The North American school bus industry has decidely taken on a British flair over the past couple of years, and the accent is only going to get stronger.
Joining FirstGroup plc and National Express Group pc on our shores is Go-Ahead Group plc, one of the transport market leaders in the UK, as it signed a joint venture agreement this week with Cook-Illinois Corp. of Chicago.
Not only does the Nov. 4 agreement mean that there are now more Group plcs, the nomenclature for the shareholder controlled public limited liability in the UK, with substantial business interests here, it’s proof that competition is increasing for school bus contracts. While First Student’s President Linda Bell told us last week that the contractor has not seen as many conversions in this economy as was previously forecast, Go-Ahead obviously sees a tremendous upside.
Said CEO Keith Ludeman on Wednesday:
“This JV is an exciting new venture for Go-Ahead. It represents an excellent, low risk and financially disciplined way for us to gradually build an operation in this strategically attractive market. The North American yellow school bus market shares many of the same characteristics as our UK bus operations and we are delighted to be working with Cook-Illinois, one of the largest school bus fleet operators in the United States. We both believe passionately in running high quality operations with a strong local focus and identity. The JV will draw upon the expertise of both of our organisations to explore potential opportunities.”
While we were awaiting further details from Cook-Illinois, which are expected early next week, we do know that the new joint company is split 50-50 between the two entities and that there are currently no contracts being operated with school districts in the Chicago area. But, Cook-Illinois is also already entrenched in Chicagoland as the largest and one of the oldest school transportation providers with 13 subsidiary companies that operate 2,000 buses each day for 200 local school districts.
Additionally, Go-Ahead ranks up there with FirstGroup and National Express in providing public bus and rail transport to a tune of 960 million passenger rides each year.
John Benish Jr., COO at Cook-Illinois, also said in a statement earlier this week that his family’s company and Go-Ahead “share similar strategies and approaches to transportation.”
One of these strategies, at least for Cook-Illinois, has been to remain local to Chicago while many of its competitors branch out into different areas and even different states. Certainly Go-Ahead offers Cook-Illinois the opportunity to expand as well as share the burden of skyrocketing transportation costs tied to the economy. But, in Chicago at least, look for the new joint venture to expand.
“This joint venture will help to provide efficient, environmentally friendly transportation solutions to our customers while expanding into new markets,” added Benish.
It could also be telling us something about market forecasts. National Express here, which owns Durham School Services, has been on the selling block all summer. FirstGroup inquired about purchasing then rescinded its offer, National Express’ own majority shareholder no longer (publicly at least) being interested in taking over the company and now Stagecoach Group plc being told by National Express “thanks but no thanks” on a possible deal. Then the news this week that the UK government was taking control of several lucrative rail contracts amid financial troubles.
Meanwhile, FirstGroup just received a £150 million “investment” from the UK taxpayers to help the company through the economy.
