BusTalk

[R62CNG]

From New Flyer's website: June 24, 2014

New Flyer to Focus on Xcelsior® as Single Heavy-Duty and BRT Transit Bus Platform
•New Flyer to rationalize to a common Xcelsior® platform for all heavy-duty and BRT transit buses
•Allows for enhanced New Flyer lifecycle service, parts and customer support programs
•Production of NABI LFW and BRT models to be phased out, with the Anniston, Alabama facility transitioning to Xcelsior in the second half of 2015
•Aggressively promoting MiDi®, New Flyer’s medium-sized, low-floor bus, now in production in St Cloud, Minnesota
•Enables transition to common information technology infrastructure and provides opportunities for cost reduction and avoidance and sourcing synergies to enhance New Flyer’s overall competitiveness
Winnipeg, Manitoba, Canada – June 24, 2014: (TSX: NFI) (TSX: NFI.DB.U) New Flyer Industries Inc. (“New Flyer” or the “Company”), the leading manufacturer of heavy-duty transit buses in Canada and the United States, announced today plans to focus on a single heavy-duty transit and BRT bus platform that features its world-class Xcelsior.

Xcelsior is the latest generation of New Flyer’s low-floor vehicle platform that revolutionized North American transit in the early 1990s. Xcelsior comes with a variety of propulsion options including clean diesel, natural gas, diesel-electric hybrid, electric-trolley, and now, zero emission battery-electric. Similar to New Flyer’s previous bus models, Xcelsior is customized and configured to meet each customer’s unique specifications. New Flyer plans to further enhance its BRT styling options for the Xcelsior platform by building on NABI’s extensive BRT experience and New Flyer’s customer input.

“New Flyer has made significant investments to make Xcelsior a world-class product. Our focus on a single heavy-duty bus platform enhances our ability to innovate, optimize our supply chain, improve product quality and enhance our competiveness,” said Paul Soubry, New Flyer’s President and Chief Executive Officer. “We will transition production at NABI in Anniston, AL from the LFW and BRT to Xcelsior, which enables us to avoid redundant product upgrade costs and duplicate support infrastructure and demonstrates our continued investment in New Flyer’s future.”

Through the transition, New Flyer expects to:
•Improve its competiveness in the U.S. and Canadian markets by leveraging its combined bus volume, production, and purchasing for greater efficiencies,
•Streamline design, sourcing, standardization, and overhead for better product control (such as eliminating redundancy and future costs in designing products, including refreshing bus and propulsion platforms, testing and engineering), and
•Make product enhancements and optimize aftermarket support to better serve customer needs.
“New Flyer acquired North American Bus Industries, Inc. in June 2013 to broaden our market position, to improve our technology leadership and to expand our aftermarket parts business, while providing public transit operators with long-term stability and excellence in product support. Today’s announced plan is the natural evolution and optimization of product lines at New Flyer and NABI,” Soubry explained.

New Flyer expects to deliver orders as previously committed and to provide support for NABI customers of the LFW and BRT products for as long as those buses are in service. A number of NABI customers have already indicated an interest in transitioning to Xcelsior. The Company believes customers will benefit from the enhancements that result from its focus on a single heavy-duty platform.

“With the transition of the Anniston facility, we will manage the potential people impact over the coming months through redeployment, retirements and job attrition, where possible,” Soubry said. “We truly appreciate our employees’ dedication, hard work and ongoing efforts at New Flyer and NABI and for their focused commitment to our customers each and every day.”

During this transition period, management expects to invest approximately $20 million in direct operating costs and capital expenditures to complete the transition, utilizing operating cash flow and current credit facilities. Management anticipates these direct operating and capital expenditures will be paid back through captured cost reductions and synergies within approximately two to three years. Management expects to maintain the Company’s dividend policy.

Unless otherwise indicated all monetary amounts in this news release are expressed in U.S. dollars.

[R62CNG]

How will this affect the upcoming WMATA order of BRT 42s and BRT 62s? Also, isn't Dallas Dart and Houston Metro both due for new NABI LFW CNGs in the near future?

[R62CNG]

Will NABI do like what Orion did and reassign bus orders to New Flyer and elsewhere?

[Q65A]

Unless some other manufacturer arrives soon, NF and Nova will be the only 2 players left in the HD transit bus market. It is a tough market, because demand is not consistently high and public sector transit agencies often demand a lot of after-sales support for warranty claims.
In his history of Flxible, bus historian Robert Ebert said that the U.S. transit bus market was able to support multiple transit bus manufacturers from 1945-1960 because of very high industry demand for 2 main reasons:
1. Government-mandated industrial production restrictions during WW2 forced bus lines to "make do" with worn out, Depression-era equipment
2. Street railways were trying to "motorize" quickly as a means of cutting costs to stay in business during a period of intense inflation
Once those 2 big catalysts went away, there just was not sufficient demand and only the strong guys (i.e. GM and, for a time, Flxible) survived while weaker players like ACF-Brill, Ford, Mack, White and others just went away.
You could argue that the same situation developed during our modern ADB era. When the Feds were pushing their Transbus agenda, new ADBs were being purchased quickly to replace older New Look transits. At that time there was enough business to go around to support a large number of transit bus builders: GM, Flxible, AM General, Flyer, OBI/Orion, Ikarus (later NABI), Neoplan, Volvo, MAN, Gillig, Scania and maybe other brands now forgotten. Today, one transit bus builder has a wealthy parent (NovaBus is an AB Volvo property) while the market leader (NF) is a smaller independent organization. The story of OBI/Orion shows that even with a wealthy parent company, success is not automatic: Daimler Benz, a huge global automotive enterprise, apparently couldn't see a b right financial future for Orion and, on the OTR side, they gave MCI the sales/marketing/parts business in the US for Setra. The only successful Daimler buses in the U.S. are the small ones: Sprinters. Unlike the medium/heavy truck business, the annual # of transit buses needed to support the demands of the North American market is not all that big.

[R62CNG]

Orion pulled out at the worst possible time. This huge upcoming MTA order would of at least brought them time to work on the Orion VIII and Orion 9 designs. Orion's main problem was that they overbidded on orders were as others such as New Flyer and Gillig had underbidded. But I still believe Orion was a very successful bus maker, they (or rather Daimler) closed at the worst possible time. MTA/NICE (cause let's face it, the MTA and NICE are basically the same guys), TTC, WMATA, KC Metro, and many other TAs would of brought more buses from them had they stayed open, so Orion's closure was a shocker, but NABI's however wasn't. Their biggest TA's were NJT, LACMTA, and Miami MTA and now that their gone, they only have WMATA (who until now never seemed to be a NABI fan), Houston Metro (same boat as WMATA), and Dallas Dart.

[traildriver]

Isn't Gillig still around....I guess somewhat a minor player, but perhaps can gain some market share with the other's folding?

[Tiny Tim]

Gillig goes after the mid size and smaller places. Here we now have a all gillig fleet (was mixed between NF and gillig) We missed out on flxibles because of the closing of flxible and the contract was given to NF. Gillig has the state contract for Fla. ( its all low bid) So more and more are showing up here. Disney World has been buying Gilligs also the newer ones have the ramp in the rear door. MSBA had gilligs back in the day.

[R62CNG]

[Tiny Tim]

[Q65A]

I think it may have been posted on this board several years ago, but one of the main reasons why only a few bus builders respond to RFPs (Requests for Proposal) issued by some big transit agencies like MTA is the tough after-sales support demanded by such organizations. I heard at www.nycfire that the same situation is true at FDNY. The nation's largest builder of fire apparatus is Pierce (Appleton WI) yet they usually don't reply to FDNY RFPs, while Seagrave, Ferrara and (most recently) KME are interested. Big organizations command a lot of clout prior to the closing of a sale. They usually are not beginners at acquisition of equipment and they know exactly what they want. For suppliers to these agencies, however, winning a big bid can be a "good news/bad news" proposition: you have to walk the walk after talking the talk (especially in the first-article inspection process and warranty support areas).

[traildriver]

[Q65A]

I work in Edison NJ and in years past I used to drive up Coolidge St. in South Plainfield, right past the Prevost facility. You are quite right: NYCT Novas were frequent "guests".