Q&A: New Blue Bird Exec Sees Positive Signs

Greg Bennett, Blue Bird Corp.’s new president and CEO, joins the company in a year when it expects school bus industry market volume to be down about 20 to 30 percent.

Unlike 2006, when school bus sales spiked in advance of the EPA’s 2007 emissions standards, there appears to be no fuel for a pre-buying rally ahead of the 2010 standards.

Yet Blue Bird reported receiving a record number of orders in March — typically a slower time of year — and boosting production capacity to meet demand.

Bennett, who has decades of experience in manufacturing management, also expresses the company’s confidence in its choice of engine technology for 2010, selective catalytic reduction, and he points to increasing success with Blue Bird’s alternative fuel school bus offerings.

Bennett discussed key industry issues and recent developments at Blue Bird with SBF Executive Editor Thomas McMahon.

SBF: Tell us a bit about your professional background.
GREG BENNETT: I have more than 30 years of experience in manufacturing management with domestic and international organizations, including the Key Automotive Group, the Aero Structures Company and United States Marine Repair. Most recently, I served as a managing director of Peguform GmbH. I’ve held various leadership positions and served on several boards for manufacturing companies. I’ve also held materials management positions with General Dynamics – Lockheed Martin for 13 years and, for a short time, at Marmon Motors, which was the manufacturer of premium Texas-made Class 8 trucks for the owner/operator market.

As president and CEO of Blue Bird, what are your key goals?
My goal is the long-term health and viability of the company and to ensure that we are bringing all disciplines of the corporation together into a continual performance improvement effort.

What is the top priority for school bus buyers right now?
The question would best be put to the school bus buyer, but we hear the answer is multi-faceted. There is a lot on the school bus buyer’s plate for right now: decreasing transportation budgets, ensuring they buy buses with the lowest total cost of ownership, understanding and ensuring buses meet new federal and state standards, forecasting fuel costs and much more. The most important priority still remains the safe transportation of schoolchildren.

What kind of feedback has Blue Bird been getting about the new All American Type D school bus?
I would suggest a visit to our Website [www.blue-bird.com] to hear and see coverage of industry professionals as they offer comment about our next generation All American Type D school bus. Throughout the entire development process, we did extensive research, including focus groups with dealers, drivers, mechanics and other school transportation professionals. We are being told we hit the mark with increased visibility, improved accessibility, serviceability, driver ergonomics and the list goes on. We continue to listen to the marketplace and can say there will always be continuous improvements implemented through out the life of this product, as with all products, but overall, we are very excited and proud to offer the newly redesigned All American.

What is Blue Bird hearing from customers in terms of how they feel about the new engine technology for the forthcoming 2010 EPA standards?
Well, the verdict is almost unanimous among engine, truck and bus manufacturers that SCR [selective catalytic reduction] is the best engine technology solution to meet 2010 EPA emissions standards. Major North American vehicle and diesel engine manufacturers have embraced this proven technology as the optimal emissions solution. Blue Bird joins Cummins, Volvo, Paccar, Mack and Daimler in the use of the SCR solution. SCR technology is clearly the best diesel-powered choice for meeting 2010 emissions standards with best-in-class fuel economy and ease of serviceability. Our customers are asking for the facts, and we are aggressively providing information about 2010 EPA compliant buses. We will continue to provide additional education opportunities about 2010 EPA emissions standards into the coming transitional year. Anyone with questions can also visit the 2010 emissions page on our Website.

In 2006, there was a strong increase in school bus sales, apparently due to pre-buying before the 2007 EPA standards. Are you seeing a lot of pre-buying activity this year?
There may be some pre-buying, but as yet, we really wouldn’t say that we have seen a strong increase due to the approaching new emissions standards.

Do you think that the upcoming 2010 standards have prompted more interest in Blue Bird’s propane and compressed natural gas (CNG) options?
We have been enjoying increasing success with both our propane- and CNG-powered school bus offerings. I think this is the result of many factors. They are fine buses. They are both clean and powerful and are already EPA 2010 compliant. The Propane-Powered Vision is the lowest cost OEM-produced, alternative fuel-powered school bus in the market. Our dealers, sales team and marketing teams have been out building awareness of these units, and the response from every ride-and-drive has been tremendous.

Blue Bird’s CNG- and propane-powered school buses qualify for federal stimulus funds at the 50 percent level, effectively allowing school districts to buy two new school buses for the price of one. The requests for funds were due at the end of April 2009, with awards announced in June/July. Blue Bird has and continues to invest in new technology to stay on top of market needs and industry advances to further provide products that customers demand. The industry moving towards alternative fuels and eco-friendly products is not a new thing.

Blue Bird reported that it received a record number of orders in March and increased production capacity. Was this an unexpected development?
We are being very conservative in forecasting orders in this troubled economy and are managing to the order book. I have to say, the large number of orders in March was somewhat of a pleasant surprise. We like to think the orders were both a reward for, and the result of, our efforts to bring the best value in buses to market.

How is the company doing financially in this down economy?
Blue Bird is as strong as ever. The company is in excellent financial shape with strong shareholder backing. As an 82-year-old company, Blue Bird is here for the long term to serve the school bus industry with the best and safest buses. The company posted strong sales in its last fiscal year, ending in September 2008. The Blue Bird manufacturing capabilities have also been strong recently, with more than 1,700 buses delivered in one month in 2008. And as you mentioned, the company received a record number of orders in March 2009 and has opened up previously unscheduled production capacity to meet demand. This signals positive movement in the industry and confidence in the Blue Bird product.

Didn’t Blue Bird lay off some of its employees earlier this year?
Blue Bird’s employees are the core of what allows us to provide safe and reliable buses. In the current economic climate with the industry market volume down, we’re being careful with workforce adjustments to ensure our long-term competitiveness and strong position. Some cuts in our salaried force were required to make the necessary adjustments to market conditions. However, on the production side, we have added an overtime shift at our Lafayette manufacturing facility in north Georgia. While reports have competitors announcing production cuts, we’re adding a shift. Blue Bird views this as potential for further growth and a positive sign that our strategic direction is paying off.

Is Blue Bird being positioned as a company to be sold off?
Blue Bird is being managed for the long-term health and viability of the company. We are not actively marketing Blue Bird now, nor are there any plans to do so in the near future.

You recently held town hall-style meetings with Blue Bird dealers. What were some of the big issues on their minds?
Yes, we recently held town hall-style dealer meetings in Dallas and Denver. These two meetings provided a great opportunity for Blue Bird to share information with its dealer network about its current strength and growth prospects. The meetings also allowed us to gain insight from our dealers on how to continue to improve our products and services.

What role do Blue Bird’s dealers play for the company?
The authorized Blue Bird dealers are a very important part of the Blue Bird team. They provide additional insight into the industry and provide crucial feedback, which is why the town hall format was chosen for the recent dealer meetings. It gave the dealers an open and concise voice at the meetings. They gave honest feedback, and the Blue Bird leadership listened. Our dealers’ feedback was heard, and it will be used to make the Blue Bird products and services even better.

What is Blue Bird’s current view of the state of the school bus industry?
From the information available to us and from what we have observed, it appears the school bus industry market volume will be down in approximately the 20 to 30 percent range this year. Moving forward, we are cautious about the 2010 school bus market as the economy begins to rebound, but we are confident overall in the future of the school transportation industry.