Enrique Boull’t, dividing the contract will stimulate the industry through two national supply chains and help avoid a downward spiral toward deflation. Reynolds said A-Z has increased its parts inventories to sup-
port the newer green fleet. “Having multiple vendors enables us to be our customers’ parts dealer even in a down economy.” Reynolds agreed the LAUSD contract will benefit hundreds of suppliers across the country. Todd Franssen, Southern California sales manager for BusWest
said dealers there are fortunate California is so adept at obtaining grants to buy CNG and propane vehicles. “Tat’s the reason L.A. Unified and other districts around the
state are able to buy these buses,” Franssen said. “California is good at getting federal funds to help out.” Hedgecock agreed. “Economic stimulus incentives have helped
(Tomas) customers incorporate more environmentally-friendly buses into their fleets and we’ve experienced an increase in hy- brid and CNG bus orders.” Te propane and CNG markets come with considerable costs
that must be subsidized by federal and state grants. CNG buses cost 25 percent to 35 percent more. Grants from the California Air Resources Board (CARB) and local air quality management districts help school districts buy CNG buses, but school districts must bear the increased maintenance costs, which includes replacing CNG tanks every 15 years at about $25,000 per bus. Money is available for new bus purchases and retrofits, but not for maintenance and CNG tank replacement. Te CNG bus market is a blessing for suppliers who can pro-
duce the specialized parts and equipment manufacturers require for “green” buses, and a curse to suppliers who lack the capital to convert or expand their services. Another challenge is the demand for diesel buses is dwindling faster than the demand for CNG buses increases. Only a few states have shown an inclination to follow California’s lead, but none have matched the commitment. A question that remains is how much longer an industry which
has developed a noticeable limp can continue to support three major manufacturers and hundreds of dealers and suppliers. Te parent companies of the major OEMs are quietly reducing their de- pendence on traditional bus sales while combining their CNG and clean diesel opportunities with those in more lucrative markets. Forecasts are cloudy. Everyone is trying to avoid a deflation
scenario. If demand goes through the floor even the Big Tree would suffer gaping wounds in their bottom lines. Franssen agrees the school bus business is cyclical and cau-
tions that it is not immune to the economic vulnerabilities of other industries. “Every 10 years or so there is a downturn, but it has never been
this bad. Te days of bus companies that only sell traditional die- sel buses are dwindling,” he said. “You can’t survive just selling traditional school buses and not provide any other services or products. In time I don’t think there will be enough business to support three major manufacturers.” ■
38 School Transportation News Magazine August 2010
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