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The Squeeze Felt Around the World

The Great Supply Chain Crunch of 2022 will leave its mark on the yellow bus industry for quite some time.

The global supply chain’s nagging shortages and snafus, which have turned many economic sectors upside down, has created disparate levels of disruption and anxiety for the yellow bus industry. Mike Oyster, founder of Apple Bus Company and a 47-year industry veteran, said it’s important to maintain perspective. “Buses are being built, buses are being delivered, just not at pre-COVID levels. So, it’s a nuisance and a burden for somebody wanting to grow, but it’s survivable,” he said. “It’s a situation that through a little bit of creativity people can deal with.”But he also sounded a note of caution.

“My greater hope is not that the supply chain as it relates to school bus manufacturers improves anytime soon, I just hope it doesn’t deteriorate,” he added. “That’s my concern.

”Tim Denoyer, vice president and senior analyst with ACT Research Company, a leader in market data, industry analysis and forecasting for the commercial vehicle and transportation markets, agreed. “The risk of disruptions is still significant,” he noted.

He cited Russia’s invasion of Ukraine and China’s latest COVID-19 induced lockdowns as factors adding to supply chain uncertainties. The lockdowns had the potential to free up capacity but could also cause disruptions. And broad supply issues “continue to affect all commercial vehicle production,” he added.

“A shift to the largest and most profitable vehicles may be leading to some constraints on the school bus side because there are many common components,” Denoyer said. “In particular, there’s a lot of tightness around the electric powertrains, which are in pretty strong demand. A lot more semiconductors go into electric powertrains than internal combustion engines. There’s also very strong demand for batteries in the light vehicle market and that has had an effect, too.”

He added that the North American Class 5-7 bus backlog is stretched out 10 months, which is more than triple the long-term average. “Production is up 15 per-cent year-to-date through April, but orders have been strong for 18 months, and we’re not keeping up with demand,” he added.

Denoyer said Ukraine sources about half of the world’s supply of semiconductor-grade neon. “That’s been shut down since February, so we’re waiting for the other shoe to drop. The industry understands that and is working hard to re-source,” he commented.

Meanwhile, Brooke Garcia, CEO of 4Seasons Transportation in Calgary, Alberta, said the company specializing in transporting children with special needs has experienced many supply chain issues.

“We’ve noticed it big time, from acquiring buses and pieces of equipment to buying harnesses for our students with high needs. When we have a kiddo smash a piece of glass out of a bus, instead of two weeks it takes two to five months to get a piece of glass,” she said.

But the biggest issue she cited is not receiving new bus orders because of delays small bus manufacturers are experiencing in receiving cutaway chassis. “Because of that, I’m unable to guarantee con-tracts. So, I’m having to turn down work because I can’t guarantee bus-es will actually be there,” she said.

Garcia explained she was forced to cancel an order for vehicles when suppliers couldn’t guarantee a timely delivery. She sounded hopeful that a second order of vehicles will arrive by late December.

She acknowledged the financial tremors caused by the Great Supply Chain Crunch of 2022 will be felt for years to come. “Most contractors have three- to five-year contracts. So, you could be looking at five- to 10-year contracts, but if you don’t have the equipment there’s nothing you can do,” Garcia said. Yet she praised the vehicle manufacturers for being open and honest about the state of affairs.

“They’ve been very transparent that this is a challenge right now across the transportation industry, regardless of if its consumer or commercial equipment. Some of our manufacturers are saying two years, and some are saying a year [before the supply chain issue is resolved], so it could take a while,” she said.

And she emphasized the current predicament is not the bus manufacturers’ fault. “I wouldn’t want anyone to think negatively toward them,” Garcia added. “This is an overarching issue for all vehicle manufacturers right now.”

Meanwhile, Oyster said he views the bigger challenge being the repair and maintenance of vehicles already on the road for Apple Bus, which serves 80 school districts in eight states from Alabama to Alaska. The company was acquired by First Student in February.

“We’re seeing some cases of dramatically extended vehicle downtime because parts aren’t avail-able. Instead of just calling our usual supplier, we’ve had cases where our fleet maintenance supervisor has made multiple calls and come to me and asked if I knew anyone from my [many years in the industry] that he might call for a particular part or a connection to that particular part,” he said. “That’s time, effort and, ultimately, money. It’s also led to, and we’re not the only ones doing it like the military does, cannibalizing existing equipment.”

Jim Hessel, transportation director for the Cameron School District in Wisconsin, said parts delays have been exacerbated by rising prices. “Lately, it hasn’t been too bad, but last fall, I had a bus that needed a tie rod assembly and I think it was over three months before it arrived,” he said.

Some parts delays have been caused by problems at the production level, he added, while others have resulted from the shortage of over-the-road truckers.

When a distributor told Hessel to expect a six-month wait for a new DEF pump, he found one at an after-market parts supplier. “I paid about four times more than I normally would have or should have, but I couldn’t have a perfectly good bus sitting for six months because it needed one part.”

The Cameron district doesn’t have an on-staff mechanic, so servicing is done at a local large truck dealer. Another type of shortage a lack of specialized mechanics creates other delays for Hessel’s fleet.

“They’re short-staffed so a bus will sit for a couple weeks before they can get to it sometimes. That’s been within the last year to year and a half,” Hessel said. “Buses have gotten more complex. They have a number of mechanics who can do a number of things but only a few can work on those systems.”

While the parts backlog has improved since last fall, there’s one thing that Hessel doesn’t expect to ease. “Things are costing a lot more, and I doubt that’s going to change,” he said. Once parts prices have gone up, they usually don’t go down. There might be some [relief] when fuel prices come down and there are more truckers on the road, but that’s a small fraction of the cost.”

Brian Alexander, director of public relations for Lion Electric Company, said the Quebec, Canada, electric bus manufacturer has escaped most supply chain pain because of the specialized nature of its product. “We’ve been affected but to a lesser extent than you hear about in the consumer auto industry and, really, the supply chain in general,” Alexander said.

Alexander commented that one difference is the small-er volume of vehicles that Lion Electric and other school bus OEMs produce in comparison to car and light truck makers. “We don’t do mass volume. One million F-150 trucks mean you need millions of microchips. We don’t produce that kind of volume, so it brings down the impact on microchips,” he said. “And because we’ve been de-signing electric vehicles since 2010 and building electric buses since 2016, we have a pretty robust line-up of suppliers. We have a very focused procurement group, and we know what we need to get to build electric buses.”

Alexander said the company is taking more steps to reduce further supply chain shocks, including adding more suppliers to its network, and building a battery manufacturing facility in Quebec that will be online later this year and a new vehicle factory outside of Chicago.

Beyond its electric power source, the company’s buses are also “designed to have commonality where possible” with combustible engine vehicles to reduce the need for specialized training because mechanics already will be “as familiar as possible with them.” He continued, “And because the engine doesn’t need any of the 2,000 parts in a combustible engine, there’s far fewer parts to source or stock.”

In time, Denoyer suggested, equilibrium will be restored within the supply chain. “Overall, the U.S. economic out-look has slowed down. Obviously, that’s not a good thing, with the risk of recessions, but if nothing else, it should ease pressure on the supply chain,” he said.

Oyster counsels exercising patience: “This, too, shall pass in the greater scheme of life,” he advised. “Those who are capable of creativity and a little extra effort, they’ll be fine.”

Editor’s Note: As reprinted in the July 2022 issue of School Transportation News.

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