Q&A: Change — and Opportunity — at Collins Industries’ Bus Division

In mid-January, Kent Tyler narrowed his focus at Collins Industries while, at the same time, broadening his responsibilities.

On Jan. 19, Tyler was named president of the bus division of the Hutchinson, Kan.-based company, taking over the helm from Paul Kessler, who left the company to pursue other interests.

Tyler previously was corporate vice president of sales and marketing, which meant that he dealt with the company’s entire line of specialty vehicles — ambulances, fire emergency vehicles, terminal trucks and road construction equipment, in addition to Type A school buses.

Now, Tyler can focus on the company’s bus division, which comprises Collins Bus Corp. and Mid Bus Inc. Collectively, these divisions make Collins the largest Type A school bus manufacturer in North America. The divisions have manufacturing facilities in Kansas and Ohio.

Tyler has been with Collins Industries for nine years. Before joining the company, he was vice president of Ackerman McQueen, a full-service national marketing and advertising agency.

Tyler moves into his new position during a transition period for the company. Last fall, Collins entered into a merger agreement with AIP/Steel Partners II LP, a private investment partnership headquartered in New York.

Tyler, who says he’s excited about the challenges of his new position and the future of the company, recently answered some questions posed by SBF Editor Steve Hirano.

Based on your experience of more than nine years at Collins Industries, what are the company’s key strengths?
Collins Industries has been a great company to work for because of our employees and dealers that represent all of our products. I have been fortunate to be a part of an organization that continues to grow revenues and build market share in all the businesses we represent. As you know, Collins Industries holds No. 1 or No. 2 market share positions in every market we participate in, and we are poised for growth in all our divisions.

In addition to our bus division, Collins Industries is a leading manufacturer of ambulances (including medical attack vehicles, rescue vehicles and fire emergency vehicles), the nation’s second largest manufacturer of terminal trucks and a leader in the road construction and industrial sweeper markets. Since 1971, the company has grown to more than 1,000 employees in six plants, comprising more than 1 million combined square feet of manufacturing space.

Are you looking forward to focusing all of your efforts on the bus division, as opposed to Collins’ ambulance and fire vehicles?
Absolutely. The bus company has always been exciting and challenging when you look at the quality of manufacturers involved, the competition that exists and, most importantly, the people involved within the industry.

And as the largest Type A manufacturer, we may be small in annual volume sales, but our numbers and dealer organization are tremendous. We are the largest manufacturer of small school buses (known as Type A) in North America. Collins Bus and Mid Bus sell and service their buses through an authorized national distributor network with manufacturing facilities in Kansas and Ohio. These companies are wholly-owned subsidiaries of Collins Industries.

How do you view the health of the Type A market for 2007?
It’s a very competitive market, no question. But there is certainly opportunity to grow.

In addition to the traditional yellow market, we believe the non-conforming van issue is a real issue that won’t go away. And as manufacturers, we continue to attempt to educate the public on these issues. I think the lack of education on the issue of safety has to be our largest concern within the industry.

One manufacturer can’t do this alone. It takes a united effort to put together a plan and a purpose for this issue. We need to educate the public on not only the differences of a certified bus vs. a van, but the multitude of advantages a bus can offer their particular school district.

How did Collins Bus and Mid Bus perform in 2006?
Both companies performed very well in 2006, and we expect them to do the same this year. We are fortunate to have a good mix of national account business, national and regional contractor business, as well as strong school district orders through our national dealer organization.

{+PAGEBREAK+} In addition, we have made a number of manufacturing changes over the past few years at both bus facilities. In 2002, Collins Bus underwent a significant, revolutionary redesign, resulting in product quality improvements and more efficient manufacturing.

And in 2005, the Mid Bus product line underwent a redesign that included significant investments in new equipment and improved manufacturing processes. These redesigns have resulted in improved product consistency and quality, reduced warranty costs and an enhanced ability to meet customer product demands.

What impact will the new ownership of Collins Industries have on the bus division?
The acquisition of Collins Industries Inc. by AIP/Steel Partners represents a significant opportunity for us. Early on, we established the following motto for the company: “Respect the past ... embrace the future.”

Certainly, nobody likes or wants change, at least initially. However, we have tried to send a clear message to our employees, dealers and customers that our new ownership brings a team concept to the table. That is, employees need/want to feel empowered to bring new/better ideas to the table that can help the company. And again, we have told employees to embrace the future through quality, technology, innovation and leadership.

Do you expect the MFSAB market to continue to grow? If so, in what sectors?
As the leader in the small school bus market, we are acutely aware of the inherent dangers non-conforming vans represent to the childcare industry. As you know, over the past few years we have been active in offering alternatives to 15-passenger vans by developing certified buses. With a reported 500,000 of these passenger vans on the road, we believe there is a significant need to replace them with buses that meet Federal Motor Vehicle Safety Standards.

Structurally, 15-passenger vans are significantly different from small school buses. In contrast to a certified school bus design, a van has a much thinner outer layer of sheet metal and thin interior vertical strips to hold the outer layer in place. Many of these vehicles use cardboard as the primary component between the exterior of the vehicle and the interior compartment.

And I think that perhaps the biggest surprise to administrators is how little price difference there is between a non-conforming van and a certified bus that meets all the federal standards. I think this is especially true when you factor in life expectancy of a bus versus a van, insurance costs and the overall reduction of liability if your operation is involved in an accident.

Unfortunately, we don’t believe the general public understands the inherent safety risks involved with these 15-passenger vans. These vans are designed to carry 10 or more passengers, yet don’t meet federal school bus safety standards and are more susceptible to rollovers.

The bottom line is that this market will continue to grow, especially as the white activity bus takes the place of the yellow Type A bus in many school districts.

What are Collins Bus and Mid Bus’ goals for 2007?
With new ownership in place, we have a clear direction for our employees, dealers and customers to focus on quality and customer satisfaction and on being the low-cost provider.

What are the biggest challenges facing Collins Bus and Mid Bus these days?
Staying No. 1 is always a challenge. We have great competitors in the marketplace, and we must challenge ourselves to continue to deliver quality products and services to all of our customers.

Another challenge will be the integration of new initiatives and product changes in the marketplace. We met with all of our dealers last December and gave them the opportunity to have a clear vision of who our new ownership is and how the company will operate in the future. As with our employees, I believe we must show a new sense of openness for the future with our dealers and our customers. We must send the message that we are ready, willing and able to listen to their concerns/issues and act on those concerns/issues.

Another area that I’m excited about is technology. We have made a formal commitment to bring the systems to the sales force and dealer organizations that enable our facilities to talk more effectively/efficiently to each other and to be more responsive to our customers’ needs. Again, our message has been to our dealers and employees that now is the time to embrace the future through quality, technology, innovation and leadership.

What’s the biggest challenge facing school bus OEMs, in general, these days?
Responding to the customers’ needs in a timely fashion with innovative products and ideas. There is no question this company, just like every company, has challenges facing them, but with those challenges come opportunities.