New Flyer buys NABI

[Busjack]

Well, looks like NABI will live on under the New Flyer banner...

From New Flyer's Press Release:

New Flyer’s President and Chief Executive Officer, Paul Soubry explained further, “NABI represents a compelling growth platform for us. The addition of NABI to the New Flyer family provides New Flyer with a highly complementary product line, access to new customers, a cost efficient manufacturing platform based in Alabama, and it creates a significant player in aftermarket parts. The Company plans to operate the NABI bus and NABI parts operations under the names NABI Bus, LLC and NABI Parts, LLC, respectively, within the New Flyer group of companies.”

Well I guess this means NABI will finally make decent 60' buses now that it has a manufacturer running things that knows how to do so. Maybe NABI will be back with CTA one day in the future with a more competent owner.

On the other hand, this is the typical corporate speak whenever there is a merger, and I said earlier it is contradicted by synergy usually winning out. And in this scenario, given that LACMTD just dumped NABI for NF, while they did not have customers in common at a certain point, they were competing for the same customers.

I've gone through mergers like this, and the only time that the company kept both products was where the same customers were buying both products at the same time, for the most part, but that's not going to happen in the transit industry, which locks up 5 year contracts.* Maybe NF and NABI LLC are both bidding on the Pace CNG contract, but stuff like that won't last long.

There were several similar waves of closings when the theaters around here merged.

Don't be surprised if certain NABI execs suddenly have "left the company to pursue other interests," another hallmark of corporate speak.

__________

*Which in CTA's case means, since Mr. New York consultant said NABI did not bid on the 60 foot portion of the current contract, that not until 2018.

[BusHunter]

Does this give NF the ability to bid twice on bus orders, one as NABI the other as NF? In a way, keeping both companies is smart. In places where NABI thrives like LA, by changing the name NF risks losing the NABI customers to someone else like Nova or Gillig. It's like the return of Hostess, the snack cake, they will return as Hostess, not some other name, which you won't buy as fast as the name Hostess. (although I think changing the ingredients is taking a big risk, we shall see)

[Busjack]

Does this give NF the ability to bid twice on bus orders, one as NABI the other as NF? In a way, keeping both companies is smart. In places where NABI thrives like LA, by changing the name NF risks losing the NABI customers to someone else like Nova or Gillig. It's like the return of Hostess, the snack cake, they will return as Hostess, not some other name, which you won't buy as fast as the name Hostess. (although I think changing the ingredients is taking a big risk, we shall see)

As I mentioned above, NABI already lost the LA contract to NF, so that's moot for 5 years.

I suppose it is similar to Volkswagen group offering a Lamborghini, Bentley, Porsche, VW, or Skoda, but I don't think that the domestic bus bidding process is divided into that many market segments. As I indicated above, hypothetically NF sticks with the NABI bid on the Pace CNGs because Pace is only concerned with price, but they would still have to undercut ElDorado National, because a bus is still a pretty fungible good.

[ctrabs74]

On the other hand, this is the typical corporate speak whenever there is a merger, and I said earlier it is contradicted by synergy usually winning out. And in this scenario, given that LACMTD just dumped NABI for NF, while they did not have customers in common at a certain point, they were competing for the same customers.

I've gone through mergers like this, and the only time that the company kept both products was where the same customers were buying both products at the same time, for the most part, but that's not going to happen in the transit industry, which locks up 5 year contracts.* Maybe NF and NABI LLC are both bidding on the Pace CNG contract, but stuff like that won't last long.

In a similar vein, Luminator bought out TwinVision, however both destination sign product lines are still available.

[See Tea Eh]

What five-year contracts are you referring to?

[BusHunter]

As I mentioned above, NABI already lost the LA contract to NF, so that's moot for 5 years.

I suppose it is similar to Volkswagen group offering a Lamborghini, Bentley, Porsche, VW, or Skoda, but I don't think that the domestic bus bidding process is divided into that many market segments. As I indicated above, hypothetically NF sticks with the NABI bid on the Pace CNGs because Pace is only concerned with price, but they would still have to undercut ElDorado National, because a bus is still a pretty fungible good.

The Pace CNG that was on order was for a 45C, right? (I thought it was a 45LFW, but you said it was a 45C) If the hungarian plant has made their last 45C shell, how can that order be filled anyway?

[Busjack]

What five-year contracts are you referring to?

Just about any bus contract I have seen in the past 10 years has been base order plus options for the next 5 years. Even the CTA sliding 450 one was reworded to bases of 300 and 50 with options to 450 and 150.

Of course the TA doesn't have to exercise all the options, but in most cases they do.

Anyway, the Press Release for the LA contract says "The five-year contract contains a firm order for 550 buses and options for up to an additional 350 buses." So, unless LA wants something other than a 40 foot bus, there is no need to rebid for 5 years.

[Busjack]

The Pace CNG that was on order was for a 45C, right? (I thought it was a 45LFW, but you said it was a 45C) If the hungarian plant has made their last 45C shell, how can that order be filled anyway?

No. They have a requisition (which rolled over into opened, not yet awarded) for 40 foot buses.

The 45C was for the rejected application for a stimulus grant to turn the left lane of the Tollway over to the bus and HOV. Then, the last Pace budget had a picture of a touring Xcelsior, which jesi identified as on the way to be delivered to the Rock Island MTD Metrolink.

[See Tea Eh]

A couple of properties may order buses for delivery over five years, but that doesn't mean that it's an industry standard practice.

WMATA, for example, bought buses more or less concurrently, from both New Flyer and Orion from the mid 2000s up until Orion stopped building buses a year or so ago.

New York was receiving buses concurrently from three different manufacturers (Nova, New Flyer, and Orion) earlier this decade.

Many other agencies also don't go for a five-year deal.

[Busjack]

A couple of properties may order buses for delivery over five years, but that doesn't mean that it's an industry standard practice.

WMATA, for example, bought buses more or less concurrently, from both New Flyer and Orion from the mid 2000s up until Orion stopped building buses a year or so ago.

New York was receiving buses concurrently from three different manufacturers (Nova, New Flyer, and Orion) earlier this decade.

Many other agencies also don't go for a five-year deal.

Nothing is universal. But there was also the time when NYMTA had orders for over a thousand Orion VIIs in a row.

Anyway, there is a 5 year limit to rolling stock commitments according to the FTA, citing 49 USC 5325, so that's why transit authorities do them.

And, anyway, you asked "What five-year contracts are you referring to?" and got an answer.

[ctrabs74]

A couple of properties may order buses for delivery over five years, but that doesn't mean that it's an industry standard practice.

WMATA, for example, bought buses more or less concurrently, from both New Flyer and Orion from the mid 2000s up until Orion stopped building buses a year or so ago.

New York was receiving buses concurrently from three different manufacturers (Nova, New Flyer, and Orion) earlier this decade.

Many other agencies also don't go for a five-year deal.

SEPTA purchased 400 NABI high floors in 1995-1997 in a single order. Those buses were in and out of service for repairs quite regularly over the first few years they were in service, resulting in SEPTA's reverting back to ordering 100-150 buses per order, as they did in the 1980s - first with the RTS order in 1980, then with the Neoplan orders from 1982-1985 (8000s/Allison transmission) and 1986-1989 (3000s/ZF transmission).

Starting in 2001, SEPTA began recieving buses in batches of 100-120 under a five-year deal with New Flyer for D40LFs from 2001-2005 and a separate deal for DE40LFs/LFRs lasting four-years from 2008-2011.

To me, the better option is to enter into a five-year deal to spread the order out instead of having a few hundred buses being delivered in one shot.

[Busjack]

....

To me, the better option is to enter into a five-year deal to spread the order out instead of having a few hundred buses being delivered in one shot.

The original theory CTA postulated in 1999 was that the orders and options were to be spread out so that they replaced 150 buses per year. However the Nova base order must have been late, as 309 buses were delivered, then there was a break until Mar. 2002, and then Option 2 (6709-6883) was delivered.

With regard to 40 foot buses (NF 1000s and the current Novas) and also the L cars, the requisitions were for options over 5 years, but in the case of the NF buses got accelerated to stop the cost of living increase factor, and in the case of the 5000s was accelerated because if the options were allowed to run out at the end of the 5 years, the price would have gone up from $1.4 million to $2.5 million a car.

Thus, the only advantage of the 5 year contract is a certain degree of price certainty. For New Flyer, the ability to report an options backlog.

[Busjack]

New Flyer's website no longer reflects the LFR. Maybe if a TA wants a steel bus, it is stuck with a NABI.

[nflyer22]

New Flyer's website no longer reflects the LFR. Maybe if a TA wants a steel bus, it is stuck with a NABI.

The CUMTD wanted more DE40LFRs due to good performance from their order in 2011, but settled for 10 XDE40s earlier this year because as you mentioned, the LFR got discontinued.

[Mr.cta85]

The CUMTD wanted more DE40FLRs due to good performance from their order in 2011, but settled for 10 XDE40 earlier this year because as you mentioned, the LFR got discontinued.

I wonder why new flyer discontinued the LFR didn't that version just come out just a few yrs ago??

[Busjack]

I wonder why new flyer discontinued the LFR didn't that version just come out just a few yrs ago??

I had intimated a reason earlier, which was that they weren't going to have it and its NABI subsidiary competing against itself. Since NABI had a new steel fabrication factory (as opposed to its former practice of importing shells from Hungary), I guess NF decided to move steel bus production there, instead of buying and shutting down NABI, as I would have guessed.

Probably the better questions are what NF intend to do with their Winnipeg and Crookston facilities, since the Xcelsior is supposedly entirely assembled in St. Cloud, and NABI in Alabama. nflyer22 implies the answer to the other question, that apparently preexisting LFR contract options are being converted to X. The Press Releases indicate that all new contracts after the NABI acquisition are for either NABIs or Xcelsiors.

[sw4400]

I had intimated a reason earlier, which was that they weren't going to have it and its NABI subsidiary competing against itself. Since NABI had a new steel fabrication factory (as opposed to its former practice of importing shells from Hungary), I guess NF decided to move steel bus production there, instead of buying and shutting down NABI, as I would have guessed.

Probably the better questions are what NF intend to do with their Winnipeg and Crookston facilities, since the Xcelsior is supposedly entirely assembled in St. Cloud, and NABI in Alabama. nflyer22 implies the answer to the other question, that apparently preexisting LFR contract options are being converted to X. The Press Releases indicate that all new contracts after the NABI acquisition are for either NABIs or Xcelsiors.

I wonder how this move will impact CTA's bus purchasing in the future... will they continue to give business to New Flyer if they are turning to NABI for 40' buses other than the Xcelsior? CTA goes for the cheaper model, and the LF was cheaper than the LFR at the time of the 1000-Series contract in 2006. They would've went for the LF model for the 4300 and 4333-Series articulated if they weren't discontinued at the time of procurement. The yet-to-be-seen all-electric buses are being built on the New Flyer X40 frame(I don't know if CTA had choice of that or not. If they did, I presume they would've had them built on the LFR frame). I know I'm beating a dead horse about the NABI issues and lawsuits stemming from the 60-LFW failures, but I don't think that CTA will ever trust NABI for any buses ever again, even the 40' model(likewise with NABI bidding on CTA procurements, since the CTA stopped payment and sued for reimbursement on the articulated buses). Even a New Flyer-ran NABI company may not give/get business from the CTA now.

Looks like Nova Bus will be seeing a lot more business from the CTA in the future as more buses are needed. My only wonder is that all lifts for articulated buses will have to be made longer(this includes heavy maintenance shops like South Shops) as most standard articulated buses are 60' now, but the Nova Bus LFS articulated is 62', two feet longer than a standard articulated bus.

[jajuan]

I wonder how this move will impact CTA's bus purchasing in the future... will they continue to give business to New Flyer if they are turning to NABI for 40' buses other than the Xcelsior? CTA goes for the cheaper model, and the LF was cheaper than the LFR at the time of the 1000-Series contract in 2006. They would've went for the LF model for the 4300 and 4333-Series articulated if they weren't discontinued at the time of procurement. The yet-to-be-seen all-electric buses are being built on the New Flyer X40 frame(I don't know if CTA had choice of that or not. If they did, I presume they would've had them built on the LFR frame). I know I'm beating a dead horse about the NABI issues and lawsuits stemming from the 60-LFW failures, but I don't think that CTA will ever trust NABI for any buses ever again, even the 40' model(likewise with NABI bidding on CTA procurements, since the CTA stopped payment and sued for reimbursement on the articulated buses). Even a New Flyer-ran NABI company may not give/get business from the CTA now.

Looks like Nova Bus will be seeing a lot more business from the CTA in the future as more buses are needed. My only wonder is that all lifts for articulated buses will have to be made longer(this includes heavy maintenance shops like South Shops) as most standard articulated buses are 60' now, but the Nova Bus LFS articulated is 62', two feet longer than a standard articulated bus.

Nova would only see more business from CTA if and that's a significant IF CTA doesn't choose to go to New Flyer for Xcelsiors in the future when it's time to start replacing the 1000s and the 20 40-foot hybrids. For all we know in the space of the six to seven years the 40 NFs come due for replacement, New Flyer may develop another model that would be more expensive than the Xcelsiors and thus still make Xcelsior a cheaper model to opt for from the purely New Flyer framed buses.

[Busjack]

I wonder how this move will impact CTA's bus purchasing in the future... will they continue to give business to New Flyer if they are turning to NABI for 40' buses other than the Xcelsior?....

As jajuan indicates, up to 450 40 foot buses for up to 5 years are going to be supplied by Nova Bus, and then who knows.

As for the 60 foot buses, I quoted earlier (with regard to ZF transmissions not meeting spec) that one of the comments had to do with the X..60. For any artics in the near future, I assume that the prior solicitation is still valid, and also that only NF and Nova are in the mix. The only question would be whether if NF is the prior, but unawarded, low bidder, whether it would withdraw any bid for the LFR, and then say that the bid for the X is the only bid, or honor the LFR bid by producing an X.

[jajuan]

On the NABI side of operations, the CompoBus is also discontinued this year. Looks like LA Metro will be choosing something different when its time to replace its complement of CompoBuses, some of which it uses on its Silver Line BRT route (evidence that BRT doesn't automatically equate to articulated bus). Plus looking at brochure on the NABI website (yes NABI still has its own separate website), the current iteration of the LFW, the LFW Gen III, has some qualities that are similar cosmetically to the discontinued LFR bus models.

[Busjack]

On the NABI side of operations, the CompoBus is also discontinued this year. Looks like LA Metro will be choosing something different when its time to replace its complement of CompoBuses, some of which it uses on its Silver Line BRT route (evidence that BRT doesn't automatically equate to articulated bus). Plus looking at brochure on the NABI website (yes NABI still has its own separate website), the current iteration of the LFW, the LFW Gen III, has some qualities that are similar cosmetically to the discontinued LFR bus models.

The more interesting question (for LA in about 10 years) is that NABI essentially brought back the Compobus on an LA spec that left it the sole responsible bidder (in the board's eyes).

The other distinction is that the Compobus was essentially structurally molded, while the Xcelsior is composite on a steel frame. CTA doesn't have anything against that kind of bus,which is essentially the same as the RTS. I also think that the Nova is similar, but one would have to thunk the body (or look for fibers) to confirm that. Looking at the brochure, the LFW doesn't use steel body panels, either, but aluminum, so I stand corrected on that.

[jajuan]

The more interesting question (for LA in about 10 years) is that NABI essentially brought back the Compobus on an LA spec that left it the sole responsible bidder (in the board's eyes).

The other distinction is that the Compobus was essentially structurally molded, while the Xcelsior is composite on a steel frame. CTA doesn't have anything against that kind of bus,which is essentially the same as the RTS. I also think that the Nova is similar, but one would have to thunk the body (or look for fibers) to confirm that. Looking at the brochure, the LFW doesn't use steel body panels, either, but aluminum, so I stand corrected on that.

I was thinking over Mr.cta85's comment above that the LFR was introduced only a few years ago, which if you look at the 2005 introduction year that may be true. But it was still essentially nothing more than an LF with cosmetic changes to the front and rear exterior. Internally it was still the same bus New Flyer had been producing since 1989, a total of 24 years (though the 30, 35 and 60 foot versions of the LF came in 1996 and 1997). With the Xcelsior coming in 2008 and more TAs going for that model over the LFR, it's not too surprising that the LFR also found itself discontinued, the acquisition of NABI notwithstanding.

[Mr.cta85]

I was thinking over Mr.cta85's comment above that the LFR was introduced only a few years ago, which if you look at the 2005 introduction year that may be true. But it was still essentially nothing more than an LF with cosmetic changes to the front and rear exterior. Internally it was still the same bus New Flyer had been producing since 1989, a total of 24 years (though the 30, 35 and 60 foot versions of the LF came in 1996 and 1997). With the Xcelsior coming in 2008 and more TAs going for that model over the LFR, it's not too surprising that the LFR also found itself discontinued, the acquisition of NABI notwithstanding.

Well you certainly answered my question thanks!!

[MVTArider]

Probably the better questions are what NF intend to do with their Winnipeg and Crookston facilities, since the Xcelsior is supposedly entirely assembled in St. Cloud, and NABI in Alabama. nflyer22 implies the answer to the other question, that apparently preexisting LFR contract options are being converted to X. The Press Releases indicate that all new contracts after the NABI acquisition are for either NABIs or Xcelsiors.

While the NFI site is certainly vague on this compared to previous versions, I would think Crookston and Winni will be primarily producing the Xcelsior for Canadian agencies while St. Cloud will be producing Xcelsior primarily for US operators. Don't forget they make the point that MiDi production will also be done in St. Cloud. Winnipeg still seems to be the product development center for NFI too, (I.e. Metro Transit's 7290 and 7291, and rebuilt SR2321 spending a fair amount of time shadowing Winnipeg Transit routes during the testing phase) so I doubt they would close out manufacturing there entirely.

[Busjack]

While the NFI site is certainly vague on this compared to previous versions, I would think Crookston and Winni will be primarily producing the Xcelsior for Canadian agencies while St. Cloud will be producing Xcelsior primarily for US operators. Don't forget they make the point that MiDi production will also be done in St. Cloud. Winnipeg still seems to be the product development center for NFI too, (I.e. Metro Transit's 7290 and 7291, and rebuilt SR2321 spending a fair amount of time shadowing Winnipeg Transit routes during the testing phase) so I doubt they would close out manufacturing there entirely.

Since Crookston is in Minnesota, I doubt that it will do production for Canada. Questions raised by your post are whether it would split Xcelsior production, or there is enough of a backlog in LFR production on existing orders to keep two Minnesota locations going.