Dive Brief:
- Specialty vehicle maker Rev Group plans to close its ElDorado National (California) bus manufacturing plant in Riverside, California, laying off 425 people, according to a state Worker Adjustment and Retraining Notification Act post. The site produced and distributed transit buses for on-campus transportation, cities and airport shuttles.
- The first round of layoffs is expected to begin March 29 and the scheduled closure date is Sept. 30, according to the WARN Act letter.
- The closure is part of Rev Group’s plan to shutter its ElDorado National (California) business and exit the school and transit bus manufacturing sector. The company also sold its bus manufacturer subsidiary Collins Bus to Forest River Bus for $303 million in January.
Dive Insight:
Supply delays and an increased pivot to electric vehicles have made it a tough market for diesel and gas-powered buses, Rev Group President and CEO Mark Skonieczny told analysts in a call last month.
“The decision to wind down operations was not made lightly,” Skonieczny said. “However, based on the options available to us, we believe this is the best path forward for our business.”
The Rev Group subsidiary has struggled to make a profit amid efforts to produce electric buses alongside its gasoline-powered products. El Dorado National’s business has resulted in losses over the past seven quarters, Skonieczny added. Production was also hampered by a lack of reliable sourcing.
“Qualification and integration of dual sources for new suppliers was expected to take up to one year before production and regulatory testing began, further delaying new orders, deliveries and profitability,” Skonieczny said during the call.
Rev Group also plans to consolidate its remaining commercial vehicle segment with its fire and emergency business under a new segment dubbed specialty vehicles.
“By combining these two segments, the Company expects to drive enhanced efficiencies while better leveraging its scale in various aspects of the business,” according to a Jan. 31 Securities and Exchange Commission filing.
The restructuring is expected to generate $250 million, according to the company. However, the company expects to spend $7 million to $8 million on employee severance, retention and other benefits related to the Riverside plant closure, according to the filing.
Rev Group, under its former name Allied Specialty Vehicles, acquired El Dorado National (California) in 2013 along with the company’s Salina, Kansas, shuttle bus business.
The company has been offloading operational assets in recent years. Rev Group sold El Dorado National (Kansas) to Forest River in 2020, along with its other bus brands.
Vehicle emission regulations have increased over the last few years, leading manufacturers to pivot to EVs from gas-powered vehicles. Last year, the Environmental Protection Agency released a proposed rule to reduce toxic air emissions from heavy and light-duty vehicles beginning in 2027. The proposal, if finalized, would prevent nearly 10 billion tons of carbon dioxide emissions and reduce the U.S.’s dependence on approximately 20 billion barrels of oil imports.
Federal funding has also been available to incentivize transit and state agencies to increase the number of electric buses and decrease emissions under the Bipartisan Infrastructure Law. In 2022, the Federal Transit Administration funded $1.66 billion in grants to transit agencies nationwide that would allow them to buy 1,800 new buses, including 1,100 zero-emission buses.
