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June 01, 2007  |   Comments (0)   |   Post a comment

Q&A: Large Bus Manufacturers

Key executives at the three large bus OEMs weigh in on industry developments and challenges.

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Thomas Built Buses

John O’Leary
President and CEO

How are the Type C and Type D markets looking for the 2007-08 school year?
The market spiked up by approximately 4,000 units in 2006, primarily due to EPA 2007 engine pre-buy activity. It appears the market is retreating to its previous annual level of approximately 40,000 buses in 2007.

Do you expect the prices of the raw materials (steel, rubber, copper, etc.) to continue to climb? If so, will school bus prices need to be adjusted upward?
Yes, school bus prices, like most things in life, will continue to trend upward. Higher energy costs and rapid development in other countries continues to put pressure on the cost and availability of raw materials for all manufacturers. However, we do not expect to see truly large increases again until the next round of EPA emission changes in 2010.

In a recent SCHOOL BUS FLEET survey, 52% of respondents described the quality of new school buses as “good”; 17.9% as “excellent”; 18.5% as “fair”; and 3.5% as “poor” (8.1% had no opinion). How does that fit with your assessment of customer satisfaction in general?
I’m not surprised by the survey results. People naturally tend to compare the quality of commercial vehicles to their personal automobiles. Due in large part to sheer volume and frequent turnover, automobile quality has improved at a faster rate than that of trucks and buses. Unlike car companies, none of the school bus OEMs can spend a billion dollars on tooling and automation for each product line, so we are much more vulnerable to human error.

Layer on top of that a level of complexity that is easily 100 times that faced by the car companies and you can begin to understand the challenge we all face. Despite this, operators are able to run buses significantly longer, in some cases twice as long, as they did as recently as 10 or 15 years ago. So, quality is definitely improving, but expectations continue to rise, and rightly so. At Thomas we spend a lot of time and resources on employee training and improving product quality. As we implement the DaimlerChrysler Production System and Six Sigma, we are seeing measurable gains.

What are the key concerns of your customers these days in regard to your Type C and Type D products?
Customers today are asked to do more with less. This results in longer school bus lifecycles and the need for reliability to keep their costs down. Some customers who were replacing buses every 10 years are now mandating 20-year life spans. This is only possible because the quality of buses today makes this economically feasible. That goes hand-in-hand with the level of service they receive from their local dealer. If a bus does break down, they need to quickly get it fixed because, in all likelihood, they don’t have a large number of spare buses.

Are you sensing a lot of customer anxiety about the care and maintenance of 2007 EPA-compatible engines and aftertreatment systems?
New technology usually brings some anxiety, and there is no doubt that the ’07 engines will have a learning curve from an operational and service perspective. We’re pleased that this industry sees the environmental benefits of the 2007 EPA engine and is leading the charge to purchase this clean technology.

Looking 10 years into the future, can you predict how school bus design and engineering might change to adapt to customer needs?
Digital technology is having a significant impact on our industry. Multiplex wiring is now available from a number of manufacturers. In 10 years, it is likely that every bus will have a GPS system as well as some type of student tracking technology. Ten years is probably too soon for the more advanced forms of alternative fuels such as hydrogen, so clean diesel will continue to be the fuel of choice in our industry for some time to come.

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