Slack bus tour and charter sector slices into company's order book.
WINNIPEG, Manitoba — Economic uncertainty has forced the bus tour and charter industry to push hard on the brakes, forcing Motor Coach Industries
to gradually lay off more than half its Winnipeg workforce over the last 18 months.
The Winnipeg coach manufacturer has been gradually laying off groups of less than 50 people during that time, to the point where the unionized workforce has fallen to around 500. In 2008, the union had about 1,100 on the job at MCI.
Glen Tomchuk, head of the International Association of Machinists and Aerospace Workers local representing MCI workers, said recently his membership is the lowest it has been in several years. "The industry is not what it used to be," Tomchuk said.
In addition to a diminished order book — production rates are about half what they were prior to 2008 — Tomchuk said MCI is contracting out work that had previously been done on the Winnipeg shop floor.
"Outsourcing is hurting us," he said. "The primary manufacturing classification is a lot smaller than it has ever been."
Patricia Plodzeen, a spokeswoman for MCI, whose headquarters is in Schaumburg, Ill., said the company is contracting out some work "to stay competitive," but that has had no effect on the company's labor situation. Rather, she said, the shrinking workforce at MCI is directly related to demand, which has fallen industry-wide.
Officials in the tour and charter business in the United States agree that business has been soft since 2008.
"MCI has had a history of aligning its line rate with market demand. It's the way it has always been," Plodzeen said. "The slower demand is continuing and we cannot forecast what is going to happen."
MCI's parent company emerged from bankruptcy protection in the U.S. last April when it restructured several hundred million dollars worth of debt. At the time, company officials said the restructuring would not affect the workforce. However, market conditions clearly have not improved.
Victor Parra, CEO of the United Motorcoach Association (UMA), based in Alexandria, Va., said business was lousy throughout North America, especially in the second half of 2009, but he has seen evidence that interest in bus tours may be picking up.
"Indicators are that things are improving. I am encouraged," he said. "But we are all happy to see 2009 go away."
According to statistics published recently in a UMA publication called Bus & Motorcoach News, out of Oklahoma City, sales of new motorcoaches in the U.S. and Canada fell to their lowest level of the decade in 2009, with 1,654 new over-the-road buses sold last year, 24% less than in 2007.
MCI is turning out about half as many of its most popular models — the "E" and "J" lines — than it did in early 2008, according to union officials.
But Larry Plachno, a bus tour and charter industry expert and editor and publisher of National Bus Trader of western Illinois, said the tour and charter business is typically volatile and ongoing economic uncertainty, especially in the U.S., has hurt the industry.
"This is a down economy," Plachno said. "It is not unique to MCI. The other manufacturers are hurting, too."
But he also pointed out that MCI has had more than a 50% market share for several decades, and that continues to be the case.
Plachno said new regulations from the U.S. Environmental Protection Agency about engine performance come into effect this year and that also could be encouraging some operators to hold off making new purchases.
Tomchuk said he hopes the market turns around quickly, but he has been given no indications from management when that might occur. Time is running out for some of his members.
"Our guys have two years to get called back," Tomchuk said. "After that, the company does not have to call you back. If you do come back, it's as a new employee."
Source: Winnipeg Free-Press
Timeline of decline
Motor-coach sales have been declining in Canada and the U.S. Here's how much they've fallen in the last five quarters (year over year declines):
Q4 2009, 8%; Q3 2009, 15%; Q2 2009, 17%; Q1 2009, 29%; Q4 2008, 23%
Here's the total number of new motor coaches sold in Canada and the United States:
1,654 — 2009
2,017 — 2008
2,173 — 2007
Source: Bus & Motorcoach News