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New Flyer buys Motor Coach Industries


MAX BRT
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I don't think many of us saw that one coming... If anything I thought they might get involved in the motorcoach market eventually by working with MarcoPolo to offer some version of their products to the US and Canada. It'll be interesting to see how this deal affects their relationship with ABC in regards to product offerings. Also, could this mean more MiDis or Xcelsiors appearing in private charter fleets? (Hey, stop wasting your money on those cutaway minicoaches that don't last. We can get you a great deal on a new XD35 tailored for your shuttle needs since you're already buying 5 J4500. For just an extra $50,000 over what you would pay for one of those poor riding minicoaches, we can offer you a low floor MiDi bus that is perfect for those senior groups you drive around town.)

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I don't think many of us saw that one coming... If anything I thought they might get involved in the motorcoach market eventually by working with MarcoPolo to offer some version of their products to the US and Canada. It'll be interesting to see how this deal affects their relationship with ABC in regards to product offerings. Also, could this mean more MiDis or Xcelsiors appearing in private charter fleets? (Hey, stop wasting your money on those cutaway minicoaches that don't last. We can get you a great deal on a new XD35 tailored for your shuttle needs since you're already buying 5 J4500.)

Not just that I can see the MCI/New Flyer offering systems that order both Motor coaches for commuter runs and regular transit buses a bid for a mass order for both to save on cost.

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Fun speculation guys. If this somehow leads to more heavier duty buses out there and fewer cutaways, I'm all for it.

Volvo/Nova/Prevost and Gillig have to be hoping this does not lead to "synergies" which lower NFIs cost of production. If this diversification works, Gillig looks to be a loser, since they are not diversified into coaches.

On the other hand, I worry that this kind of expansion could lead NFI to lose focus on improving their transit buses and staying ahead of the competition. Gillig and Proterra are not diversified and that should help them to focus strictly on making the best transit buses.

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I wonder what the future will be of the now two New Flyer plants in Winnipeg? The MCI plant has two lines (one for "D"s and one for "J"s). There are now also two finishing plants in close proximity, the MCI facility in Pembina, North Dakota, and the New Flyer facility 100 miles away in Crookston, Minnesota. New Flyer is now producing Excelsiors on three lines: Winnipeg-Crookston, St. Cloud, and Anniston. MiDi's all come from St. Cloud.

Flyer and MCI have been "cross-town rivals" here in Winnipeg for more than 80 years. In particular the two companies competed for skilled tradesmen (welders, etc) in the same labour market.

Whenever there is talk of tightening the "Buy America" percentages in the US, New Flyer's Winnipeg plant has seemed in jeopardy. The coach market is less subject to that, since most of the customers are commercial operators. I wonder what New Flyer will do with multiple plants and multiple products and divergent rules...

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A quote from the Winnipeg Free Press article on the deal:

[New Flyer CEO Paul] Soubry said this is a diversification play and not an integration. Meaning the two companies will continue to operate separately and there are no layoffs or plant closures or integration being contemplated.

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Mergers only work for a parent company if there are synergies that can be realized.

If they wanted to diversify, they could have bought a timber company.

Instead, they bought another bus company.

While they may continue to have separate product lines, there is no doubt that some aspects of the operation will be combined (parts distribution, for instance?).

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Funny enough, this is sort of the reverse of what happened in the late 1980's when MCI bought GM's RTS and Classic bus lines.

There is very little overlap in the transit and coach market segments, IMO. MCI has done a good job in building the commuter cruiser market since the 1970's but outside of a handful of big operators that is still tiny relative to the traditional transit bus and intercity coach markets. The opportunity for combining bids is limited since most of those big transit agencies typically either bid the coach orders separately or split the awards.

The fact that Marcopolo has a 20% stake in NFI is what I find most interesting about this deal.

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The fact that Marcopolo has a 20% stake in NFI is what I find most interesting about this deal.

The Marcopolo stake goes back to January 2013.

Brazilian bus maker loads up stake in New Flyer Industries

Winnipeg

The Canadian Press

Published Wednesday, Jan. 23, 2013 6:42PM EST

Last updated Wednesday, Jan. 23, 2013 7:01PM EST

Under the deal, Marcopolo will pay $10.50 per share for nearly 11.1 million shares in New Flyer, a roughly 19.99 per cent stake.

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Mergers only work for a parent company if there are synergies that can be realized.

If they wanted to diversify, they could have bought a timber company.

Instead, they bought another bus company.

While they may continue to have separate product lines, there is no doubt that some aspects of the operation will be combined (parts distribution, for instance?).

Mergers only work for a parent company if there are synergies that can be realized.

If they wanted to diversify, they could have bought a timber company.

Instead, they bought another bus company.

While they may continue to have separate product lines, there is no doubt that some aspects of the operation will be combined (parts distribution, for instance?).

Nice contribution, northwesterner!

Parts distribution is the most profitable part of NFI, I believe.

So what parts do an MCI coach and an Xcelsior have in common? Savings might be had in stocking aftermarket parts and, before that, in buying in bulk for production.

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The Marcopolo stake goes back to January 2013.

Brazilian bus maker loads up stake in New Flyer Industries

Winnipeg

The Canadian Press

Published Wednesday, Jan. 23, 2013 6:42PM EST

Last updated Wednesday, Jan. 23, 2013 7:01PM EST

Yes, I did know that. I find it interesting in that I've wondered if Marcopolo bought its stake in NFI to get a foot in the door in the U.S. and Canada. They now will have a connection to the leading coach manufacturer in these markets. Of course, they also could have just bought MCI themselves I suppose.

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