Tuesday, 28 August 2012

Micro-Level Trends – North American Bus & Coach (Part 2) – Evolving Producer & Operator Structures.

Further to the societal aspect of this topic seen in Part 1, this Part 2, provides insight into the internal dynamic of the industry. With critically, particular attention drawn to the lessons that have been, and still can be, learnt from Europe; where mass-mobility transport has typically been more advanced given its historical socio-economic construct regards public transport, and the greater geo-political integration since 1989, so boosting transcontinental and tour trades.

Part 2 – The Industrial Context -

The North American sphere has historically been divided into the prime constituent corner-stones of:

a) Chassis Providers
b) Bus-Body Producers
c) Bus & Coach Operators.

In its broad societal guise, the bus and coach system is a mode of public and semi-private transport that was historically viewed – especially by liberals - as intentionally under-funded throughout the 20th century. So as to promote the scale-based 'individualism' economic interests of US auto and oil industries; which thus provides a far more complex, far-reach basis as a national economic template, and underpinning the American ideology of personal freedom.

The 'Old Guard' Indigenous Producers –

Though of course operating far earlier, the 20th century American bus-age was effectively determined in the 'conglomeratisation' effect of the 1920s. The main auto-makers – then as now Detroit's 'Big 3' providing the vehicle 'running-gear' (mechanical platform) whilst a separate (though sometimes conglomerate connected) body-building specialist would furnish an attached body – series produced or singularly commissioned.

Periodic attempts were made to overcome this structure with the appearance of new entrants seeking to construct proprietary chassis and bodies – and indeed even in earlier years wholly integral monocoque type structures – with a choice of domestic engines; typically Detroit Diesel or Cummins.

But, by virtue of size and scale, reputation and commercial dependability the established players (GM, Ford and Chrysler-Dodge) along with other brand dedicated US truck-makers (eg Mack, International, Freightliner, Kenworth & Peterbilt [now under PACCAR]) maintained a stranglehold on the sector, with little change decade upon decade.

The basic construction method of “body on chassis” remained relatively technically unchanged for 80-90 years, that standard structure similar for both large bus (based on heavy trucks) and mid / small bus (based on van chassis). The former seeing a general re-positioning of the engine to the rear for improved vehicle passenger and luggage 'packaging' from the 1950s onwards. The buses today categorised as Types A, B, C & D. relative to dimensions, GVW and passenger capacity.

For many decades Detroit's “Big 3” and in later years a few close others such as Navistar and PACCAR (directly or indirectly) had a national strangle-hold on engine rolling chassis production. The end-user bus purchaser either bought directly from bus-builders who themselves sourced the rolling chassis and added a handling margin for doing so, or in order to save on costs, separately bought the rolling-chassis and fabrication services of the bus-builder, managing the former's delivery to the latter.

This basic but effective model, much the same as the early luxury-type 'coach-built' passenger car methods, stood in place for decades, ensuring the Big 3's dominance, that of domestic bus-builder. So creating a virtuous circle of activity reliant upon economies of scale, Greyhound, Trailways and mid-size firms like Peter Pan the expansionary demand base..

The (Intermediary) Body-Builders -

The emergence of motor-car and motor-truck saw competition for specialist body-building tasks, participants from across the traditional horse-drawn wagon/coach builders, the horse-drawn tramway builders and a new crop of industry dedicated start-ups.

Whilst many over the years have been absorbed into bigger concerns or failed during recessions, today the list of North American bus & coach body fitters – from what could be considered 'old guard' roots - appears as so:

US participants include:
Advanced Bus Industries [Worthington, Ohio]
Blue-Bird Corp, (Traxis Group, Cerberus Capital Mgmt) [Fort Valley Georgia].
Collins Industries (inc CollinsBus, MidBus, Corbeil)[Hutchinson, Kansas].
Forest River (inc Elkhart Coach, Glaval Bus, Starcraft Bus) (Berkshire Hathaway). [Elkhart, Indiana & Goshen, Indiana].
Gillig Corp (CC Industries) [Hayward, California].
Goshen Coach [Goshen, Indiana]
IC Bus (Navistar International Corp) [Warrenville, Illinois]
Midway Speciality Vehicles [Elkhart, Indiana]
North American Bus Industries (NABI) [Anniston, Alabama]
StarTrans (Supreme Corp) [Goshen, Indiana]
Thomas Built Buses (Freightliner, Daimler AG) [High Point, North Carolina].
Thor Industries (bus divisions: General / Champion / Eldorado National) [various]
Trans Tech (Transportation Collaborative Inc) [Warwick, New York].

Canadian participants include:
Lion Bus (Mssrs Bedard & Chartrand) [Saint-Jerome, Quebec].
MCI (Daimler AG and KPS Capital) [Winnipeg, Manitoba]
NewFlyer [Winnipeg, Manitoba]
Prevost (AB Volvo Group) [Sainte-Claire, Quebec]

A Renewed Battle for the Middle Ground -

Within this list there are telling signs of a sector under-going a new phase of transformation, recent years have witnessed a change in the parental ownership patterns of various firms. Whereas, with only a few anomolies, yesteryear saw distinct separation of chassis-provider and body-provider, the turn of the new 21st century brought a narrowing of that chasm.

The notables being IC Bus owned by Navistar, Thomas Built Buses owned by Freightliner / Daimler, MCI owned by Daimler and Prevost's relationship with AB Volvo.

Today we see that some domestic and foreign truck-makers have re-ignited their interests in absorbing and so controlling certain bus and coach body-building producing firms.

To better ensure that they can grasp a vital slice of this 'higher value' market and ensure extensional control across the sector's value-chain. Thereby able to ensure better access to this increasingly important intermediate-market, provide improved order book stability (assisted by improved pricing flexibility as necessary), enable shorter order lead-times, provide more soundly planned growth projections for both the high capex costs of primary platform operations and labour intensive secondary operations, and no doubt utilise the advantage of cross-divisional transfer pricing up and down its in-house value chain as required to meet strategically set divisional profitability targets. A long list of advantages from consolidation of the build process.

American domestic players do so in part to retain the dominance of their traditional rolling chassis production, so protecting the standard technical formula. Whilst the foreign players seek to ply their proven capabilities regards more advanced technical offerings, both as separate body on chassis guises (given powertrain efficiencies) and critically regards the integrated (monocoque) structure that has become favoured in European bus and coach – the former trickling-down from the latter. .

The only 'All American affair” is Navistar's ownership and amalgamation of IC Bus. At a far lower level, with tentative steps is Volvo's 'strategic partnership' with Prevost. But it is Daimler that is well ahead in the business integration stakes, and with powerful strategic force, given its total control of the traditionally constructed Thomas Built Bus (via its Freightliner subsidary), and part control of MCI (alongside KPS Capital), for increased deployment of monocoque structures.

Daimler then able to direct its efforts simultaneously toward both sub-sectors of the marketplace: the more traditional public-service transit client with primary aim of cost reduction, and the more demanding and so price-elastic coach operator.

This example, and the issues it raises, has set the beginning of a fundamental shift in the shape of production for North American Bus & Coach sector. As depicted above, it presently appears that the 'score' between the progressive Europeans and incumbent Americans, in the manufacturing battle, is presently 3-1, with Daimler scoring twice.

Whilst it has become evident that US and Canadian investment firms and private stock-holders have taken an increasingly large interests in European companies with technological edge (and so have vested interests in seeing the likes of Daimler continue to thrive domestically), there is a possibility that as part of a national re-strengthening effort, it seems likely that North American will seek to redress this glaring and growing 'industrial deficit'. And at some future point seek to absorb the strategic and technical lessons learnt from the Europeans to revive the internal capabilities of its own domestic industry.

Yes this is an age of industrial globalisation, North America shown as fertile ground for such by the numerous car company transplant factories. But how far will it allow its proprietary know-how to diminish?

Moreover, that threat is made all the more apparent given the much changed, new realm of foreign bus and coach operators.

Though typically historically separate, when deemed advantageous, an operator would seek to acquire a body-building company for its own ends to dramatically lower the cost of bus manufacture, especially if allotting a large order, and so deny a competitor. This was the case with Greyhound Lines in 1970, when it acquired one of the largest of those intermediate firms Motor Coach Industries; now MCI..

It could feasibly be the case again with the 'British Invasion' (soon explained).

The 'Old Guard' Indigenous Operators -

Both economic downturns and indeed upswings saw a working population effectively mobilised from city to city and from state to state by the low-cost bus, with now legendary names like Greyhound and Trailways. (Trailways devised as a co-ordinated multi-operator system to compete with Greyhound, but later acquired by Greyhound). These two prime actors and smaller independent firms offering easier access to trans-state and trans-national travel compared to a limited routes and organizationally fragmented railway system, even under Amtrac - which itself relies on bus operators to connect separate rail-stations with the ThruWay bus service.

With manufacturing focus on scale and operator focus on costs, as such the sector was only able to offer marginal and incremental improvements in basic levels of comfort, convenience and enjoyment; in seating, heating, and on plusher vehicles curtains, radio and later video/television, and (typically) stewardess service. A quicker and more dramatic pace of change was seen upon the exterior, led by Greyhound with aluminium & plastic skins, panoramic windows and airline-like logos this was primarily an (externalised) exercise to promote company branding and so inter-company competitive advantage.

Thus from the paying customer's perspective, little changed decade upon decade. This no doubt as a consequence of the need for basic utility furnishings for easy cleaning, little customer demand for change given his/her own 'low expectational' lifestyles and infrequent personal travel. And set against the understandable commercial imperative to only improve the product / service for profitable ends by reducing bus weight, improving engine efficiency (MPG & emissions), bettering aerodynamic drag, improving stability and aiding entry/egress access, and critically installing only 'paid for' services to provide additional income streams

End of the 20th Century and 'All Change' -

By the early 1990s the bus sector's cross-state and inter-state travel advantage had waned considerably, partly the result of changing social patterns, partly because of internal 'over-bloatedness' within the sector. The business models of both the operators and so intermediary fabricators and primary producers became increasingly squeezed:

'External Influences' :
- increase of personal wealth even amongst the 'bottom tier' provided non-bus travel options
- the continued growth of car ownership, especially via cheaper used cars.
- modern (shopping mall) consumer lifestyles increased basic service & delivery expectations.
- emergence of affordable and later low-cost domestic airlines and sub-divisions.
- the emergent desire for IT 'inter-connectedness' whilst travelling.

'Internal Events' -
- (Greyhound) bus drivers strike of 1984 with endemic employee malais thereafter
- Fred Currey leading re-structuring of both Trailways & Greyhound Lines.
- the merger of Trailways into Greyhound in 1987.
- 1990 long-term strike action by employees
- Greyhound's bankruptcy filing of 1990
- Greyhound's rebound acquisition of Continental Trailways (separate entity)
- Greyhound acquired by Laidlaw Inc. (already owners of Greyhound Canada)
- Laidlaw Inc's bankruptcy in 2001
- Laidlaw's rebound in 2003 (NYSE listed) now without loss-making routes
- the influence of 'advanced' European bus & coach travel.

Combined, these and other forces, meant that a customer-orientated and internally-necessary evolutionary change was on its way. The last 15 years or so has born testament to that change when viewing the fundamental operator's structure

This sector stall was re-started by the re-organisation of established players including Peter Pan Lines. The introduction of new entrants – or at least seeming new entrants - seeking to offer alternative travel experiences helped to revitalise flagging sales and passenger numbers. New names however variously owned by established players, semi-dependent upon them or in some cases truly new wholly independent players.

The MegaBus network (operated by the UK's Stagecoach plc) was established in 2006. Later in 2008 Bolt Bus was created to serve both the NW & NE regions, but its NW operation is wholly Greyhound owned and the NE operation a JV between Greyhound & Peter Pan. NeOn was also originated that year by Greyhound & Trailways, to bolster Bolt and compete head-on with MegaBus (though apparently its service differentiation has been increasingly diluted, substituted with standard Trailway buses).

To name but a few independent operators, there are: Vamoose Bus which runs between NYC and Washington DC; and Fung Wah Bus, Chinatown Bus and associated lines (Apex, New Century, Lucky Star) which operate along the Eastern and Western sea-boards serving each city's Chinese community and the large numbers of mobile Chinese workers and more budget travellers such as students.

Needless to say there has been friction between the established incumbents and the newcomers, resulting in accusations of Chinese gangland activities, from laundering money to violent acts against persons and property, with in return Chinese buses appearing to incur high numbers of vehicle problems, possibly stemming from either poor maintenance or sabotage or both.

“The British Operator Invasion” -

As part of their own high growth expansion ambitions, three competing UK transportation companies assessed the American potential toward the end of last century and at the beginning of this century. Assisted by a mix of stock-market and fixed income funds, their American assault started.

Initially, Stagecoach plc acquired Coach USA and Coach Canada in mid 1999 for $1.8bn; but when hit by the economic aftershock of the 9-11 attacks in 2001, it divested many of those interests in 2003 to Peter Pan Lines and the PE firm Kohlberg & Co which itself formed Coach America). Stagecoach thus retrenched to operate within the subsidy protected scheduled service of the NE region. As part of its re-expansion plan, it used its back-office capabilities to create the web-friendly MegaBus.com, its own flailed 2006 expansion into the West Coast re-energised in mid 2012 by way of re-purchasing many of the divested divisions previously sold when Coach America itself filed for bankruptcy; thereby spanning much of the nation.

Also in 1999 the Rail and Bus operator FirstGroup plc purchased 2 divested divisions of Ryder Systems: the transit-bus sections and school-bus section, re-naming them 'First Transit' and 'First Student'. It then later acquired Greyhound Lines Inc in Q3 2007 for $3.6bn (£1.9bn). First Student UK (the British arm) has used yellow buses imported from both the USA and Turkey (BMC).

The business model of Go-Ahead plc is heavily biased to serving the UK, but it operates a self-proclaimed “small” joint venture yellow school-bus contract in North America.

The remaining large UK transport companies – Arriva (a holding of Deutsch Bahn) and National Express Group plc - have no American divisions.

“The European Product Invasion” -

As a result of the private car's dominance in North America decade upon decade. and the technical stagnation of indigenous chassis and body producers, it was inevitable that the recently arrived foreign bus and coach operators would look outside the US and Canada when assessing and purchasing it new vehicle fleets.

The familiarity of British and European sourced vehicles meant that with such established and strong commercial relations, and the technical chasm between typical European and N. American vehicles grew all the more apparent; and that almost inevitably US regulation adapted 'Euro' buses would be appearing on Americas highways.

That product shift had a broader sector domino effect.

Having seen this new wave trend set in place by the British operators, from 2000 onwards the domestic municipal operators, with responsibility for state-wide and city-wide public transport, started to test, lease and buy foreign-made buses. Increasing specific interests lay with double-decker buses for city-centre and inner-suburbs routes, so as to reduce vehicle fleet numbers required (so reducing storage and maintenance costs), maximise passenger capacity per route and streamline mass transit services.

In turn, that local-effect caught the attention of smaller regional private operators.

As an example of the trend, in 2004 the UK's Alexander Dennis first started to explore the North American market for its adapted Enviro500: since providing demonstrator, lease and fleet vehicles to 10 municipal transit companies, and 2 private sightseeing/ tour companies. The popularity of the bus underpinned an initial manufacturing deal with ElDorado International. More recently, in May 2012, Alexander Dennis and America's New Flyer Industries announced a new joint-venture to design and manufacture a medium-duty low-floor 'midi bus', with the UK firm undertaking engineering and testing and its US counterpart providing assembly and marketing.

Having listed the American chassis and body makers, a similar list is provided regards European manufacturers.

Traditional Chassis Providers :
Daimler EvoBus [Germany]
DAF (engine supply only) (PACCAR) [Netherlands / USA]
Enterprise Bus [United Kingdom]
IVECO [Italy]
MAN [Germany]
Scania {Sweden]
Volvo [Sweden]

Traditional Body Constructors:
Advanced Vehicle Builders [United Kingdom]
Alexander-Dennis (Mayfair Group) [United Kingdom]
BUSiness [The Netherlands]
Cacciamali [Italy]
Carrus [Finland]
Caetanobus [Portugal]
Castrosua [Spain]
De Simon Group SpA [Italy]
Hess [Switzerland]
Ikarus [Hungary]
Irizar [Spain]
Laden Autokori [Finland]
Libertybus [Germany]
NEOPLAN [Germany]
Optare [United Kingdom]
RedKite [United Kingdom]
Sfakianakis [Greece]
Sitcar [Italy]
Solaris [Poland]
Van Hool [Belgium]
VDL Bus & Coach (VDL Groep) [Eindhoven, Netherlands]
Wrightbus [Northern Ireland, United Kingdom]

Amalgamated Chassis & Body Supply
IVECO + Irisbus [Italy-France]
MAN + NEOPLAN [Germany]
Daimler + SETRA [Germany]

Integrated Mono-Structure:
Alexander-Dennis (Mayfair Group) [United Kingdom]
Van Hool (engine choice) [Belgium]
VDL Groep [Netherlands]
Wrightbus [United Kingdom]

As highlighted previously, of particular note is the manner in which the European sector has evolved, and impacted the US & Canada:

1) the increasing bus amalgamation interests of volume truck-makers
2) the defensive consolidation reaction of larger hi-tech body-builders
3) the increasing adoption of integrated monocoque construction techniques*
4) the very powerful strategic and industrial competitive capabilities of advanced truck & car
manufacturers (ie Daimler and VW Group)

[NB * ironically first pioneered in the public realm by the London Routemaster in 1958]

Hence the reasons are clear as to why investment-auto-motives labels the European sector as 'Avante-Garde' in relation to the 'Old Guard' American sector.
As is now apparent, it is the larger VM type companies spanning both traditional and new formats that has the commercial advantage.

Importantly, American industry well recognises the commercial power and commercial prowess that has evolved from the number of 'Euro-EM' alliances formed, and indeed as a consequence, the very real low-cost threat posed by a new raft of ever improving EM players that have replicated and arguably moved beyond the NA model. The fact that Mexican company DINA previously acquired a large stake-hold in Canada's MCI in order to improve its own vehicle engineering capabilities speaks volumes.

The Euro-EM and EM players include:

Ashok Leyland [India]
BMC [Turkey]
Busscar [Brazil]
Caio Induscar [Brazil]
DINA Camiones [Mexico]
Eicher Motor [India]
Encava [Venezuela]
GolAZ [Russia]
Golden Dragon [China]
Guleryuz [Turkey]
Higer [China]
Imeca [Argentina]
Karsan [Turkey]
Marcopolo [Brazil]
Mercedes-Benz Turk (Daimler EvoBus) [Turkey]
Mahindar-Navistar [India]
Marz [Russia]
MAZ [Belarus]
MWM-Navistar (engine supply) [Brazil]
PAZ [Russia]
TATA [India]
TEMSA [Turkey]
Tezeller [Turkey]
Zhengzhou Yutong Group [China]

The “Big Picture” -

The accompanying diagram (located top right for the duration of this two-part web-log) provides a contemporary contextual 'big picture' of North America's Bus & Coach sector.

The section above depicts the American vs European industrial spheres. Whilst obviously separated by geography and history, they could be said to respectively represent 'inward' vs 'outward' market environments, which effectively hindered vs helped industrial progress. Furthermore, it could be argued that differing perspectives of what constitutes 'value creation' has had an enormous affect: the near term profit motive of the US (as deployed by Chapter 11 quick turnaround restructuring) vs European (ie German) philosophy (for organisational longevity underpinned by technical capability).

Thus illustrating what may be seen as two very different indutrial micro-climates with very different levels of commercial, industrial and technical integration. So evolving the 'Avant-Garde' scenario that sets an ideology of “European Future-Forwardism”, bound to the eco-driven profit imperative; itself led by Germany, Netherlands, Scandinavia and United Kingdom. Whilst under American 'Old Guard' is shown the transitional effect that the Europeans are having upon North America, and the reaction by Navistar to follow a 'capabilities consolidation' as set by Daimler, VW Group (MAN & Scania) and AB Volvo.

European 'Future-Forwardism' -

So whilst we see low level progression in the North American sector, thanks to the 'Euro-bus' evolution, much of the sector is still effectively decades behind Europe. The cause suspected being a fiscally powerful yet technically antiquated business model of Ford-JMC doing little to drive change because of the transit-bus business platform that could be argued as negating fundamental change.

The internet-conveyed official marketing pictures of the Euro producers, with a greater bias toward less utilitarian coach-travel type offerings demonstrate a host of comfort and safety features such as hi-style cabins and high-visibility floor-level aisle LED-lighting for use in (smoke related) emergency situations, but also used to welcome boarding passengers with knowing reference to aircraft related feel and functionality.

Such interior appointments only the last of a long history of Euro bus and coach design advancement, a world away from an 'era-trapped' US industry.

The creation of a new generation 'Trolley Bus' has emerged by the likes of Hess.

[NB the term 'Trolley-Bus has been modified by the industry since its origins as an electrified, pantograph linked, single body vehicle, now applied to alternative bus architectures].

The Hess version is that of a multi-sectioned bendy-bus which snakes as per a train, thus a true road-train. Whilst no doubt adaptable to electric motor installation and pantograph 'hook-up' for original Trolley-Bus operation, the real interest seems to lay in being conventionally ICE powered but guided by road-surface installed magnets route which can automatically or semi-automatically steer the vehicle.

Other versions of the modern 'Trolley-Bus' – pertaining to short or long multi-linked sections - has been developed by Van Hool. This time with hybrid-drive system that couples an ICE motor with pantograph-fed electric motor. Van Hool also exploring continuation of standard hybrid power-trains (ie non pantograph fed) and on-board Fuel-Cell electrical generation for true zero emissions power. This the case across all the major European producers: Daimler, MAN, Scania, Volvo, Iveco.

An oft forgotten instance is the creation of the Jumbo-Cruiser: a very high capacity vehicle in the form of a double-decker bendy-bus. Conceived in the mid 1970s in reaction to the '73-'74 oil crisis and the heavy contraction of the US aviation sector, it went into limited European operation in the 1990s, but stalled itself with the growth of low-coat airlines. Whilst this example undoubtedly demonstrated short-falls relative to a latter-day airline boom in both Europe and the US, it does demonstrate a progressive fusion of micro-level solutions to macro-level problems.

The Ripple Effect -

The precursors to these examples did have a rub-off effect in North America, but ultimately only a small one, with little real world outcome. Bigger players have undertaken various evolutionary and revolutionary R&D paths to seemingly evolve the generic bus.

Reaction came from the likes of NewFlyer, NABI (North American Bus Industries), and far smaller ABI (Advanced Bus Industries).

NewFlyer with use of plastic exterior body panels to reduce weight, introduction of LED external lighting packs for purer light and reduced electrical drain and introduction of the Bus Rapid Transit BRT model which is essentially a 'styled' bendy-bus. NABI similarly introduced a BRT bendy-bus, with also a Low Floor 'LFW' model so offering basic regulatory provision and more interestingly the CompoBus model, combining chassis and shell using lightweight composite materials And of course vehicle adaption to LNG & CNG powered engines requiring high-pressure tank installations.

Elements of learning and improvement have come with the growth of the specialist 'coach-conversion' sub-segment. Which sees coaches being originally commissioned or converted to mobile homes, for 'on the road' clients with luxury demands moving from event to event; such as: touring music singers and bands, touring entertainers, the general film industry and race-car sector requiring plush motor-homes.

ABI is an example of such. It was originally established to serve the specialist niche of highly-styled midi-sized luxury coaches, consisting of fibre-glass bodies and heavily feature packed for comfort and convenience. The company was taken over by ex-transit management with a view to offering the advanced vehicle to metro transit clients. But durability and reliability problems from the advanced windscreen and suspension systems plagued the operators, so were discarded in favour of conventional 'old guard' vehicles from well known manufacturers.

Whilst American-devised advanced technologies have been explored in a few specific cases, the prototyping, development and testing regimes were deemed to be wholly inadequate; thereby creating the commercially untenable situation where the risk-averse operator ultimately acts as project test-bed.

No surprise then that the few examples of notional vehicle design progress stalled quickly, highlighting the need for true R&D professionalism in the NA sector. This perhaps the greatest historical difference between North American vs Northern European industrial practice.

For Appearances Sake -

Given the general desire for modernity by most end-users, private and public operators, so believing that their funds have been well spent, it is little surprise that the American producers provide that appearance, even if vehicle platforms are little evolved.

This perhaps especially the case when municipal regions seek to differentiate themselves as part of broader regeneration efforts toward suburban expansion, brown-field reclamation and dense urban-living initiatives; with the attraction of private enterprise a high agenda item, so necessitating good mobility infrastructure.

As such a number of public operators adopted the higher capacity bendy-bus, had it re-styled (often poorly) and re-naming it the 'BRT (Bus Rapid Transit) system'. But this supposedly an innovative new mass transit philosophy was little more than “mutton dressed as lamb”.

Such a resistance to true progress has meant that the medieval towns of 'olde worlde' Europe often have far more advanced transit vehicles (and systems) than the skyscraper towns of 'new world' America.

Unfortunately, for 21st century America, little looks set to change.

The “American Renaissance” Thesis -

As the accompanying graphic displays, investment-auto-motives seeks to highlight the possibility that Ford (and its investment bank backers) may seek to re-join the party, so as to rebalance the 'industrial deficit' now seen within North American.

However, if the thesis is correct, it only serves to fulfil half the modern industrial agenda requirement, and only re-traces the past steps of the 'Old Guard'.

Ford looks to be in the position of being able to create a powerful value-chain which connects its low-cost truck-making interests in China's JMC to a lesser known Canadian used-truck retail business also named JMC based in Winnipeg, this city the production heartland where both MCI and NewFlyer are based

Given that MCI and Thomas Built Bus are respectively under direct and indirect Daimler control, Provost with Volvo and Navistar with IC Bus, it then indicates that NewFlyer is a natural target for Ford seeking to expand its heavy vehicle interests..

Such a move would then mimic the efforts of Navistar, which beyond presently having IC Bus as a synergistic sub-holding also operates a Chinese JV with Anhui Jianghuai, aswell as with India's Mahindra.

Under this scenario it should be noted that investment-auto-motives believes Ford would not create a hi-tech type of bus/coach product. Instead intentionally utilise the traditional body on chassis 'easy build / easy maintain' construction methods that suit China's inland bus operators on poorer semi-rural roads, and the opposite-side of the Pacific, maintain a technical corollary to NewFlyer's traditional client-base of public transit companies, who likewise seek conventional engineering.

However, whilst tried and tested 'old-tech' undoubtedly has its place, and can offer sizeable profit margins on large scale order volumes, the North American industry must also manifestly progress to catch-up with “the best of the rest” so as to climb the bus and coach value ladder.

That means investment in making a technology leap, which today sees lightweight monocoque construction solutions commercially interwoven with IT enabled intelligent networks and route-planning.

Required Evolution of the American Breed -

However, a danger exists that sees the US & Canada continue to slip behind.

There is a likelihood that, because of military -backed US economic domination through the latter half of the 20th century, now effectively replaced by newly generated QE liquidity which acts as the 21st century 'soft power' (eg GM's 7% of Peugeot), that America will not seek to self develop its industrial capabilities. It may have asked itself why it should develop new types of “Menlo Park” in old industries when interests in leading others (such as Peugeot's low CO” engines) can now be bought?). Why indeed go backwards when even Silicon Valley appears to be faltering with poor performing IPOs?

It is today able to re-run the template of the 'American century' elsewhere around the globe, especially in Asia, with remote industrial direction of Japan, Vietnam & S.Korea, pushing each to become respective leaders in eco-tech, mass manufacture and IT, with of course its growing merged industrial interests in China.

Today, those niche to mass-scale, low-value to high-value interests across the world means the US could replay its 20th century global industrial play-book, but whereas before it was the smokestack industries leading to GM & Ford domination, the 21st century sees the US network of interest create more complex and dynamic industrial and commercial webs connected by the internet.

Yet the ironically the investment and returns attraction (ie replay) of 'dinosaur technologies' exemplified by 'body on chassis' vehicles, with business models based upon low capex outlays and ever present low cost labour, means that for all the rhetoric about industrial and commercial progress, the impetus is to re-run the successful formula.

Changing Global Winds -

But the world has changed, from the milestone markers that were the original Rio & Kyoto eco-summits to the subtle manner in which China seeks industrial domination, able to adopt and utilising learning from its own domesticated Europeans to do so.

North America must recognise itself in the industrial and commercial middle-ground, sat between that 'European Future-Forwardism' that is increasingly well received by wealthy EM nations and China's remarkable capability to replay the American 'dinosaur-tech' capitalist model on its own terms.

The old American heavyweight single-deck bus with varying wheel-base and rear overhang - and indeed its “RBT” close cousin - is reliant upon little more than cost-averse engineering alterations. This historically an understandable ploy given the economic cycles of bus building and so aversion to heavy capex exposure. So vehicle updates are ostensibly cosmetic rather than technical, in the 1950s Detriot idiom that 'new' in fact simply means restyled.

Such heavyweight simple construction (which promoters call 'over-engineered' has undoubtedly assisted the fixed cost operations of producers but at the detriment of far heavier variable in-service costs of operators, most notably fuel consumption (and related emissions), especially during times of surging oil prices. This is now well recognised by those operators, especially the more enlightened such as Stagecoach and FirstGroup.

21st Century Macro Drivers for Change -

The following points highlight the trends that the North American industry must satisfy, or be overtaken on home territory by the European vehicle providers and operating companies.

- an ageing indigenous population with reduced self-driving patterns
- greater mobility expectations of specialist groups (esp less able-bodied).
- the demographic corollary of the two former trends
- less wealthy young indigenous population unable to run a car
- less % of the young seeking driving licences
- greater immigration flows to replenish society
- assisted by increasing 'open border' policies across NAFTA (esp US & Central America)
- reduced reliance and prohibition of private cars in certain areas
- increased 're-urbanisation' of specific city centres
- growth of cycling cities and 'car-free' inhabitants (Portland, Oregan etc)
- fewer cars per family (or indeed individual)
- present sense of greater American 'inwardness' (akin to 1930s)
- reduced federal and state general transportation and community travel budgets
- needs filled by private enterprise
-continual process of upgrading of state and national road network via PFI or wholly private
- expected rise of travel-systems infrastructure, private companies using 'intelligent network' capacity allocation
- increased adoption of road-toll highways and federally induced 'travel pricing'

[NB the private American passenger car will of course maintain its popularity, and indeed very probably grow in production and overall car-parc numbers, by way of increased population size and the desire for personal freedom and status expression; albeit the era of the SUV and full-size car may be over as American 'enormity' is gradually down-sized to global norms].

Conclusion -

The North American bus and coach industry had an early wake-up call in the early 1990s with the creation of the aforementioned Jumbo-Bus concept (by NEOPLAN), seen at the time by industrialists as a distant but very real threat both domestic bus industry and the resurging airline sector, from new carriers to Boeing.

In reaction, Hollywood (care of Wall Street) played its hand to subtly defend the status quo with the 1976 spoof-disaster movie 'The BigBus”, the story of a super-fast, bendy-double-decker, nuclear powered trans-national bus, which encounters various technical problems because of sabotage time-bombs. By not so mocking the idea of true Mega-Bus in the populat consciousness, the film subtly assisting the regeneration process of the domestic airline sector by wooing people back to 'safer and quicker' aircraft.

The emergence of low-cost internal airlines and commercial reaction from the larger, established carriers has had an undoubted effect upon the likes of Greyhound and its smaller rivals, and many of those dedicated internal airlines did well from the mid 1980s onwards to 2001 and again over the last decade.

But the fact remains that North America is facing a very different future to the recession rebounds of the past, one in which an unprecedented macro-economic shift has and will affect the lives and travelling habits of millions over the coming years.

The recent MegaBus crash on 08.08.2012 in Lichfield (NE St Louis) when en route between Chicago to Kansas, has of course drawn momentary negative attention, with the death of a young Asian-Indian lady. That incident adds short-lived public perception pressures on the bus-sector, and specifically the “MegaBus” service run by the UK's Stagecoach plc.

But the required remedial action of one operational incident does not undermine the very real potential of the sector into the future, one which even with renewed airline expansion, looks set to rise.

North American bus and coach can unthinkingly replay its past.

But by doing so exposes itself yet further to the very real threat of global competitive pressures taking an ever greater slice of the homeland manufacturing and travel-service markets.

Daimler Leads the Pack -

The efforts by the German company to cross-breed its technical prowess with Thomas Built's and MCI's renowned in-market names reflects the growing “Europeanisation” of North America's bus and coach fleets and overall car-parc. That Europeanisation itself created by the increasingly changed and ever greater demands of the sector's fleet operators customers.

From the ambitious producer's perspective – as per Daimler – it is able to offer its conventional trucks to trucking companies across the world, use the basic modules from those trucks to create front and rear 'chassis-mounted' sections for a transit bus range, and in turn utilise those modules (adapted as required) for the module elements within an integrated monocoque structure.

This then extends the basic business model raison d'etre yet again, from the basic counter-cyclicity of truck vs bus production - given respective private vs public funding sources and schedules - to now include and interweave an additional, now very distinct coach business stream. A simple metaphor drawn from electrical engineering sees an evolving a business model that moves from 2-phase to 3-phase streams, which ideally even-out and stabalise capex 'inputs' and revenue 'outputs'.

All the remaining American producers should take note of the German advantage.

Deploying American Private Equity -

International free markets have demonstrated that better foreign ideas have had right success. America must now follow those tracks..

To this end the large and mid-size asset managers of the PE community, along with various investment bank interests, seek to deploy the present low cost, possibly additionally QE3 fueled liquidity environment. And are presently re-building their respective coffers. Yet core elements of an American eco re-industrialisation process and outcome should not be to try and simply mimic the best international efforts, but to recognise the desperate need to physically embrace the best of the rest.

As seen previously with the American commercial capture of the European industrial leaders in 1880s and1920s..."it's all just a little bit of history repeating".

Dinosaurs, Mammals and Birds -

An overtly simplistic, but all to true synopsis, is to compare the technical and so commercial offerings as the “American Dinosaur” set against the far more intelligent “European Mammal”, both suited to their own environments. However, situational change saw the lumbering dinosaur become extinct. Mammals thrived. But, a few dinosaur species evolved into multi-faceted flyers and so 'took to the blue' to become birds.