Filed under: 2010 Emissions, IC, International, School Transportation News Magazine
The president of Navistar’s bus and motorcoach arm sits down with STN to discuss how the company is reacting to the economy, new and existing markets.
SCHOOL TRANSPORTATION NEWS: WHAT’S THE LASTEST NEWS FROM IC BUS?
JOHN MCKINNEY: IC Bus had a buy summer making final preparations for the emissions change coming next year. We feel that MaxxForce Advanced EGR will be the preferred emissions solution to our customers. Its simplistic nature, with compliance resting on us, not our customers, will make it the preferred choice for 2010. Additionally, we have several product enhancement programs underway. Our customers will see a new seat frame, new electrical system, and new mirrors from us later in the year, all of which we have made great progress on over the summer. And while we are striving to improve the product experience for our customers, we at the same time are focused on improving the quality of the product coming out of our plants. I feel that when we look back on this summer, IC Bus will have made great strides in improving the long-term satisfaction of our customers.
STN: WHAT ROLE DO IC BUS’ DEALERS PLAY FOR THE COMPANY?
JM: Our dealer network is one of the greatest assets, we think it is the strongest dealer network in the industry. Part of what makes IC Bus who we are in we believe in providing support to our customers from start to finish, having them “covered” if you will. Our IC Bus dealers play that role for us. They are the conduit through which we work with customers, thus vital to our continued success.
STN: HOW IS THE COMPANY DOING FINANCIALLY IN THIS DOWN ECONOMY?
JM: IC Bus is financially sound. As part of a larger organization such as Navistar, we have been able to benefit from an organization that is diversified in its business, not solely relying upon the school bus or truck market. Within IC Bus specifically, our extension into the global commercial bus business has helped us diversify our revenue streams, which in a down school bus market allows us the ability to continue to reinvest into our school bus business.
STN: HOW IS IC BUS LEVERAGING NAVISTAR’S RELATIONSHIPS THROUGHOUT THE MEDIUM- AND HEAVY-DUTY MARKETPLACE (I.E. RECENT ASSET PURCHASE AND FORMATION OF MONACO RV LLC, INTERNATIONAL MOVEMENT WITH MAHINDRA MAHINDRA, ETC.) ECONOMIES OF SCALE?
JM: Through the business and relationships Navistar has in the truck market, IC Bus is able to draw upon these not only to leverage economies of scale with suppliers but also in product development. Our inventory of available components to select from in new product development or processes allows us to more effectively control development costs. For example, take something like a headlight. With our relationships around the world, we can tap into existing componentry, versus developing it from scratch ourselves. This allows us to control costs while still brining a world class school bus to market.
STN: WHAT IS THE CURRENT VIEW FROM IC BUS OF THE STATE OF THE SCHOOL BUS INDUSTRY?
JM: We see the industry being down this year about 20 percent. With the economic downfall, school revenues are down, leading to a decrease of bus purchases. This unfortunately has been added onto an industry that had already been facing pressure. If we look back to before the economic collapse, the industry was shrinking due to revenue short falls, rising fuel prices, and parental indifference to school bus service. This decline, while important to me as an employee for a bus manufacturer, is important as well as I’m a father of school age children. I want them to be able to ride the bus to and from school, which is why groups such as the American School bus Council are so important. We will have a few months left (as of this interview), and the potential for ordering in advance of the emissions change, but the reality is that many school districts stared a new budget year July 1, and it is this fiscal year where they will feel the hit of the economy. While school districts may want to order prior to the emissions change, a lot will not have the money to do so.
STN: DO YOU SEE ANY SPECIFIC TRENDS THAT ARE FUELING YOUR CONFIDENCE FOR THE LONG-TERM STRENGTH OF SCHOOL TRANSPORTATION?
JM: What gives me confidence in the long term strength of the school bus industry is the fact that a lot of people care about it. When visiting with customers, you can see the passion they have for what they do, that they believe in the benefits of the yellow school bus. And knowing that they are supported by great organizations such as NAPT, NASDPTS, NSTA and the American School Bus Council, give me confidence that the school bus industry will not only survive, but grow and prosper.
STN: CAN YOU EXPLAIN/BREAK DOWN THE RECENT $6,000 TO $8,000 PRICE INCREASES FOR YOUR 2010 VEHICLES? HOW MUCH IS TIED TO THE NEW ADVANCED EGR ENGINE AND HOW MUCH IS TIED TO OTHER MATERIALS?
JM: With each emissions change, bus and engine manufacturers have incurred costs to comply with the strict emissions standards set by the EPA. While I can’t break down the cost between engine and vehicle, with stricter emissions controls comes research and development costs to meet the standards. Navistar’s engine group has spent millions of dollars on R&D to be able to develop and hone MaxxForce Advanced EGR. While we understand our customers have a difficult time absorbing any price increase, we fell they will appreciate the benefits.
STN: WHAT IS THE IC BUS VISION OVER THE NEXT SIX MONTHS, YEAR FOR WEATHERING THE CURRENT ECONOMIC CONDITIONS? ARE THERE LONGER RANGE GOALS?
JM: Our plan to weather the economic storm is simple; we have to stay committed to executing on our strategy. First, we have to deliver 2010 EPA compliant engines using MaxxForce Advanced EGR. We are on track, but it is important that we stay focused to ensure we deliver engines and buses that perform as our customers demand. Second, we have to continue to work to control bus costs. Keeping the pressure on now will only benefit our customers when the economy begins to turn around and commodity prices trend upward again. Finally, we need to deliver on the product programs that we have designed to improve our customers’ experience with our buses. New seat frames, new electrical harnesses and mirrors, along with longer ranging programs, designed to improve the operational experience our customers have with our buses.
STN: HOW BIG OF A ROLE DO YOU SEE PRE-BUYS AHEAD OF THE 2010 ENGINE REQUIREMENTS PLAYING INTO PURCHASING DECISIONS THIS YEAR?
JM: We feel the impact of a pre-buy will be small. Many customers would like to, but simply do not have the funding to do so. Some will be the recipients of grants, which will allow them to advance their school bus buys. But the federal dollars to do so were stretched pretty thin. A lot of customers looking for federal assistance with their purchase did not receive funding.
STN: COMMODITY PRICES HAVE BEEN ON A YO-YO FOR THE PAST YEAR. WHAT IS IC BUS DOING IN RESPONSE TO THESE COSTS FROM A MANUFACTURING STANDPOINT? IS THERE ANYTHING IC BUS IS DOING TO HELP ALLEVIATE SOME FINANCIAL STRAIN ON CUSTOMERS?
JM: From the manufacturing side, we are continually looking to control costs. Commonly through improving our manufacturing efficiencies or through supplier selection and negotiation, but also through product enhancement. For example, with our redesigned seat frame, we are able to eliminate about 60 percent of our welds, which will dramatically improve the durability, reducing the back-end costs for both IC Bus and our customers. For our customers on the sales side, we are able to offer budget constrained school districts financing options, which allows them to manage their available budget to get them the buses they need. We have several options available and can work within a number of parameters.
STN: HOW DOES IC VIEW THE RECENT BANKRUPTCIES OF CHRYSLER AND GM AFFECTING ITS BUSINESS, EITHER DIRECTLY OR INDIRECTLY? ITS SUPPLIERS?
JM: The difficulties within the automotive industry do impact school bus OEMs, as we use a lot of the same suppliers. At IC Bus, our purchasing division has been working to ensure our supply base is strong, and in areas where there may be some concern, find new suppliers that can meet our supplier and product standards, as well as help control costs. IC Bus has several hundred suppliers, which with the economic turbulence, we have seen some unable to continue to support us. But as some of the suppliers have dropped off, other, new, stronger, suppliers have taken their place.
STN: RECENTLY, IT WAS ANNOUNCED THAT NAVISTAR WOULD RECEIVE A $39 MILLION FEDERAL GRANT TO COMMERCIALIZE ELECTRIC VEHICLE TRUCK TECHNOLOGY. WHAT IS THE EFFECT OF THIS MONEY ON IC BUS?
JM: The $39 million grant from the Department of Energy will be focused on developing all delivery trucks. While IC Bus may be able to indirectly benefit from the technology development in energy storage and use, the delivery vehicles will be a different class vehicle than used in the school bus industry. I am excited about the opportunity presented for IC Bus through a grant awarded in April 2009 for $10 million to develop the next generation plug in hybrid school bus. Which this grant, we will be able to electrify accessories on the bus and turn the engine off, allowing the school bus to run in an all electric mode for a short time, drastically improving fuel economy and reducing emission output.
STN: THANK YOU.
From School Transportation News Magazine, November 2009 issue.
Navistar has introduced a new online entertainment channel. Customers will be able to learn about Navistar’s MaxxForce brand engines with the launch of MaxxForce TV, an online channel devoted entirely to trucks and engines that can be viewed at www.stnonline.com/go/355. The inaugural series, “Maxx IQ,” is a game show hosted by Joe Elmore, host of the television show “Horsepower TV” on the Spike Network. In each fast paced segment, Elmore tests the engine smarts of drivers at truck stops and other locations across the country for a chance to win cash and prizes.
From School Transportation News Magazine – November 2009 Issue
Filed under: Finance, IC, Iowa, Leasing, Minnesota, School Transportation News Magazine
Clearing up the myths and misconceptions behind leasing a school bus.
By Stephane Babcock, School Transportation News Magazine, April 2009
Schools are tightening their belts. And some are trying so hard that schools buses are getting squeezed out of budgets completely. Now, more than ever, districts need to research new options to fill the constant demands of school transportation.
Taking the Fear out of Leasing
With the economy putting a stranglehold on personal, business and educational budgets, everyone is looking for new options to stretch their dollars to cover all of life’s necessities. For school districts, that may mean re-educating themselves on what the term “leasing” really means.
“In today’s world, people are sometimes fearful of what the word lease means of they’ve had a bad personal experience with it. That’s why I can it an installment purchase,” said Ken Kaminsky, president and COO of Traxis Financial Group, the financial services arm that works closely with Blue Bird and its customers.
Even when the country’s economy in dire straits, the not-too-distant future is much brighter in many people’s minds. Leasing, according to Kaminsky, gives school districts the ability to purchase the buses they need now and stretch the payments over a period of time that is more manageable. For example, when people purchase a home, they usually have a mortgage. At the end of the mortgage’s term, they own the home. In this same way, people can acquire and procure a school bus. Essentially, they are making payments over a period of time and then own the school bus at the end of that period.
“People can optimize and maximize their working capital and their budgets by using financing to get the buses that they need to meet the requirements of their different communities,” added Kaminsky.
Some districts are already taking advantage of leasing’s advantages. Gary Walk, fleet manager for Aurora, Colo., Public Schools, first looked into the leasing option to purchase the buses he needed to immediately replace older vehicles he was forced to retire.
“There are financial companies out there that would like your business, so you do have a choice getting the very best proposal,” said Walk. “In the long run, you will be paying more for the leased buses. But remember, you have them to use right away.”
After purchasing a 56-passenger special needs bus, one multi-function bus, support fleet vehicles and some related equipment outright, his department’s budget was almost gone. With the money he had left, Walk entered into a lease/purchase agreement for four, 77-passenger school buses and one 16-passenger bus with a wheelchair lift.
Keeping it in the Family
For the three large bus manufacturers, financing and leasing options are just a phone call away. Blue Bird, IC Bus and Thomas Built Buses, as members of much larger conglomerates, have financial services partners in the form of Traxis Financial Group, Navistar Financial, and Daimler Financial, respectively. This close relationship is available to help customers in the end, as the interconnected groups understand the distinct nature of the school bus market.
“Our direct association with IC Bus allows us to stay close to the market needs, helping keep our rates and programs competitive, ultimately offering our customers the best finance options in their bus purchase,” said Craig Medvec, bus marketing manager of Navistar Financial.
With the nuances associated with school buses, whether it be the differing laws and requirements between states of the industry-specific federal laws, some would have a hard time speaking intelligently with customers, according to Kaminsky.
“Traxis’ ability to focus solely in the transportation marketplace allows it to be aware and educated to those very specific details.”
The connections beyond the school bus market can also benefit the OEMs and, in the end, the customer.
“A major advantage is that Thomas and Daimler Financial are both part of Daimler AG, a global and diversified company that also includes the Mercedes-Benz and Freightliner brands,” said Keith Courtney, Daimler Financial’s sales manager for municipal and bus finance, adding that he believes this will help the company to weather the current economic storm.
Options and Benefits
Once districts get past any initial phobias, they can begin to learn more about the options available to them in terms of leasing a school bus. They key, according to Baystone Financial Group Vice President Blake Kaus, is finding a company that understands the business and is willing to work with the customer in order to provide them with the best option available.
“What may initially appear to be the best option may not actually be the best once all the final details and costs are considered. It will simply be important that a customer understands the variables involved when comparing leasing options and selects the best one for them,” added Kaus.
Although the commercial transportation leasing and financial market has been severely impacted by the current recession, there are bright spots.
“For customers with good credit, interest rates are at historical lows, and manufacturers are making deals to move inventory,” said Edward P. Kaye, president of Advantage Funding. “A sound and experienced finance or leasing company should be able to tailor a finance program to the district’s needs.”
These programs can offer options that range from one-year to 10-year leases, with monthly, quarterly, semi-annual or annual payment options. Navistar Financial offers tax-exempt leasing to school districts which can help them balance budget constraints with the need for new school bus purchases.
“Through municipal leasing, school districts can make their budgets work harder for them, allowing them to spend the same amount while increasing the number of old buses replaced with new, more efficient vehicles,” said Medvec.
School districts must also consider the fact that prices will likely increase with the 2010 emissions requirements.
“Purchasing and additional bus or two and financing them…is less expensive than it will be with next year’s anticipated price increases,” said Daimler Financial’s Courtney.
In the end, educating school districts on the options is the first and most important step to this financial equation.
“I think it’s incumbent upon us to make sure people know they have options at their disposal and that they just need to make an informed and educated business decision that will make sense for them and help them optimize their existing budgets,” added Traxis’ Kaminsky.
** If you have any questions about leasing, please contact our sales manager Jason Anderson at salesmanager@hoglundbus.com or 763-295-2955. **
Filed under: School Transportation News Magazine
By Denny Coughlin, Minneapolis Public School Fleet Manager from School Transportation News Magazine - March 2009
There has been a lot of concern over the age of the tires we are using, even new tires. A Dateline NBC news segment last year told of tires stored in warehouses for years but being sold as new. So how can we tell how old a tire really is? Read the DOT number.
Each tire manufactured in the United States has raised lettering located near the bead area with the letters “DOT”, of the U.S. Department of Transportation, followed by a series of alphanumerics. If we can understand what these mean, it will help us understand the tire better.
The first set of, usually, two letters after DOT represents the manufacturing facility. Each tire manufacturing facility is assigned a unique set. (Click here to find the code for each facility) The next two letters indicate the tire size. These will be in code followed by the tire group or batch number. This may be referenced in a recall situation. The last set of numbers is the one we’re more interested in. We cannot tell the exact date the tire was made, but we know the week and the year.
The first two numbers will range from 00 to 52 corresponding to the week in the year; the last two represent the manufacture year. For example, a tire manufactured on Feb. 5, 2009 will be represented by the characters 0509, as the date falls during the fifth full week of the year. You may see some tires with a three-digit date code indicating the week of the year, with the final digit representing the last number in the year code. These pertain to tires manufactured in the 1990’s.
Each time the tire is recapped, the tire is branded with another set of numbers usually located just above the initial markings. The first four letters will start with an “R” to represent a recap, followed by the unique three letters that represent the recapping facility. The four-digit date code will again be branded into the rubber. A brand will be added each time the casing is recapped, so you can see how many times the casing has been recapped.
How old is too old? There is no simple answer. We know there are factors that deteriorate the compounds of the tire, including exposure to extreme sunlight in hot climates. Tires that are run low on air pressure cause extreme heat and can weaken or break the cords and deteriorate the rubber. Tires that are overlooked or extremely over inflated can be susceptible to damage when they run over objects or curbs.
We are fortunate in the school bus industry that we are relatively easy on tires. We do not carry extremely heavy loads, we do not run long distances at high speeds and, for most of us, we have good roads to operate on. You may think we are faced with harsh conditions, but when compared to long-haul, fully-loaded trucks or construction equipment, we operate in comparatively mild environments.
Because we must replace the front tires with new tires, we are constantly supplied with never-capped, or virgin, casings. Many of us insist on having our own casings returned with the new caps versus putting our casings into and later selecting them from a pool. We know the history of our casings, but we don’t know the history of those from other fleets. While there is criteria that determines if a casing can be recapped or not, the factors of past load and heat conditions are difficult to determine.
Tires have been manufactured with a bar code attached for many years. As long as the bar code can be read, it can be tracked. Most top quality recapping shops have equipment that can look at the tire much like an x-ray to determine the structure of the tire casing. These files can be kept in storage for future reference.
There are simple things we can do to manage our tire inventory. We may look at a policy that would insist on our own casings. Due to the new (front) tires coming into our fleet, we should generally not have to recap our casings more than twice. I would look at the casings in stock, and balance the number of recaps so I don’t send in a casing with multiple recaps branded when I have a virgin casing waiting for recap. Use a reputable tire recapping shop with the more up to date equipment. Visit a couple shops to learn what equipment they have and how they test and recap your casings. Spend some time with your local tire sales representative. Learn about the new tread designs and what is new in tire technology. It may save a lot of money for your fleet.
The Minnesota Association for Pupil Transportation kept its members informed on everything from state laws to upcoming conferences in its final installment of the association’s newsletter for 2008. Newsletter editor David Peterson from St. Paul Public Schools reminded drivers to report any and all traffic violations – a must for any commercial driver in the state – and gave readers a visual recap of the recent NAPT conference, including a photo of STN Leadership Award winner Kanoe Cockett. Some news on an online discussion forum on the association’s Web site – www.mnapt.org – was also included, as were dates for the upcoming MAPT/MSBOA Joint Spring Conference in Mankato.
From School Transporation News Magazine – March 2009
From School Transportation News Magazine – March 2009
Sound Solution in Minnesota
State Sen. Rick Olseen introduced a bill to correct difficulties that cropped up after a law he authorized requiring Type III school bus drivers to get physicals caused problems for drivers at schools for the deaf.
Olseen introduced the orginial bill requiring drivers of vans and Suburbans to undergo physical examinations, submit to background checks and drug and alcohol testing and to undergo safety training last year after a critical statewide audit. But the physical requirement unintentionally prohibited some hearing-impaired staff at schools for the deaf from operating the vehicles.
The revised bill specifically exempts employees not hired expressly for the purpose of operating a Type III vehicle from the requirement. Sen. Olseen said these employees will still be subject to school employee background checks, and an annual review of their driver licenses should provide fair protection without the cost to districts. After the first bill was passed, he got many calls from districts about this burden, he said.
Not all are happy with the revised bill. The Minnesota School Bus Operators Association said the changes do well to help those hearing-impaired employees but go too far in eliminating requirements for teachers and coaches. The organization would like to see all who drive subject to the same requirements.
