5 Questions: Blue Bird's Phil Horlock on Innovation and Optimism in School Bus Manufacturing

In May 2023, Phil Horlock slipped out of retirement at Blue Bird Corporation after less than two years serving on the company’s board of directors and acting as a senior advisor, resuming the mantle of president and CEO.

Horlock had previously led Blue Bird in that capacity between 2010 and 2021, championing the company’s push toward low- and zero-emission school buses. Horlock returned to leadership after the departure of Matthew Stevenson (who now serves as president and CEO of Holley – a platform geared toward performance automotive enthusiasts).

And, starting July 1, Horlock passes the title of president along to Britton Smith. He’ll remain as CEO.

In this interview with School Bus Fleet, Horlock offers insights into the challenges facing the industry, but also his reasons for optimism for the years ahead.

1. How does it feel to be back in the role of CEO at Blue Bird?

It feels great, as though I've never been away, and the warm reception from the Blue Bird team has been amazing! I was gone for 18 months, but I have to admit, there wasn't a day when I didn't think about the people at Blue Bird, our dealers, our customers and of course, the business. I stayed on the board during my short "retirement", so I've been engaged throughout my absence. Coming back is a bit like riding a bike — you never forget how to ride it, except the wheels are turning a little faster!

2. What are your goals for the company?

I truly believe the goals are the same as they were during my first spell with Blue Bird, and also during my absence. We have a great strategy that starts with our people and culture. First, we want an engaged workforce that drives to win, is passionate about Blue Bird and looks forward to coming to work every day. Second, we want to surprise and delight our dealers and customers with great-value products and services that differentiate us from our competitors. When you look at what we have done in being first-to-market and continuing to lead in low- and zero-emission solutions, i.e., propane, gasoline, and electric-powered buses, I think this shows our continued commitment to alternative-power school buses. Third, as in any successful business, we want to drive profitable growth to ensure we thrive and prosper and that our shareholders benefit too. We've been around for almost a century, so we must be doing this right!

3. What’s your vision for increasing the popularity of alt-fuel school buses with a finite horizon for opportunities like the EPA’s Clean School Bus Program?

Alternative-fuel school buses, or as we prefer to call it, "alternative-power" school buses, is the fastest growing segment in the school bus industry. Why wouldn't we want to provide clean air around our children? Some 26 million kids ride a school bus to and from school each day and they deserve the cleanest air quality available. We have been promoting and leading this initiative for more than a decade and ended last year with almost 60% of our sales being alternative-powered buses. Incidentally, this compares with only 25% for the industry, so I think we are on the right track. A couple of years ago, the federal government announced its $5 billion funding plan for ultra-low and zero-emission school buses over five years. That's an unprecedented $1 billion a year, enough to completely fund around 2,500 electric-powered school buses annually. In the first phase of this Clean School Bus Program released last year, some 12,000 school bus applications were submitted, so we know this topic resonates with school districts and school boards. The federal government funding is designed to accelerate the adoption of low- and zero-emission buses and to increase the awareness nationwide and it's working. Yes, in five years, the funding could be over, but by this time, every economic indicator projects that battery costs will be substantially lower, making electric school buses much more affordable. Couple that with the fact that customers report that an electric-powered school bus today costs 14 cents a mile to operate compared with 49 cents a mile for a diesel bus, I'm confident that the road to clean emissions is secure. We intend to remain at the forefront, as we are today.

4. What are the greatest challenges for school bus manufacturers like Blue Bird in 2023?

Undoubtedly, the lack of robustness of the supply chain remains the greatest challenge for our industry. While we have a global supply base, shared in many instances with other automotive segments, we continue to deal with component shortages. This is a legacy of the recent COVID-19 pandemic and an impact from the war in Ukraine, where our suppliers procure many key components and raw materials. Unfortunately, these shortages delay deliveries of buses to our customers, which is frustrating for all. That said, we are seeing some easing of these supply chain issues and look forward to continued progress ahead.

5. Share what gives you optimism for the school bus market.

We have three key factors that make me very confident about the school bus market. First, there is pent-up demand for new school buses. Let's not forget that in late 2020 and through much of 2021, we saw schools close in response to the COVID-19 pandemic. In fact, many schools closed for up to nine months and weren't ordering or taking deliveries of school buses during that time. The result is that the school bus fleet aged and now about 44% of the more than 500,000 school buses on the road today are more than 10 years old. They will need replacing soon and demand will continue to be strong. Second, the industry has a historically high backlog of bus orders as a result of the COVID-19 pandemic and supply chain issues, and I know we are working at full-speed to deliver these buses as soon as possible. Nevertheless, our backlog is around five times larger than we experienced pre-pandemic. And third, we have the unprecedented funding support from federal and state governments to accelerate the deployment of ultra-low and zero-emission school buses. Overall, there is substantial momentum in the demand for school buses, and let's remember — a school bus is not a discretionary purchase. It's driven by the need to have safe, clean and reliable transportation for our school children. As I like to tell our dealer network, "It's a great time to be a Blue Bird dealer!"