Blue Bird Builds Big Yellow School Bus Business in Georgia, CEO Comments on Recent Acquisition

John Tabellione

Monday, September 29th, 2014

Every school day, parents in the U.S. trust about half a million school buses to safely transport 25 million children to and from school and related activities. Statistics show students are 50 times safer in a school bus than in a passenger car.

The person responsible for manufacturing almost one-third of these vehicles is Phil Horlock, CEO of Blue Bird Corporation, headquartered in Fort Valley, Georgia. Blue Bird, founded in 1927 by Albert L. Luce, is the innovator of the original yellow school bus with a metal frame, now ubiquitous and recognizable throughout the world.

As you might imagine, safety is the number one priority for Horlock and Blue Bird. The company’s buses are “remarkably safe” and the foundation of the bus, the company’s purpose-built chassis, are the only ones in the industry “engineered and built uniquely for transporting children,” says Horlock; whereas competitor chassis are designed for carrying cargo and rest on a truck chassis.
Specifically, Blue Bird’s most popular model, the Vision, has a sloped hood with a steeper angle versus competitors to provide best-in-class visibility for the driver. When it comes to the ability to make tight turns, Blue Bird buses have the tightest turning radius. For customers who order them, seatbelts can be built into all of their buses, but the compartmentalized and padded high-back seats actually serve to act as a cocoon for the passengers in the event of an accident. Overall, Horlock states the Fort Valley engineers design unique safety features into its buses that help to further protect its passengers.  

Blue Bird has been on a roll since the school bus industry hit its low point in 2011 as a result of the economic downturn, which led to reduced tax revenues, subsequent school budget cuts and reduced purchases. Horlock’s appointment as CEO that same year has coincided with a sales revenue increase of 50% since then, highlighted by a 13% increase in sales volume this fiscal year versus the average annual industry rate of 4-6%. “Our goal is to outpace the industry,” states Horlock.

A native of Manchester, England and an ardent supporter of Manchester United’s soccer team, Horlock originally came to the States to spend only three years, which is “now going on 24,” he says. Most of his career, both here and in his home country, Horlock has held executive positions at Ford Motor Company, most recently seeing the leadership of Alan Mulally firsthand, where he learned that “you can’t manage a secret.” 

Hence, Horlock has emulated Mulally’s Thursday morning meeting philosophy at Blue Bird, when all functional department heads meet in order to communicate better with one another, since each group interacts and is interdependent with one another. The meetings, now a fixture of the company culture, cover the entire global business, serving to put the critical issues on the table and letting managers attack them in the open.

The results of these management sessions not only show in the sales figures, but have also led to product innovation. The average lifespan for which a district keeps a school bus is about 15 years, closer to 20 in California. While fleets are durable, wear and tear affects some parts more than others, such as the windows, which are notorious for sagging and leaking after years of use. At a recent industry trade exhibit, Blue Bird introduced an industry-leading and kid-friendly window with triple seals for superior leak resistance, ergonomic dual-grip latches to withstand over 50,000 up-and-down cycles over the life of the bus and greater weather stripping to reduce noise, wind, dust and water intrusion. Customer visits are a routine activity at the Fort Valley plant and on seeing the new windows on such a visit recently, one potential new customer remarked to Horlock, “I might just buy your buses for these new windows!”

Perhaps the “single biggest game changer,” says Horlock, “is our exclusive, second generation of propane-powered buses.” As the pioneer of propane-powered buses, the eco-friendly line comprises around 20% of all Blue Bird sales today and continues to rapidly grow. The clean, green vehicles can annually save at least $2,500 in fuel cost per bus and reduce maintenance expenses by another $1,000. Furthermore, they are ideal for cold morning starting. “These buses help to meet the challenge and pressure on school districts to control operating costs, while being green and great to drive”, says Horlock. “A lot of work is involved in keeping a bus maintained and running efficiently over 15 years and we work hard to provide our customers with the best ownership experience.” 

Horlock has continued the privately held company’s long-time tradition of community involvement in Fort Valley and nearby counties from where Blue Bird employs over 1,500 people, many with long records of service and whose prior generations also have worked there. While he personally serves on the Board of the Georgia Chamber of Commerce, Blue Bird employees are actively involved with the local Chambers and the Ronald MacDonald House and multiple charitable organizations. In addition, Blue Bird supports a local Taste of the Arts event; it employs around 20 interns from local colleges each year; and it encourages several volunteers who tutor students at the local schools. As part of their annual supplier meeting each year, vendors participate and provide donations at the charity golf event which further benefits numerous local charities

And, to help ensure that Blue Bird continues along the straight and narrow, Horlock points out that every other Wednesday, they hold a non-denominational, voluntary service run by their full-time chaplain and counselor, Jay Jones, who once served in a similar role at the White House. The chaplain’s responsibilities also include attending weddings and funerals of employees, performing hospital visits and assisting in the event of a family crisis. “This is a truly unique and caring company in so many ways, with terrific employees, and I’m proud to represent it,” added Horlock. 

Blue Bird to Become a Public Company as Hennessy Capital Acquisition Corp. Announces Agreement to Acquire Blue Bird

Immediately subsequent to the GeorgiaCEO interview with Phil Horlock, CEO of Blue Bird Corporation, earlier in September, Hennessy Capital Acquisition Corp. (HCAC) of Houston, Texas, formally announced it had entered into a definitive purchase agreement to acquire all of the outstanding capital stock of School Bus Holdings Inc. This entity is an indirect parent company of Blue Bird Corporation from The Traxis Group B.V., which is majority-owned by funds affiliated with Cerberus Capital Management. 

Because of the confidential nature of the arrangement, Horlock was not able to divulge the transaction during the initial interview, but was keen to discuss it with GeorgiaCEO when the news became public. 

In a follow-up interview with Horlock, he noted, “Hennessy came to Cerberus three or four months ago in a search to select a company investment that met their criteria, namely, having a well-recognized, iconic brand, a rising growth curve and an established business with a strong management team. Out of one hundred companies, they whittled their list to 20, before selecting Blue Bird.” 

Since Hennessy is currently listed on the NASDAQ exchange, ratification of the acquisition is required from the SEC, expected by year-end, thereby making Blue Bird a publicly traded company without having to generate an IPO. 

Cerberus will remain the largest shareholder with 42% ownership. Chan Galbato, CEO of Cerberus Operations and Advisory Company, LLC, remains Chairman, and current Blue Bird board members will hold six of nine board seats, while Daniel Hennessy, Chairman and CEO of HCAC and Hennessy COO, Kevin Charlton, will become board members. Horlock emphasized that the current Blue Bird management team will remain in place, with him as CEO. 

As for the Blue Bird employees, Horlock said, “SEC approval will give them an opportunity to also have ownership in their company. It’s another chapter in the 87-year history of the excellent relationship between the Fort Valley company’s employees and the area’s largest employer. We believe this transaction will enable us to maintain our growth momentum with our exceptional workforce building the world’s finest school bus. It’s a perfect match all the way around.”

About John Tabellione

John Tabellione is an award-winning, professional business writer, complemented by over twenty-five years of strategic communication responsibilities as a Marketing, New Business Development and National Account Sales Executive in consumer goods and commercial industries. 

Experience with Fortune 500 companies, as well as with smaller firms and non-profits, encompassing a variety of products, including those of Georgia-Pacific, Kimberly-Clark and Stanley Works. 

John has a B.A. in English from Fairfield University and an MBA in Marketing from the University of Hartford. In addition, he has studied Russian at the Defense Language Institute at Syracuse University, and Italian language and culture at Kennesaw State University.