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Arkansas' 'auto' plant still going strong after 75 years.

"WHAT MANY FORGET WHEN they consider offering economic incentives to lure an auto manufacturer to Arkansas is that the state already has an auto plant at Conway--and it has been there for years.

What is now IC Corp. has gone through several name changes, but it has survived to become one of the three remaining large bus makers in the United States with nearly a 60 percent market share. It continues to be one of Faulkner County s largest manufacturers.

The largest maker of school buses in the United States began with $125 in 1933, when D.H. "Dave" Ward, who owned a blacksmith shop, was asked to "lower the roof of a wooden bus" for the Southside schools north of Conway.

Later in the 1930s, Ward began to make all-metal school bus bodies at his business, then known as Ward Body Works, gradually adding all the components and machinery to build complete buses from the ground up.

Ward Body Works evolved into Ward School Bus Manufacturing Inc. as the company grew to some 1,200 workers at one point.

It remained a Ward family business until 1980, when it filed for bankruptcy. On July 18, 1980, the 1,100 full-time and temporary workers were laid off and the plant was shut down. A week later, on July 25, the Wards declared bankruptcy.

[ILLUSTRATION OMITTED]

According to an article in the Arkansas Gazette, the company had $21.5 million in debt.

To save the business, then-Gov. Bill Clinton helped put together a group of investors that bought the assets of Ward Industries Inc.

Those investors were Thomas E "Mack" McLarty, J.W. "Buddy" Benafield and two Kansas City brothers, R.L. "Dick" Harmon and Robert Harmon. McLarty and Benafield each owned a third and the Harmon brothers owned a third. They formed MBH Inc. and reopened the plant on Aug. 21, 1980.

Although the Wards no longer had any interest in the manufacturing of the buses, Dave Ward's sons, Charles and Steve, operated dealerships selling the buses up until a couple of years ago. Efforts to contact Steve Ward, the sole survivor of the family business, failed.

MBH told the Arkansas Democrat in 1980 that it would have "$16 million invested in the plant by the time it is ready for full production."

That included the assumption of $11 million to $12 million for "all or part of the various debts of both secured and unsecured creditors of Ward Industries Inc.," the Democrat article said, and the pumping of an additional $4 million to $5 million into the facility.

Why did it go bankrupt? According to an article in the Gazette, U.S. Bankruptcy Judge Charles Baker said "proceedings established that the Ward family members had sold assets or borrowed heavily to keep the company operating. As a result, he said, the evidence was that the Wards had no money and 'the personal guarantees of the Ward family are barely worth the paper they are written on.'"

Later that year, the investment group formed American Transportation Corp., and in 1981, American Transportation began doing business as AmTran Corp., though it continued to market the buses under the Ward name for several years.

Two years later, in 1983, the Harmon brothers bought controlling interest of AmTran.

In 1991 Navistar International Corp. of Warrenville, Ill., bought a third interest in American Transportation Corp. and also got an option that would allow it to buy the remaining two-thirds by April 1995. That option was carried out and Navistar became the sole owner of the bus operation.

In 2000, Navistar began using the "International" trade name for the company's products. In 2002, the company changed its product-marketing name to IC Corp.

Slowdown and Tulsa

Today there are about 800 workers at the plant, which turns out some 20 buses a day, about half of what could be built at full production capacity, said John Thompson, director of sales training.

The current economic slowdown and resulting decline in orders for new buses forced the company to lay off about 300 workers in January.

When IC boosted production at its much newer bus assembly plant at Tulsa, which employs about 1,000 workers, many were afraid it might be the end of the Conway plant, but that's not so, said Ed Hartung, plant manager.

The Tulsa plant is strictly an assembly-line operation, while the Conway facility not only produces finished buses, but also does a lot of the metal fabrication that goes meeting all the variations in demand by local school districts and state regulations.

Driving along Dave Ward Drive in Conway, one cannot help but be awed at the number of buses and the 750,000 SF of facilities on the 160 acres.

It would be easy to think that is a huge number of buses filling up the lot, Thompson said, but every bus on the lot has been made to fill orders from its network of 50 dealers in the U.S. and Canada, and the company maintains no inventory at all.

IC makes conventional school bus models, small buses, rear-engine buses and front-engine buses.

School buses make up 95 percent of the plant's production, but the plant also turns out commercial buses for various school activities, use on military bases, transporting prisoners, catastrophic needs--even a poultry bus that can drop chicks off at a grower.

International engines--the MaxxForce DT, an inline six, or the MaxxForce 7, a new V-8 engine--power all the buses. Each meets all the latest regulations for diesel emissions.

The Future

The numbers in the industry haven't grown that much, so "we can't afford to be sloppy," Hartung said.

The cost of fuel has doubled and that comes out of school districts' operating budget, he said. That makes it an easy decision to defer buying new buses.

More stringent diesel emission regulations that took effect in 2007 are another reason for the slowdown in bus sales and a prime reason for the cutback in employees.

Those regulations added $5,000 to the cost of each diesel engine, and because buyers were aware of the impending change, they stocked up on the cheaper buses with less eco-friendly engines.

"Innovation is the key to staying ahead of the competition," Hartung said --competition that is much tougher than in the past despite the few players left in the industry.

Thompson said that a century ago, about 200 companies were making bus bodies. Now that number is down to three large companies and just a handful of much smaller ones.

IC currently is the biggest, but it faces stiff competition from Thomas Built Buses Inc., a division of Daimler Trucks North America LLC, which also owns Freightliner LLC, and from Blue Bird Corp., owned by Cerberus Capital Management LP, the hedge fund that also owns Chrysler LLC.

Hartung said that in addition to being more innovative, the company must focus on the quality of its buses to stay ahead. Pricing also enters the picture. In addition, IC's competitors have newer facilities that make them more efficient.

Hartung said his biggest challenge is overcoming the dated facilities at Conway so it can remain cost competitive. He said he needs financial help to make it as efficient as it should be and laments that state and local government incentives aren't as readily available to existing businesses as they are to new businesses coming into the state.

Parent company Navistar may not be able to help much after last year's loss of $120 million on revenue of $12.3 billion.

The Conway plant has been at the forefront of bus safety and security, Hartung said.

The company is meeting new requirements from some states that call for three-point safety restraints.

And Hartung foresees technological advances that will allow school districts to monitor their buses, know where they are and how the drivers are doing, as well as student passes that will let parents see if their child got on a bus, which bus and the time at which the bus should drop the child off.

By John Henry

jhenry@abpg.com
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Author:Henry, John
Publication:Arkansas Business
Geographic Code:1U7AR
Date:Jun 30, 2008
Words:1345
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