Spartan Motors Inc. today (Feb. 14) announced that it will relocate Utilimaster Corp.’s manufacturing operations, headquarters and all supporting departments and functions to Bristol, Ind., from the current location in nearby Wakarusa. The move is expected to begin during the second quarter of 2012 and be completed by year end.
According to a press release, the final lease agreements are pending as company officials are working closely with leaders from state, county and local government in Indiana to finalize the negotiation of incentives for the relocation, which will result in continued economic growth and stability for Utilimaster, as well as the Elkhart area.
The move to Bristol, located 20 miles east of Wakarusa, will consolidate Utilimaster’s operations into one facility from its current campus of 16 buildings. Moving into a single plant, combined with lean manufacturing practices, will enable Utilimaster to improve product quality and manufacturing efficiency by reducing operating costs and eliminating non-value added steps. Other highlights include:
• Reducing footprint from 760,000 to 425,000 square feet.
• Campus shrinks from 106 to 26 acres.
• Estimated annual savings of $4 million.
• Improved manufacturing flow, containerization and kitting.
• 80% reduction of material/vehicle movement.
• Production lines will accommodate multiple platforms.
• Increased sub-assembly capacities.
• A new manufacturing showcase for customers.
“The competitive nature of the delivery and service market requires that we continuously assess and improve our operations,” said Tom Gorman, COO of Spartan Motors, parent to industry supplier Spartan Chassis Inc. “The relocation to the Bristol plant will create a safer manufacturing environment for our associates and a platform from which we can accelerate our ongoing quality improvement efforts, in order to grow the Delivery and Service business in the future.
“While Utilimaster continues to perform well, we are taking these steps to ensure the business remains competitive in the long term. The dramatic reduction of non-value added operations represents an opportunity to reduce costs, and we’re focused on ensuring this strategy delivers the right results.”
The Bristol facility features over 425,000 square feet of contiguous manufacturing space that will enable continuous flow and improved work cell layout.
“Utilimaster has experienced significant growth since we acquired the company more than two years ago,” said John Sztykiel, president and CEO of Spartan Motors. “Their successful integration has exceeded our acquisition performance targets and is an important part of Spartan today. Ensuring Utilimaster’s long-term growth and profitability are driving our actions as we consolidate Utilimaster into one modern facility.
“This is the third step of our strategic plan to enhance Utilimaster’s performance. Our first step was to improve operating income in the current facilities; and the second was to bring the Reach to market. Our third step is to consolidate Utilimaster into one modern facility in order to enhance further operational efficiency and income.”
Reflecting the current weakness in the commercial real estate market in Wakarusa, the company will incur an asset impairment charge of $4 million to $6 million in the first quarter of 2012 as a result of closing the facility.
Isuzu Commercial Truck of America, Inc., distributor of America’s best-selling low-cab-forward trucks, and Utilimaster Corp., a leading manufacturer of walk-in vans and commercial truck bodies for the delivery and service marketplace and a subsidiary of Spartan Motors Inc. today (Nov. 11) announced that FedEx Express has placed a large order for the all-new Reach commercial walk-in van. The vehicles, which provide both economic and environmental benefits, are to be delivered to FedEx by the end of 2011.
FedEx Express, the world’s largest express transportation company, has been operating five Reach pilot vehicles on multiple delivery routes in Arkansas, Tennessee and Michigan since the van’s introduction in March 2011.
The Reach is a smaller, more fuel-efficient vehicle that can reduce carbon dioxide emissions by more than 11 tons (or 22,000 lbs.) per vehicle per year. The improved fuel economy and reduced carbon footprint are the result of an aerodynamic, light-weight composite body designed by Utilimaster atop a rugged Isuzu NPR ECO-MAX chassis powered by Isuzu’s 3.0-liter diesel engine.
“We have been working with Utilimaster and Isuzu since conception to develop a long-life, fuel efficient vehicle that supports the FedEx strategic sustainability objectives. They right-sized the engine down to a more fuel efficient three liters and reduced weight with composite material while maintaining a strong chassis and a spacious interior,” said Dennis Beal, vice president of Global Vehicles at FedEx Express. “The vans are performing well on our routes, and reducing our fuel costs as well as our carbon footprint.”
In addition to delivering up to 35% better fuel economy than a traditional commercial van, the Reach also meets the most stringent emissions standards in the world. Isuzu’s 4JJ1-TC engine comes with Selective Catalytic Reduction (SCR) technology with Diesel Exhaust Fluid (DEF) injection reducing NOx levels in engine exhaust by 85%.
Utilimaster Corp., a subsidiary of Charlotte, Mich.-based Spartan Motors Inc. specializing in walk-in vans and commercial truck bodies for the delivery and service market, and Anaheim, Calif.-based Isuzu Commercial Truck of America, Inc., one of the world’s largest manufacturers of medium- and heavy-duty trucks, jointly launched the Reach commercial van today (Oct. 25) at Spartan’s Utilimaster plant in Wakarusa, Ind.
Senior management from Utilimaster, Spartan and Isuzu held a ribbon-cutting ceremony and ceremonial gift exchange before an audience of customers, government officials, regional media and special guests.
“The Reach represents a great opportunity to impact our customers’ businesses, significantly reduce both fuel consumption across their fleets as well as their carbon footprint,” said Utilimaster President John Forbes. “Today is the culmination of a focused program that benefited from the global resources and power train capabilities of Isuzu and the market-specific knowledge and product development capabilities of Utilimaster.”
“We are leading – not following – the changing needs of the marketplace,“ Spartan President & CEO John Sztykiel told the assemblage, adding that the Reach is “the biggest breakthrough in the commercial van marketplace in the last 30 years” because of its styling, fuel-conscious drivetrain and durable chassis.
First introduced in March, the Reach – with a Utilimaster-designed body atop an Isuzu NPR ECO-MAX chassis powered by Isuzu’s 3.0-liter diesel engine – offers the functionality of a custom-built work truck along with the styling and ergonomics of a cargo van, Spartan reports. Fuel economy is a key selling point of the Reach, according to Spartan, which claims that it yields 35% better fuel economy than a traditional commercial van.
Spartan claims the Reach offers “best-in-class mileage” and meets EPA emissions standards, yet still provides true commercial truck capabilities and delivers a dramatically lower cost of ownership than traditional walk-in vans.
“The continued diligent work of everyone involved on this product has positioned us for further growth in the delivery and service market,” Sztykiel commented. “Today we celebrate the success of this team and their ability to produce a sustainable product that meets the duty-cycle demands of our customers, improved safety performance and driver ergonomics, as well as an exceptionally low cost of ownership.”
“Powering the Reach is Isuzu’s state-of-the-art, bio-diesel fuel compatible 4JJ1-TC 3.0-liter turbocharged engine mated to an Aisin medium-duty 6-speed automatic transmission,” Spartan’s release states. “Both the engine and transmission have class-leading B10 durability ratings of 310,000 miles, meaning that 90% of units will reach that mileage before requiring an overhaul.
“Utilimaster guided the development of the Reach’s aerodynamic shape, along with its use of composite materials, which together improve fuel efficiency and reduce interior noise,” the release continues. “The lightweight composite materials provide a 700-pound weight savings compared to traditional aluminum and steel materials. The Reach van also employs impact-resistant composite panels designed to reduce overall maintenance costs.”
Spartan’s new Reach, which some in the industry have speculated could have small motorhome applications, has a 151-inch wheelbase and is available in 12-and-14 foot body lengths. With an interior up to 27 inches higher than a conventional domestic van — and ten inches wider than imported vans — the Reach’s cargo area offers 540 or 630 cubic feet of storage, depending on the body length selected, Spartan reports.
Meanwhile, Hodge Patel, district director for 2nd District Rep. Joe Donnelly, told the Utilimaster crowd that the Reach launch represented yet another step in the recovery of Elkhart County, where the unemployment rate exceeded a “staggering” 20% in March of 2009 during the pit of the recession. Patel applauded Spartan for taking an inventive approach in new product development that helped bring jobs to the area. “We see it right here behind us – a light weight vehicle, better fuel efficiency and a better design,” said Patel.
Elkhart, Ind.-based Patrick Industries Inc., a major manufacturer and distributor of building and component products for the recreational vehicle, manufactured housing and industrial markets, today (Aug. 22) announced the appointment of John A. Forbes to its board, effective Aug. 18, 2011.
Forbes, 51, is the president of Utilimaster Corp., a subsidiary of Spartan Motors Inc. based in Wakarusa, Ind. Prior to being named president in July 2010, Forbes was the CFO of Utilimaster from May 2009 to July 2010, the CFO of Nautic Global Group from 2007 to 2009, and the CFO of Adorn, LLC from 2003 to 2007.
“We are pleased to welcome John to our board, and confident that his leadership, passion, enthusiasm, and experience will be an asset to the company as we execute on our strategic plan and continue to focus on increasing shareholder value,” said Todd M. Cleveland, president and CEO.
The Wakarusa (Ind.) Town Council passed two resolutions declaring certain Utilimaster Corp. properties as revitalization areas for the purpose of 10-year tax abatements on both real and personal property for Utilimaster and Spartan Motors Inc., which owns Utilimaster.
According to the Goshen News, Utilimaster will be making real estate improvements of approximately $1.88 million, including adding about 6,000 square feet to Plant 11. The company committed to adding 60 additional jobs in return for the tax abatements.
Council member Phil Klotz said Spartan Motors will move part of its motorhome chassis department from Charlotte, Mich., to Wakarusa.
The tax abatement amounts to 100% the first year and goes down to 5% in the 10th year. Although the official abatement documents state the company will be adding 60 jobs, a sign by the road outside the plant says the company is hiring 100 people.
In a separate article, the South Bend Tribune reported that the Spartan chassis will be made at a building already on the Utilimaster property, which consists of four manufacturing and 15 additional buildings.
“One of our 10 strategic directives is customer-centric because in any business model, the closer you can get yourself to the customer, typically the easier it is to be more effective and efficient in growing the business relationship,” John Sztykiel, president and CEO of Spartan Motors, said. “Eighty-two percent of all recreational vehicles are manufactured in northern Indiana.
According to the state, Elkhart County will consider additional property tax abatement at the request of the Economic Development Corp. of Elkhart County. But Sztykiel seemed to downplay the role the incentives played in making the move in a phone interview with the Tribune on Wednesday (June 8).
“Indiana’s a great state and they have done a lot of things right from a business perspective,” he said. “But it simply boils down to we are within minutes of where 80% of the industry is, so just pure logic said this is the right thing to do.”
It was the company’s long-range thinking when it purchased Utilimaster in 2009, he said, adding that the company hopes for additional growth in the future.
“Obviously if the business grows, which we expect it to over time, from an RV perspective, our business would grow,” Sztykiel said.
There is not a whole lot of automation in the production of chassis so if sales grow, so will the work force, he said.
Sztykiel also noted that University of Michigan economist Richard Curtin, an RV industry adviser, has been stressing how speed to market will be even more critical as time goes on because people expect to have their product much faster.
The move of the chassis division ties in directly with that thought process, Sztykie said.
Spartan Motors was formed outside of Lansing in 1976 when a small group of automotive engineers, who had lost their jobs when their company went bankrupt, launched their own business. Today, it employs approximately 1,600 in six states and had $481 million in sales in 2010.
Charlotte, Mich.-based Spartan Motors Inc., a manufacturer of specialty chassis and vehicles, will be relocating its motorhome chassis manufacturing operations to Wakarusa, Ind., from Michigan and creating up to 60 new jobs by the second half of 2012.
The company, which acquired Wakarusa-based Utilimaster Corp. in 2009, plans to invest an estimated $1.8 million on machinery, equipment, tooling and facilities, according to a press release.
“It’s becoming well-known that Indiana’s automotive and RV workers are some of the best in the world and Utilimaster’s expansion in Elkhart County is further validation of the strength and value of the Hoosier work force,” said Gov. Mitch Daniels.
Spartan Motors acquired more than 550,000 square feet of manufacturing capacity in it purchase of Utilimaster. Operations consist of four manufacturing and 15 sub-assembly, support and paint plants. The company will continue to employ its existing work force of nearly 600 associates at this location.
“Eighty-two percent of all recreational vehicles are manufactured in Northern Indiana,” said John Sztykiel, president and CEO of Spartan Motors. “By moving production of RV chassis to Wakarusa, we can improve operational execution through alignment of strategic assets with the geographic location of our customer base. This initiative allows for effective and efficient collaboration with our customers, as well as reaffirms our commitment to the industry.”
The Indiana Economic Development Corp. offered Spartan Motors up to $450,000 in performance-based tax credits and up to $75,000 in training grants based on the company’s job creation plans. Elkhart County will consider additional property tax abatement at the request of the Economic Development Corp. of Elkhart County.
“John Forbes and team have been collaborative partners with the EDC of Elkhart County,” said Dorinda Heiden-Guss, president of the Economic Development Corporation of Elkhart County. “We continue to see enhanced efficiencies and increased employment through their innovation. We are fortunate to have Utilimaster as a growing and expanding business in Elkhart County.”
The Utilimaster Corp. in Wakarusa, Ind.,, a subsidiary of Spartan Motors Inc. announced today (March 8) that the Reach, a commercial van offering over 35% better fuel efficiency, made its world debut today at the 2011 National Truck Equipment Association’s (NTEA) The Work Truck Show.
Executives from Utilimaster and Isuzu Commercial Truck of North America conducted a joint unveiling at the opening of the The Work Truck Show before a large audience. This commercial van is offered with three sizes of 450, 530, 640 cubic feet of cargo capacity and is scheduled for full production in the second half of this year, according to a news release.
This is the first commercial van to effectively meet the needs of two market segments. The durability, cargo capacity, fuel efficiency and extensive green features make it the best business decision for large fleets. But it is the modular commercial vocational packages — designed to take full advantage of the van’s expansive aisle width and headroom – that give the Isuzu dealer network a no-compromise solution for the thousands of fleets they serve in North America.
The Reach sets a new engineering and design standard in the commercial van market by delivering significant improvements across five performance vectors: cost of ownership, capacity/efficiency, durability, green and safety.
One of biggest companies in Wakarusa, Ind., shut down two of its plants today (June 24) because of storm damage from the previous night.
According to WNDU-TV, South Bend, the west wall caved in on one of the Utilimaster Corp. buildings and there was also roof damage. Company officials have closed plants 16 and 17 for the time being. The plants are located on S.R. 19 on the town’s east side.
Utilimaster, a subsidiary of Spartan Motors Inc., makes walk-in vans, parcel delivery vans, truck bodies and other specialty vehicles and was originally a key part of Holiday Rambler Corp., the original facilities of which, now occupied by Monaco RV LLC, are located nearby.
Winds clocked as high as 100 mph struck Goshen, located east of Wakarusa, minutes later. A tornado touched down just east of the city’s airport.
Spartan Motors Inc. announced Thursday (April 22) a strategic alliance with Isuzu Commercial Truck of America Inc., a market leader in Class 3 through 5 trucks, to assemble Isuzu’s gasoline-powered N-series chassis.
In addition, Spartan subsidiary Utilimaster Corp. and Isuzu have agreed to develop a next-generation commercial van, utilizing an Isuzu fuel-efficient diesel powertrain.
“We expect these agreements to be the beginning of a long-term relationship with one of the leading diesel engine and commercial vehicle manufacturers in the world,” said John Sztykiel, president and CEO of Spartan Motors. “This relationship with a market leader like Isuzu enhances Spartan’s ability to leverage our capacity and engineering and manufacturing expertise, which is critical as the landscape for the commercial vehicle market is being transformed by economic, environmental and regulatory forces even as the market is poised for growth.”
Under the terms of the agreement, Spartan will assemble the newly reintroduced Isuzu N-Series chassis, a low-cab-forward chassis powered by a General Motors 6.0-liter V-8 gasoline engine. The chassis will be built to Isuzu’s specifications using a General Motors powertrain at a Spartan assembly facility. Initial production of the N-series chassis is set to begin in the second quarter of 2011.
Shaun Skinner, executive vice president and general manager of Isuzu Commercial Truck of America, commented: “The reintroduction of this product rounds out the traditional Isuzu product line and positions our dealer base to once again offer the broadest line of low-cab-forward solutions.”
In addition to the N-Series chassis assembly agreement, Utilimaster and Isuzu have entered into an exclusive agreement under which Utilimaster will use Isuzu’s diesel chassis to power a next-generation commercial van currently under development by the two companies.
“We have worked extensively with key customers to develop this product from the ground up, and the response to the vehicle thus far has been very encouraging,” said John Marshall, senior vice president of sales and marketing for Utilimaster. “This next-generation vehicle offers best-in-class fuel economy and lower total cost of ownership, while offering important additional features to support commercial van customers, including a distinctly automotive aesthetic, which we believe will set it apart in the market.”
Key specifications for the next-generation van include:
- The van will be rated up to 12,000 pounds GVWR and will be produced in a number of models with cargo capacities up to 600 cubic feet.
- The new line will be powered by an Isuzu 4-cylinder, 3-liter engine that delivers 150 hp.
- The engine is 2010 EPA and CARB OBD compliant, offering best-in-class fuel economy.
- The model 4J truck diesel engine and 6-speed automatic transmission used in the new line offers a B10 engine life of 310,000 miles, which means that 90% of these engines and transmissions will go more than 310,000 miles before requiring major service
- Models will feature lower floors to allow for easier entrance and egress and a taller interior height in the cargo area to allow for walk-through capability in the cab and cargo areas
Spartan and Isuzu said their combined effort is the first in the industry to offer an integrated design for heavy-duty commercial vans specifically designed to reduce the cost of ownership while setting a new standard for fuel economy and reduction of carbon emissions. Spartan and Utilimaster anticipate using the new product line to expand their breadth of its addressable market.
Initial prototypes of the new commercial van are scheduled to be introduced in the third quarter or early in the fourth quarter of 2010, with full production scheduled to commence in the second half of 2011.
“We see our global assembly and product development alliance with Isuzu as a critical step in leveraging our core chassis and vehicle experience, while simultaneously expanding our end market potential,” noted Sztykiel. “Just as the Isuzu relationship is a starting point, not an end point, the same is true with Utilimaster and the commercial van platform; over time it will be about more than delivery and service.
“The new van project has been in development for more than 18 months and represents a significant portion of our R&D spend. It clearly positions Utilimaster for market share gains and a proprietary platform for entering new delivery and service niches, while taking advantage of other market applications over time. This agreement marks the early achievement of some of the promise we saw when we acquired Utilimaster last year and the continuation of the innovation trend that has been one of Spartan’s hallmarks since our founding.”
Spartan Motors Inc. today (Nov. 19) announced it has reached an agreement to acquire Utilimaster Corp. from John Hancock Life Insurance Co., a unit of Manulife Financial Corp., a leading Canadian-based financial services group, in an all-cash transaction valued at approximately $45 million.
Utilimaster is a dominant manufacturer of specialty vehicles made to customer specifications in the delivery and service market, including walk-in vans and hi-cube vans, as well as truck bodies, according to a news release.
Charlotte, Mich.-based Spartan said the acquisition of Utilimaster is expected to add approximately $105 million in annualized revenues and be slightly dilutive to earnings in the first full year and accretive by year two. Utilimaster has approximately 550 employees and more than 550,000 square feet of manufacturing capacity at its corporate headquarters in Wakarusa, Ind.
“This acquisition represents a major strategic step forward to diversify our revenue stream into new end markets that offer growth potential and are not directly dependent on government funding or consumer spending,” said John Sztykiel, president and CEO of Spartan Motors. “The two companies share similar cultures, a focus on premium products and innovation, and management depth that make this an ideal fit. We also gain entry into the North American delivery and service market, add fabrication and vehicle body expertise, benefit from Utilimaster’s strong brand, market share position and blue-chip customer base, and create opportunities to leverage future Spartan chassis growth.”
The majority of Utilimaster’s revenues are in the delivery and service market, which includes walk-in vans for the package delivery, bakery/snack delivery and linen/uniform rental markets. Its remaining revenues are attributable to commercial truck bodies, along with service, parts and accessories.
Spartan’s CFO Joe Nowicki commented: “This transaction creates the opportunity to leverage our strong balance sheet, while providing opportunities for growth in a business that is very scalable but not capital intensive, much like our current market. We also expect to see immediate operational and financial synergies, including achieving purchasing leverage in raw materials and driving joint R&D and product development efforts.
“We as a Spartan leadership team set out with a purposeful process and criteria in evaluating both organic market entries and acquisitions to diversify our business risk and growth potential. Utilimaster hit our targets for cultural fit, market potential and financial metrics, including sustained profitability and market share gains amidst an industry that has declined by 50 percent due to macro-economic conditions.”
Under the terms of the purchase agreement, Spartan will pay $50 million in cash, less a net working capital adjustment. In addition, Spartan has agreed to pay contingent earn-out payments of up to $7 million based primarily on the Utilimaster operation exceeding revenue milestones. The acquisition will be financed with a combination of cash and debt with an expected closing date for the transaction of Nov. 30, subject to the fulfillment of customary closing conditions.
Spartan had approximately $48 million in cash and cash equivalents and an additional $50 million in availability under its line of credit as of Oct. 30.
“We are pleased to join forces with the Spartan Motors team,” said Mike Kitson, Utilimaster president and CEO. “Spartan and Utilimaster share a similar business model, complementary team culture and financial discipline – focused on return on invested capital – that bode well for our continued momentum in the marketplace. Based on the excellent strategic fit, I am convinced our organizations will be stronger together as we seek to leverage operational best practices and attack new growth markets beyond those we could penetrate individually.”
Spartan Motors will host a conference call for analysts and portfolio managers at 1 p.m. EST today to discuss the acquisition. To listen to a live webcast of the call, visit www.spartanmotors.com, click on “Shareholders,” and then on “Webcasts.”
Established in 1973, Utilimaster is a leading manufacturer of walk-in vans and commercial truck bodies for the delivery and service market place. As one of the most respected and trusted manufacturers of commercial vehicles, Utilimaster designs, develops and manufactures products to customer specifications for use in the package delivery, one-way truck rental, bakery/snack delivery, utility and linen/uniform rental businesses. The company serves a diverse customer base and also sells aftermarket parts and accessories.
About Spartan Motors
Spartan Motors Inc. designs, engineers and manufactures specialty chassis and vehicles for the recreational vehicle, fire truck, ambulance, emergency-rescue and defense/specialty markets. The company’s brand names – Spartan, Crimson Fire, Crimson Fire Aerials and Road Rescue – are known for quality, value, service and being the first to market with innovative products. The company employs approximately 1,000 at facilities in Michigan, Pennsylvania, South Carolina, South Dakota and Texas. Spartan reported sales of $844.4 million in 2008 and is focused on becoming a global leader in the manufacture of specialty vehicles and chassis.