August 27, 2001 Wheels to Fortune

Volume 4 | Issue 6

One of the fastest growing bus manufacturers in the world, North American Bus Industries Group is expanding its facilities and transforming

North American Bus Industries (NABI) Group has demonstrated an astounding capacity for growth. The Budapest-based manufacturer has increased its sales more than 20-fold in the last six years, while achieving a 15 percent share in the U.S. transit bus market. In addition, the January 2000 acquisition of the British Optare Holdings Ltd. has made NABI the third largest bus manufacturer in the United Kingdom. NABI sold a company-record 602 buses in the United States alone last year, and expects to top that number this year. Says Andy Racz, president and chief executive officer, “We plan to build nearly 1,500 buses this year, including the production by our Optare subsidiary, which would be 40 percent over 2000 figures. Our order backlog – the number of buses for which we have firm orders, plus those buses that will very likely be ordered – now totals well over 3,200 buses, at a value of about $1.1 billion.”

This growth has necessitated major expansion and improvement efforts at the three NABI facilities located in the United States, Hungary and the United Kingdom, which employ more than 1,700 people. At the Anniston, Ala., plant where final assembly takes place, NABI recently completed a $3.8 million expansion project, adding 110,000 square feet to the 140,000 square-foot plant, and increasing assembly capacity to 1,000 units per year. In addition, the company opened a second production line at this facility in March to reduce start-up time at turnover.

NABI also invested in improvements in manufacturing capabilities and applied technologies at the Optare plant in Leeds, England, and at the Budapest plant where bus design and shell production take place. Both the Anniston and Budapest plants have received ISO 9001 certification for quality assurance. The company also broke ground for a new facility in Kaposvar, Hungary, near Budapest. This plant, which will take three years to complete, will produce the company’s reinforced fiberglass bus bodies, as well as other fiberglass components.

Geared for Growth

NABI began in 1992 when the First Hungary Fund, a private investment syndicate dedicated to business ventures involving Hungarian industries, purchased the facilities of a bankrupt American/Hungarian bus manufacturing joint venture. The company was incorporated to build buses specifically for the U.S. market. The body fabrication operations in Hungary were organized under North American Bus Industries, Rt., a corporation controlled by the First Hungary Fund. U.S. final assembly operations were established under what is now North American Bus Industries, Inc., a wholly owned subsidiary of NABI, Rt., and organized as an Alabama corporation. Today, the NABI Group comprises NABI, Inc., and Optare.

In 1997, NABI went public, listing its shares on the Budapest Stock Exchange. The company also established an after-sales parts and services division, which operates as an independent profit center. The division recently opened a new parts warehouse in the greater Los Angeles area, the company’s fourth such facility in the United States.

With the purchase of Optare, NABI gained access to new technologies and markets. “The transaction is based upon strong industrial and marketing synergies,” says Peter Rona, the founding chairman. “Both companies have excellent products, innovative technologies and outstanding marketing expertise in their own traditional markets. The acquisition of Optare by NABI will provide tremendous opportunity for growth stemming from the exchange of technologies, products and markets.”

That acquisition gave NABI entry into a new product category – smaller purpose-built buses. New models developed from the Optare product line – the 30-LFN Midibus and the 40-foot Excel models – further diversified NABI’s portfolio. The Midibus is based on the award-winning Optare Solo. Last year, American Eagle Airlines ordered 75 of these 30-foot, heavy-duty, low-floor buses, giving NABI its first order from a U.S. private-sector bus customer. The new Optare Alero, a downsized version of the transit bus or touring coach, is an integral-bodied, low-floor vehicle purpose-built for the U.K. elderly or handicapped market. An Americanized version is planned for fourth quarter of 2002.

In addition to new product development, NABI has refined existing bus models through extensive engineering. As the largest U.S. supplier of articulated buses in 2000, NABI is considered an articulated bus specialist. The new 60-LFW, available in stainless steel or mild steel construction, is a low-floor version of NABI’s model 436 60-foot articulated transit bus. The Chicago Transit Authority, one of the nation’s largest transit operators, recently ordered 230 of these articulated vehicles, an order worth more than $100 million. “Most of our recent growth has been due to the overall growth in the transit industry,” says Bill Coryell, vice president of sales and marketing. “But we’ve also made gains in market share.”

The Route to the Future

Since 1998, NABI has been developing a revolutionary line of buses called the CompoBus to position itself for continued growth into the 21st century. “We have been encouraged by the continued and growing interest in our CompoBus product line, which now includes 40-foot and 45-foot models,” says Coryell. “Both were inspired by a $60 million DOT (Department of Transportation) research project called the Advanced Technology Transit Bus, which demonstrated that the public transit industry would be interested in new buses with composite bodies. Our development and testing efforts have confirmed that earlier conclusion.”

What has sparked that interest? Coryell says, “First, due to the growing list of passenger amenities and high technology on buses – such as wheelchair boarding devices, alternative fuel systems and alternate propulsion systems – buses have become very heavy, which makes them more expensive to operate. Our CompoBus products are as much as 7,000 pounds lighter than their metal counterparts, which means a substantial savings on fuel costs, brake life and other operating costs over the typical 12- to 15-year life of the vehicle.” The second reason Coryell cites is the non-corrosive property of the composite material, which solves another costly problem facing public transport agencies.

“In addition to those reasons,” Coryell says, “there are a couple of trends driving the future transit market that make our CompoBus concepts more attractive. The first is the drive to alternative propulsion technologies, such as natural gas-fueled engines or hybrid propulsion, which is a combination of an internal engine and electric motors. These alternatives tend to be much heavier than standard diesel engines. Thus, lighter weight composite buses become more attractive when cities consider these new but heavier propulsion technologies to improve their air quality.

“The second future trend is a desire to improve attractiveness of public transport vehicles’ design for the rider, to help lure people out of their highly stylized cars. Composites are well suited to meeting this challenge, as evidenced by our Model 45C-LFW. In fact, the more attractive and sleek the body styling in composites, the more it strengthens the structure of the body, thanks to the unique characteristics of advanced composite materials. So, for all these reasons, we think that these two products represent only the beginning of our composite line.”

By managing the most successful year since its founding, NABI established itself as a dominant supplier of premium buses in the North Atlantic area by the end of 2000. “We plan to come close to doubling our current production in the next two years, to between 2,500 and 3,000 buses annually,” Racz says. “This will be achieved by expanding into our current markets of Britain and the U.S. with additional products. Plus, we plan to begin selling in Eastern Europe with left-hand-drive versions of the Optare Excel and Solo (the latter is called the Model 30 LFN in the United States, but will be marketed in continental Europe as the NABI Solo). In addition, the new manufacturing facility in Kaposvar will help accommodate these growth plans.”

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