IC Bus Wins North Carolina Contract

Several weeks ago, we wrote in this space about the possibility of Blue Bird grabbing the North Carolina yellow school bus contract and shutting out local company Thomas Built Buses. Strike that, as IC Bus ended up the low bidder and winning the lucrative contract for nearly 900 new Type C buses.

Local North Carolina residents are sure to be unhappy, as there were press reports last month detailing the public outrcry before the contract was even finalized. Several media outlets quoted residents who were perplexed that Thomas of High Point would not be keeping the business in state especially in light of the economy and skyrocketing unemployment.

At that time, Blue Bird looked like it would win as it was the low bidder, a state requirement for awarding such bids. But a spokesman at the North Carolina Office of Public Instruction said Blue Bird retracted its proposal apparently after discovering some internal errors in calculations that procluded the company from actually meeting the price it quoted the state. That left IC Bus as the new low bidder, and with that the deal for the close to 900 CE Series school buses was inked.

However, Blue Bird did win a multi-award contract for activity buses along with IC Bus, though the exact number of buses is unknown because those purchases are up to local districts. But, last month, John O’Leary, president at Thomas, >said last month that losing the North Carolina award would not translate into job losses at home, despite the fact the company has laid off about 400 workers in the past year due to the economy.

The IC win, meanwhile, also means the advanced EGR MaxxForce diesel engine makes it onto the state specification list for meeting upcoming 2010 EPA emissions requirements. Both Blue Bird and Thomas are meeting the standard with urea-based SCR Cummins engines.

In a statement, John McKinney, president of IC Bus, gave the credit to a local dealer for the contract win.

“The team from White’s International has a keen understanding of the needs of this customer. They helped demonstrate how IC Bus could be a partner to them during and after the sale.” McKinney commented.

North Carolina: Out with Thomas and in with Blue Bird?

By Ryan Gray

Though a final decision is pending, North Carolina appears to be set to award its 2010 bus bid to Blue Bird, marking an about face from a historic alliance with Thomas Built Buses. Not only is Thomas an in-state company but the way North Carolina's school bus specs were written called for items that Thomas was in the best position to provide, according to industry sources and Internet message boards.

North Carolina amended its bus specs in early September to make them more general to all three large bus manufacturers, with IC Bus rounding out that list. Thomas Built's president, John O'Leary, told local reporters this week that the development won't hurt the company's bottom line as 95 percent of bus sales occur out of state, anyway. As he told the local FOX News affiliate:

"We could've gone, ultimately, as low as Bluebird went. It would've been very irresponsible from our standpoint ... It's just getting down in the mud and wrestling around in that zero-profit game is not where we want to be."

Low bids are commonplace in the school bus industry, as schools nationwide must remain on constant watch to make sure they stay within if not under budget, especially in the current environment of no less than 48 states running deficits. But this represents an interesting turn of events, especially in light of published reports of struggles at Blue Bird's parent company Cerberus, which saw about half of its investors walk over the summer amid concerns over the company's position in the current marketplace and the decision to embrace a new hedge fund. Those that balked and walked reportedly took with them about $4 billion.

Blue Bird reps have said the company remains strong, but obviously the company seriously underbid its buses in comparison to what Thomas was able to offer for its C2 Saf-T-Liners. And the result is a backlash in North Carolina, where residents view the decision to contract with a Georgia-based company as a heretical move when state unemployment rates are hovering around 10.7 percent, one of the worst in the country. The local North Carolina FOX affiliate also reported that some Thomas workers were wondering aloud why the state doesn't require school systems to buy from in-state companies, since profits at North Carolina companies help keep workers employed. O'Leary said he understands that thinking, but points out he wouldn't want Georgia or Illinois to do the same thing. Plus, something that is not mentioned, Thomas uses many third-party suppliers for such things as mirrors that are manufactured out of state. So why should the actual bus be any different?

Proof in point that today's economy is making an already ultra-competitive school bus marketplace much more stiff.