Yes. Private equity ruins everything it touches.

In conjunction with this consolidation, we’ve also seen a reduction in industry capacity from actions like REV Group’s shutdown of its KME plants. What is curious about that shutdown in particular is that it came in the face of rapidly increasing demand: As federal COVID-19 assistance filled state and local government coffers, fire truck orders grew approximately 50% from 2020 to 2022, reaching roughly 6,000 for the first time since 2008. Since then, order activity has remained strong, hovering between 5,500 and 6,500. As a result, both REV Group and Oshkosh have seen their backlogs skyrocket over the last two years. The latest available data shows that REV Group had a $4.2 billion backlog on fire and emergency vehicle orders in the United States as of October 2024, while Oshkosh had a $5.3 billion backlog on fire apparatus orders globally as of June 2024. And yet, neither company appears to be making significant investments in additional manufacturing capacity to rapidly cut down its backlog — or even concerned that multi-year delays in delivery might lead customers to bail on their orders.

Indeed, it appears that the dominant manufacturers have managed to turn their delivery failures into financial advantage. Using the purported difficulty of projecting material costs over a 2-3-year lead time as an excuse, they have imposed “floating” price clauses onto their customers — allowing them to increase the final price of a rig when it finally goes into production. In effect, the bottleneck in fire truck production that REV Group, Oshkosh, and to a lesser extent, Rosenbauer created with their M&A and operating strategies are giving them even more bargaining power vis-à-vis fire departments. Not only that but, according to REV Group’s SEC reports, the twenty-four-month backlog it is running is literally enhancing its value to shareholders — AIP being the largest among them — by giving the company “strong visibility into future net sales.”

Altogether, these facts paint an alarming picture. A handful of financiers have been allowed to transform a critical, once-vibrant industry into a rent-extracting racket.

There’s a broad sea of possibile ways for national productivity to be coordinated so that sufficient fire trucks of good enough quality get into the hands of local governments. It doesn’t have to be “government directly owns firetruck factories and logically forecasts needs and matches production”. But it most certainly should not be “local governments get raked over the coals engaging in a darwinistic market free-for-all for firetrucks from a triopololy of fire truck makers”. From just a pure national productivity point of view, this is obviously a huge dead weight loss to society in service of profits for a niche industry.