar year making its findings not fully comparable to STN's.

Moreover, the STN survey is conducted of all school bus body and chassis builders in the United States and Canada. Blue Bird, Corbeil, Collins, Girardin Minibus, IC Corp., Liberty Bus, Mid Bus, Thomas Built Buses, U.S. Bus and Vancon reported their body production data. Blue Bird, General Motors, Ford Motor Co, International Truck & Engine and Freightliner/Thomas reported school bus chassis production data.

The STN survey does not tabulate bus sales due to the fact that the final sale to states, school districts or contractors, is typically handled by school bus distributors, and the complexity of obtaining the data from the several hundred school bus distributors in the U.S. and Canada.

The full story of school bus production during the past year, however, derives more from the fact that last year's production data mirrors that of the 1997-98 school year when 41,080 school buses were manufactured. (see Table 1) What these data show is that school bus production continues its 10-year cycle. It has been down for three straight years, dipping 15.4 percent overall since the 1999-2000 school year when a record 47,670 complete school buses were manufactured to federal school bus standards.

While the data suggest that school bus production took a massive hit, when you look at each individual segment the decline is not huge. Perhaps 500 units here, 400 there, etc., except for the Type A chassis cutaway segment.

Among other findings of the survey:

* Slightly less than 500 fewer Type C conventional school buses were manufactured during 2002-03 school year than during the previous year. (see Chart 2)

* Type D transit-style bus production was off 443 units compared to the previous year. (see Chart 4)

* Type C and D school bus production, which typically represents 80 percent of the market, was off a total of 917 units in 2002-03 compared to a year earlier. (see Chart 2)

* Type C and D chassis production during 2002-03 topped out at 33,077 units. That compares to 33,701 Type D chassis the previous year.

* Alternate fuel drew little interest in the past year. No alternate fuel Type C units conventional buses were reported, while in the Type D category alternate fuel accounted for less than 3.3 percent of all Type D chassis manufactured. Clearly, demand for alternate fuel buses remains flat. A year ago demand for this product line represented 3.4 percent of Type D buses as well.

* Overall, the Type A category (see Chart 5) declined 531 completed buses in the 2002-03 school year compared to the previous year. In addition, production shifted to the dual rear wheel Type A-2 buses from the single rear wheel Type A-1 buses. Type A-1 production fell 48.4 percent but Type A-2 production climbed 52.8 percent.

* Type A cutaway chassis took the biggest hit, down nearly 50 percent. Cutaway chassis for Type A and B buses dropped to 6,315 units in 2002-03 compared to 11,543 chassis the previous year.

The primary factor that accounted for the Type A cutaway chassis decline was not necessarily lack of demand. Instead, it is likely because GM did not offer a diesel-powered product during the past year. That left the door open for Ford. While Ford more than doubled its production of diesel school bus cutaway chassis units, demand could not be met. The loss of GM's diesel-powered product was huge.

Moreover, a strong demand for gasoline powered Type A buses remains, particularly in the head Start and childcare markets. When a client backed out of a large order for Type A gasoline buses from Thomas Built Buses in early in the year, other buyers quickly snapped up the gas-powered vehicles.
Another complicating factor is that all Ford diesel powered cutaway chassis are dual rear wheel. "We can't build on a Ford except for single rear wheel chassis, but that is so heavy that it limits capacity to 9600 lbs. So on the one hand there is no choice for single rear wheel diesel buses out there, and on the Ford once you go into dual wheel you are automatically into A-2 because GVWR is 11,500 or 14,050. In both cases you are A-2 and not A-1 models."

More importantly, the Type A builders face the never-ending dilemma of weight. When a chassis OEM adds 100 pounds to the chassis to comply with a new regulation, that's 100 pounds less that can be put into the bus body. In California, where a new law requiring an active occupant restraint system goes into effect January 1, 2004, seating capacity in Type A buses is expected to decline to 19 from 24.

What does 2004 hold? No one knows for sure, though tight budgets remain in the forefront. In years past several bus and chassis manufacturers offered predictions for the coming 12-month cycle; this year only two prognosticated. Ever the optimist, Peter Schmid of GM said, "With the economy starting to improve, city and state resources increase, we should do 10,0000 units in the Type A" segment next year.
Meanwhile, another bus builder speculated about the possible outcome of abandoning the low-bid school bus manufacturing environment altogether in favor of the new multifunction school activity bus. "The child care industry has the money to pay for our products," he said. Stay tuned!

Source: Reprinted from School Transportation News, December 2003. All rights reserved.