Thursday, January 31, 2008

It's Chapter 11 for American LaFrance

ALF Owners Call For A Time-Out

by: Lou Angeli

Wilmington, DE (January 30, 2008) -- Here in Wilmington, DE it’s the biggest news regarding fire apparatus since Chief Jim Wilmore ran out of working engines. What’s the big news bulletin? On Monday of this week, the venerable American LaFrance Corporation filed for bankruptcy in US District Court in Wilmington.

American LaFrance filed here under "Chapter 11" of the bankruptcy code, which typically is used by businesses that need to buy time to reorganize their finances and secure new capital. In many cases, Chapter 11 filers continue to operate. According to Bloomberg Financial some of the largest creditors listed in the filing include American LaFrance's owner, New York-based investment firm Patriarch Partners, and trucking giant Freightliner, which sold the business to Patriarch about two years ago. Various employees are owed $1.4 million for accrued vacation. It’s not clear but some say that ALF could be as much as $250 million in the hole.

This is a HUGE story for the fire service nationwide, because now 2 of the Big-3 fire apparatus manufacturers are in trouble. Ocala (FL) based
E-One showed a substantial drop in earnings last quarter and some say that sale of the firm is inevitable. The remaining large capacity apparatus builder, Pierce Manufacturing, seems to be doing well, albeit the firm’s profit margin remains mighty slim.

“American LaFrance (ALF) has claimed that a bungled implementation of IBM software contributed to the demise of its business,” says IT reporter Kelly Fiveash in The Register. ALF said that when it switched to its new ERP software last June, "serious deficiencies" threw its operations into chaos.

"These problems have resulted in slowed production, a large unfulfilled backlog, and a lack of sufficient funds to continue operating." as reported by ALF to The Register.

With ALF under Chapter 11 protection, and unable to make good on current deliveries, it is unlikely that fire department administrators will consider the firm during the bidding process. With that in mind, ALF's frontline sales team, the independent distributors, are moving quickly to represent other firms. In a few days time, German-owned
Rosenbauer has already signed many of ALF's key distributors, including Delaware-based DPC Emergency Equipment.

View photos of American LaFrance Fire Apparatus

My bet is that Italian-based
Iveco-Magirus will make a run for American LaFrance. They already own much of the international market and, like Rosenbauer and other European manufacturers, Magirus and its partners are eager to expand into the states.

By the way, the fire apparatus situation here in Wilmington has been resolved in big fashion. The WFD, under the command of former Chief Jim Ford -- and the current boss Chief Willie Patrick -- boasts the second-fastest response time in the country (according to a Boston Globe study) And the department recently took delivery of eight new frontline Pierce machines.

featured photo: An American LaFrance Rescue-Pumper operated by the Belvedere (DE) Fire Company. (photo by Lou Angeli)

(2) The Register

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