Manufacturers Face Significant Obstacles

Coming out of the pandemic, huge challenges are ahead for the manufacturers of buses and parts for the public transit industry. Is the supply chain back? Not all the way, but “we’ve gotten better at managing it,” John Condon, vice president sales, North America, Vapor Bus International, told attendees at the Strengthening Our Bus Manufacturing Capacity in Turbulent Times session.

“The past three and a half years have been extremely difficult for everyone in public transportation,” said Jennifer McNeill, vice president of sales & marketing, NFI Group. “Bus manufacturers have felt a tremendous financial burden, stemming from rapid, unpredictable inflation, supply disruption and elevated working capital requirements. Procurement reforms are urgently needed to modernize bus contracts to address equitable price adjustments, align cashflows and appropriate levels of risk transfer as we build health back into the supply chain and transition the industry to zero-emissions.

Bus makers are cautious of lag times because of inflation. Thirty percent inflation during the pandemic meant that any contract signed in 2020 or 2021 to build a bus this year or beyond is a money loser for the manufacturer. Going to a parts supplier and saying “give me your best price in three years” doesn’t work for anyone. “Somebody is going to lose in that equation,” according to Ray Melleady, executive vice president, United Safety & Survivability Corporation and chair, APTA Research, Communications and Advocacy Council, who suggests going to what is called Strategic Procurement. “We work together as an industry to share the risk so that we use Notice to Proceed as the trigger for PPI [Producer Price Index] not the initial build.”

Another huge red flag for the industry is the shifting of burdens from larger transit agencies like New York City to OEM manufacturers in such areas as indemnification, insurance and bonding. For Bill Fay of Gillig, it can be the difference between going for a contract to build buses, or passing on the business. “We have to make a determination that ‘is that contract in the best interest of Gillig to pursue’ ”?

From a public transit agency perspective, the concern is that if any other bus makers go under, will agencies be able to obtain parts for buses that they do not have the funds to replace for several more years? The shortage of microchips has also been a concern since some of the new—and inferior—products are creating new anomalies and problems.

From an audience perspective, the overriding question was when will transit agencies and manufacturers transition to all zero-emission or electric vehicles. The answer seems to lie in just how long a battery can last. Inez Evans, president and CEO, Indianapolis Public Transportation Corporation (IndyGo), says at the current range of 130 miles for an electric bus, the agency cannot replace other buses that can run 250 miles. “That is a huge cost to us, because we have to buy more buses.” None of the panelists were willing to predict when the last diesel bus will come off the assembly line.

Buddy Coleman, chief customer officer, Clever Devices Ltd., moderated the session.