New Flyer Industries Inc., a manufacturer of heavy-duty transit buses in Canada and the United States, announced today the award of two new contracts to provide Vendor-Managed Inventory (VMI) services to the Washington Metropolitan Area Transit Authority (WMATA) and to the Maryland Transit Administration (MTA). Both transit agencies are existing New Flyer customers for the provision of new buses and spare parts. Both contracts were competitively bid, and are incremental to New Flyer's current parts sales to these customers.
Washington Metropolitan Area Transit Authority (WMATA)
After an extensive tender and evaluation process, WMATA has awarded New Flyer a contract to provide VMI services for an assortment of transit bus spare parts. WMATA has approximately 1,500 heavy-duty transit buses in its fleet, of which 48 percent are manufactured by New Flyer. The VMI contract is for a oneyear term, with two additional one-year option terms, and the base contract is valued at approximately US$2.1 million annually. This program consists of three strategic elements:
- New Flyer will provide inventory planning and automated supply and replenishment ofselect spare parts under a strict performance program requiring defined response timesand fill rates,
- Augmenting this service, New Flyer will provide maintenance engineering support to analyze material usage and to provide recommendations through the use of reliabilityengineering, and
- Finally, New Flyer will assist WMATA in the analysis of the data that is being generatedby the automatic vehicle monitoring systems installed on WMATA's buses. The objectiveis to integrate the results from this analysis into the development of reliabilityimprovement strategies to support WMATA's maintenance program.
Maryland Transit Administration (MTA)
New Flyer has also been awarded a contract with MTA to supply point-of-use brake kits for transit buses built by a variety of original equipment manufacturers, including New Flyer. MTA has approximately 800 heavy-duty transit buses in its fleet, of which 52 percent are manufactured by New Flyer. The contract is for five years and is valued at approximately US$1.7 million annually. This award represents a strategic win for New Flyer, confirming the company's ability to be competitive in these types of specialized maintenance areas of the bus, and demonstrates New Flyer's leadership role in the development of customer brake programs which the Company provides to other agencies.
"We believe that these contract awards are a reflection of the long-term relationship between New Flyer and our customers and shows the confidence that both WMATA and the MTA have in our ability tosupport their efforts to increase bus up-time while reducing their operating costs" said Paul Soubry, New Flyer's president and chief executive officer. Soubry went on to explain, "As the leading heavy duty transit bus manufacturer in the U.S. and Canada, one of New Flyer's primary strategies is to provide the 'Best Bus Value for Life' and to support our customers' focus on total operating cost reduction. This is a major step in moving New Flyer from reacting to quotes, to planning and supporting our customer's needs. These contract awards also recognize New Flyer's ability to provide tailor-made material supply solutions in response to the dramatic funding pressure our customers currently face."
These VMI contract awards are similar to programs that New Flyer is now establishing with other transit operators in the United States and Canada. In particular, New Flyer has had a point-of-use brake contract with OC Transpo in Ottawa, Canada since 2010, which the parties intend to augment with a unique consignment program under development by New Flyer, as part of its delivery to OC Transpo earlier this year of 306 new articulated buses.