By Jamie Thompson
EMS1 Staff
 Photo courtesy of Union County EMS An American LaFrance Freightliner ambulance deployed by Union County EMS in S.C. |
You don’t get to be one of the oldest ambulance and emergency vehicle manufacturers around without having strength in the face of adversity.
But American LaFrance seems to be facing its toughest challenge yet after it filed for Chapter 11 bankruptcy protection Monday. The decision capped a tumultuous stretch for the company after it changed ownership from a unit of Freightliner, which ran the firm for 10 years from 1995 through 2005, to Patriarch Partners.
The company itself is pledging to bounce back stronger than ever, stressing the bankruptcy measure allows a company to “reorganize itself so it can correct its financial problems.”
Financial problems are nothing new in the apparatus manufacturing industry; in fact, many companies have fallen by the wayside over the years. But the prominent position held in the market by American LaFrance, which celebrated its 175th anniversary last year, means the Chapter 11 move is still a shock.
However, industry experts are confident the company will eventually put its woes behind it.
“American LaFrance is one of those survivors that has been able to come back in the past and I think they will do so again,” said Bill Peters, who runs New Jersey-based Fire Apparatus Consulting Services.
Peters, a retired division chief of the Jersey City Fire Department, said what sets American LaFrance apart from other manufacturers that have gone under is its strong client base.
Loyalty tested
However, the loyalty of this client base could be tested in the coming weeks, if it has not been so already. Several departments that have ordered apparatus have suffered lengthy delays in delivery.
In a statement announcing its bankruptcy, American LaFrance said the problems with late deliveries began when it stopped using Freightliner’s accounting, inventory and payroll services, and changed to a new system, causing inventory and customer data problems.
Some departments have also been waiting for months to get after-market parts to keep their apparatus in service, a problem American LaFrance said will be eased by the relocation of its Parts Distribution Center into the company’s main Summerville, S.C., plant immediately.
Peters said it is vital the company does indeed work its way through the backlog.
“Their customers will be concerned about parts and maintenance availability during this black period, but hopefully they will be able to keep that end of it up,” he said.
The scale of the problems at the manufacturer became apparent last month when the company furloughed about 100 workers, saying some of the layoffs would be permanent and other employees wouldn’t be called back until March, according to The Associated Press.
A spokesman said at the time the furloughs gave the company time to update inventory after moving last year from Charleston County to a new $62 million plant in Berkeley County.
It’s this move that Peters said may have in part led to the company’s current plight.
“I think one of their problems may have been that they underestimated the problems with moving a plant and production and actively pursuing business for new apparatus,” he said.
“Perhaps they bit off more than they could chew, especially with the building of a new factory. It might have been wise not to take as many orders and not to have backed themselves up so much.”
Sale speculation
American LaFrance is not alone in experiencing financial problems. Once the industry leader, E-One reportedly lost $12m in 2007, prompting speculation about the sale of the Fla.-based company. The decision by an investment firm to increase its stake in E-One’s parent company in December has only heightened the uncertainty, according to local media.
It’s not all doom and gloom for fire truck manufactures, according to Peters, with Pierce posting big profits last year.
“It’s been widely reported about E-One’s losses, but on the flipside Pierce made $28m last year so there is a market for fire trucks,” he said. “While I would say though that it is somewhat depressed because of the economy, fire trucks are a necessity and they will always be needed.”
American LaFrance’s specific problems are not necessarily a reflection on the state on the industry itself, said Jerry Halpin, president of the Fire Apparatus Manufacturers’ Association (FAMA).
“For 200 years, this business has had companies go up and down, just like any other industry,” he said. “But when it happens to the more well known names, then it probably gets more attention than had it been someone else.”
American LaFrance did blame in part a “depressed market” for emergency equipment for its move toward filing for bankruptcy.
Halpin said it is fair to say business is generally down currently, but added it has always been difficult in the fire truck manufacturing industry to prove statistically whether things are going well or not.
In addition, the fire service — which supports the fire truck industry — has traditionally been under-funded, Halpin said.
Emission standards
Another factor behind American LaFrance’s difficulty in finishing many vehicles on order, according to documents filed in bankruptcy court, was the new emission standards — 2007 EPA Guidelines for Diesel Engines — adopted at the start of 2007.
But in his column last month, FireRescue1 Apparatus Essentials columnist Bob Vaccaro said that while the guidelines did require a lot of redesign and engineering of cabs and bodies for all manufacturers, they did have as severe an impact as some had feared.
Halpin agreed, saying, “There was concern about being able to supply engines to meet those emission standards, but as with any other automotive industry we just had to do what we had to do.
“I don’t think the emission problem made a dramatic difference to other manufacturers, but maybe for American LaFrance it had a cascading effect.”
Vaccaro said he too believed American LaFrance’s transfer to the new factory could have played a part in the company’s current situation, but echoed the general belief it will regain its standing in the market.
“They’ve just had a big move into a brand new factory, which would have had an impact on production and parts,” he said.
“I would hate to see them go out of business as they do build a quality product. They’ve been able to weather the storm once or twice before and have always been able to come back.”