SHAKE UP: Federal Coach Sells Bus Division; Transfers Limos, Hearses

Posted on January 6, 2010 by LCT Staff - Also by this author - About the author

FORT SMITH, Ark. — Federal Coach starts off the new year taking itself apart, as a casualty of a recessionary slowdown amid major shifts in industry dynamics and vehicle preferences.

Federal Coach sold its bus division to Elkhart, Ind.-based Forest River Inc., a maker of four bus lines, on Dec. 31, 2009. Production of Federal limousines and hearses will be gradually transferred this spring to Eagle Coach of Amelia, Ohio, a business unit of the J.B. Poindexter Co. of Houston, a transportation conglomerate which also owns Federal Coach.

The new builders will continue to manufacture and sell all Federal vehicles under the Federal Coach label.

History unfolds

For the chauffeured transportation industry, the dismantling of Federal Coach is the starkest indicator yet of an industry wracked by fundamental economic and transportation shifts. Federal Coach traces its heritage to the legendary Armbruster & Company stagecoach builders of northwest Arkansas that gained prominence in the 1880s when it built “hold-up proof” stagecoaches with secure compartments that were ideal for travelers heading out to the wilder western states and territories.

A century later, in 1989, Armbruster Stageway was sold to Executive Coach Builders, and its production transferred from Fort Smith, Ark., to ECB’s plant in Springfield, Mo. But then Fort Smith businessman Chris Witte bought the vacant Fort Smith plants from ECB later that year and started Federal Coach.

Tough moves

Some of the 140 Federal employees are second- and third-generation technicians and craftsmen descended from family members that have worked in the region’s limousine business that at its peak consisted of multiple factories throughout the southwest Missouri and northwest Arkansas region. Although some Federal Coach employees are being offered jobs with the new owners, most will be laid off, said Bill Flint, executive vice president of Specialty Vehicle Group, the division of J. B. Poindexter that runs Eagle Coach and Federal Coach.

“It was a tough move,” Flint said. “We had to reduce costs and make some tough decisions. This is more of a reaction to find a better and more efficient way to make products.”

Flint emphasized that Federal Coach vehicle models will continue to be built with the same quality standards, and will bear the Federal Coach label.

For Federal Coach, 2009 saw its market share for hearses rise, but demand for its stretch limousines flatten and decline. Flint said Federal production volumes fell due to the lack of next-generation limousine chassis from Cadillac and Lincoln. As a result, chauffeured transportation operators and funeral homes are driving and leasing their vehicles longer until GM and Ford release their new chassis, likely by 2012. “Why pay more money for the same look?” Flint asked. “We are recognizing what demand will be like until 2011 or 2012 when new models are released.”

Industry sources have hinted privately for two years now that Ford/Lincoln and GM/Cadillac are planning successor models to both the Lincoln Town Car and Cadillac DTS, but the automakers have not officially announced any new livery vehicle models or platforms. The Town Car model will continue to be built at least through the 2011 model year, according to Ford Motor Co.

What happens to limos and hearses

The transfer of Federal limousines and hearses to Eagle Coach, located outside of Cincinnati, Ohio, will occur in three stages, with Cadillac hearses and production equipment moving in February, Lincoln hearses by April, and stretch limousines in May and June, Flint said.

“We will continue to have both brands [Federal and Eagle] with their own dealer networks,” Flint said. “By moving the products to Amelia and using its manufacturing capacity, we have and will become more efficient.”

Stretch limousines will be made under the Federal Coach label while hearses and funeral vehicles will be built under both the Federal and Eagle labels, Flint said.

What happens to buses

Federal Coach exited the mini-bus business entirely when it closed the sale of its bus division and Federal Coach label license to Forest River Inc. on Dec. 31, 2009. The sale price was not disclosed.

Federal buses, built on Ford, GM, and Freightliner chassis, will be manufactured at Starcraft Bus Company’s 100,000 square-foot plant in Goshen, Ind. Starcraft is owned by Forest River Inc., which is owned by Berkshire-Hathaway, a Warren Buffett company.

Production of the Federal Coach buses will resume Feb. 1 after workers transfer equipment this month from the Fort Smith facility, said David Wright, the general manager of Starcraft.

Of Forest River’s four bus labels, Starcraft Bus Company oversees Federal Coach and Starcraft, which are built in Goshen. The Glaval and Elkhart Coach bus lines are made at Forest River’s plant in nearby Elkhart, Ind. Forest River’s other main businesses units include recreational vehicles, boats, school buses, and mobile homes.

Wright could not provide 2010 production estimates yet for Federal Coach buses, but expected output to at least match the 250-300 buses manufactured annually at the Fort Smith factory. “With our dealers and products, we believe we can significantly eclipse that figure in 2010,” Wright said. The acquisition of Federal’s bus division likely will add about 65-70 jobs to the plant once transfers are done.

“We’ve interviewed and talked to [Federal] employees and offered positions, but we’re not sure who is relocating,” Wright said. “There is not a large number looking to relocate.” About half of the Goshen plant will be devoted to production of Federal bus models, all of which Starcraft plans to keep.

Federal Coach bus design, production, purchasing, quality control, sales and marketing will all be kept within a separate unit of Starcraft, Wright said.

For more information on Federal Coach buses: (800) 348-7440.

Source: Martin Romjue, LCT Magazine

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