Stimulus means big boost for Minnesota bus factories

Federal officials say Minnesota is getting more than $60 million in stimulus money for transit improvements, and a Canadian company with two Minnesota plants could benefit from increased orders for transit vehicles.

Most of the stimulus money in Minnesota will go to the Metropolitan Council for hybrid buses and other vehicles, and some of that funding will end up at New Flyer, the bus manufacturing company with plants in St. Cloud and Crookston.

During a visit to New Flyer's St. Cloud plant earlier this year, Vice President Joe Biden suggested that billions in economic stimulus would prompt city and state governments to expand their transit fleets, but it could take time before St. Cloud begins to sees new jobs from stimulus money at the New Flyer plant.

The Metropolitan Council in the Twin Cities, along with transit authorities in Cincinnati and Everett, Wash., have already begun to receive new buses from New Flyer from orders they made before the passage of the Recovery Act.

These bus orders from last year -- when gas prices were at an all-time high -- have kept the St. Cloud plant busy building 26 buses a week from start to finish.

"We've seen additional activity from some of the customers in preparation for additional buys," said Wayne Joseph, vice president of operations for New Flyer.

As of early June, New Flyer had two confirmed bus orders from transit authorities in Chicago and Philadelphia using stimulus money.

"There are others in the works," Joseph said. "It takes a while for the cities to go through the process of issuing orders."

Chicago is scheduled to receive 58 hybrid buses purchased with stimulus funds this upcoming fall, and transit authorities in Cincinnati and Minneapolis will get their buses some time next year.

Joseph wouldn't say what all this activity means for the company's plans to expand and hire new people, but he did say the company wants to ensure it is as efficient and stable as possible before it expands further.

The company has hired 200 new employees in the last two years, and it has about $4 billion in backlog orders.

"So our total potential backlog right now is 9,236 buses, and to put that in perspective, this year we'll produce about 2,400 buses," Joseph said. "So we have a pretty healthy backlog right now."

That backlog might not translate into new jobs in the near future, said Louis Johnston, an economics professor at the College of Saint Benedict and Saint John's University.

Johnston says once cities confirm any tentative bus orders, New Flyer could help the local economy if it expands and hires in St. Cloud, but the process could move slowly.

"Budget situations are pretty tight right now and this stimulus package was geared a lot more toward helping individuals than states and municipalities," Johnston said. "So there is stimulus going to transportation and stimulus money going to the states but a lot of that is going to be washed out by cuts made at the state and local level."

Johnston says only about 10 percent of the stimulus money has been spent.

"And if they can get all the contracts signed and everything, I can't imagine that they can ramp up production before next spring," he said.

That's because each metro transit or city has its own requirements for bus features. New Flyer's Joseph says new buses are typically ordered up to a year in advance. The company's annual report from March says cancellations for bus orders that haven't been confirmed yet are rare.

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St. Cloud Mayor Dave Kleis says New Flyer has been an asset to the city over the last few years. It employs about 700 people in St. Cloud. Still, Kleis says it will be difficult to measure how many new jobs at New Flyer will be a direct result of the stimulus package because the company was busy before the package was enacted.

"There's no doubt that when cash-strapped municipalities or authorities are having to replace fleets or increase their fleet because of demand, having the dollars available from the stimulus package helps in that respect," Kleis said.

Next week, New Flyer plans to release its quarterly newsletter, which will include updates on any new confirmed orders and its backlog.

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