Marc F.Gustafson was named the president of American LaFrance Corp. in June 2003. Gustafson, 51, served as president and CEO of Volvo Trucks North America from 1996 to 2001 and was head of sales and marketing for Mack Trucks Inc. from 1992 to 1996. Prior to his corporate positions, he was a multi-franchise dealer of heavy-duty trucks in the southeastern United States from 1975 to 1992.
A native of Jacksonville, Fla., Gustafson holds a bachelor’s degree from Berry College in Rome, Ga. He lives in the Charleston, S.C., area with his wife and two children. Gustafson talked with FIRE CHIEF at American LaFrance’s new headquarters in North Charleston.
FC: What’s new at American LaFrance?
Gustafson: The company is in a very exciting stage right now. We’re seeing a lot of the things come together that we have worked on for a long time. We increased the employment here at Charleston and we’re up to about 650 people. We have seen some of our new products come to market recently. The American LaFrance Eagle, which we launched back in Dallas, is pretty much a commercial success now. Those vehicles are rolling on and are in service, getting a lot of attention from the industry.
Our new 100-foot aerial has taken off very, very well. In fact, the demand for this product has filled our production capacity through 2004. We’re in the best stage that we’ve been for aerial sales in the company in the last three years. We have also brought to market our new body, the L3, which is manufactured at our Charleston facility. The L3 product represents the amalgamation of the best features and architecture of our diversified product offering made popular by the companies acquired by American LaFrance throughout the past several years.
FC: What’s one area you’re particularly excited about?
Gustafson: The development and introduction of the L3 product. We put this project together basically to advance the company from a technology standpoint here in Charleston and gained the benefit of a superior product. We took the best design features of different products that we have acquired over time to create our own Charleston body. We’re ramping up that production right now and the commercial line looks very, very good.
We had a dealer meeting a few months ago, presented this to the dealers and their first response was very, very good, very hot. It’s a monolithic body, so in other words it can be produced on an assembly line separate from the vehicle. This allows us to really decrease the production time, thus cutting delivery times by about 40%. At the same time, we’ve really taken some of the best attributes that we saw of each body and made this a state-of-the-art product. The best materials, the best design features, the best customization and make it available in aluminum, AL3 or stainless steel, SL3. We’re quite excited about this particular product.
FC: Why did ALF move from North Carolina to South Carolina?
Gustafson: It was a couple things. The company had grown to the point with the number of businesses that it had acquired that we didn’t have the most cost effective structure. We had almost 25% of Freightliner’s industrial footprint but about 10% of its revenues. We really had more facilities than we were capable of using, so we started consolidating facilities to get the best efficiency.
The new headquarters is a half a million square-foot-facility, second to none in the industry. We’re actually at the point now that we’re bringing in some suppliers to take some of the sub-assemblies for us so that we can continue our growth plan that we have for this facility and get the best utilization. So chassis assembly is one thing that we’ll be staging in the local area to give us increased capacity.
FC: There were a lot of rumors about ALF, especially during the move to Charleston.
Gustafson: A lot of reconstruction activities have been going on with American LaFrance. We’ve looked at the business model that was developed over the last five years, and we‘ve been working to refine that. We have been working on our manufacturing operations basically to take a more focused approached in each industrial site. When I came here, we were producing several product lines in basically each facility and I would say our efficiency was optimal. Since then we’ve changed our whole industrial footprint. We’ve taken the Charleston operations and we’ve focused them on producing fire, rescue and refuse vehicles. We’ve taken our Sanford operation and we produced ambulances in that particular facility and then LTI is producing aerial products only. This revamped business model has resulted in a 20% increase in line capacity and a manufacturing through-put increase of 60%, resulting in reduced order turnaround times.
So we’ve been moving manufacturing operations around, moving the pieces around in the system to basically improve our efficiency and be able to improve our capacity. These steps will help to ensure our long-range plan is to be a top-two player in this industry.
FG: Are you planning to consolidate your facilities in Wyoming and Hamburg?
Gustafson: No, there are no changes on that. We will maintain our focus to align manufacturing efforts at each facility to specialize in a particular product offering.
FC: So your focus is on…
Gustafson: We’re refining our aerial products. The bodies--we’re obviously investing there to improve them and take them to state-of-the art technology. Now the development for the company will come where it should come, where you’d expect it to come and that’s the cab and chassis area.
Freightliner is one of the largest commercial vehicle producers in the world. You would think that that’s our strike zone, but I think there was a point in time where we were digesting a lot of acquisitions and trying to find a good business formula. We have the formula now and now we know where to invest. We had a challenging period over the last year wrapping up the new facility, absorbing acquisitions that had been brought in to the fold that were never really, fully integrated for a very intense period to bring a business model together. At the same time, we’ve launched several new products to the market. So I think that’s a clear indication that American LaFrance is not going to sit idle. We’ve revved up the engines and we’re going.
FC: What type of growth do you see in Homeland Security?
Gustafson: We think the rescue business is obviously an area for focus, and we’ve got some plans there. When the dealers were here we launched our rescue strategy. We’ve hired some people from the industry with lots of experience in rescue and so we are marching forward in that particular area.
FC: The emergency services are fighting budget battles. How do you see American LaFrance helping fire departments?
Gustafson: Obviously, budgetary constraints are going to be a challenge for everybody. We’re all going to have to be as cost efficient as possible. I think that will redefine the rules of the entire industry, not only from a user standpoint, but also from a supplier standpoint.
If I look at it from a supplier standpoint, a lot of companies are trying to serve up a pretty finite number of customers. The demand is pretty static. I believe that legislative changes, like emissions, will cause a restructuring of the industry. We’ve seen this in many other industries that are similarly structured to the fire and emergency services industry, so I think the supply chain will be reconfigured and that landscape will change.
Multi-purpose vehicles obviously are going to become more the mainstay. Chiefs will have less resources so they need to get more functionality out of each vehicle that they buy. That presents a number of technical challenges for us as a manufacturer so you have to have the scale and the scope to be able to fund the development to meet those demands from the industry. That’s why I’m quite confident in this company, because we do have long breaths, so to speak, to ride out these periods and the deep pockets. At the end of the day, that’s what it’s going to get to: Size does matter.
We can leverage the investments that our parent company makes in other commercial industries, borrow that technology and piggy-back off that technology. That doesn’t mean that we’re going to try to standardize this industry or come short of what the customer expectations are, not at all. It means that we have the speed to bring things to market faster.
FC: How much input does your parent company, Freightliner have, and how involved is it?
Gustafson: It’s a good relationship. I think they give us the freedom to do the things we need to do. Our CEO was here a few months ago. He addressed the work force and said we’ve learned some things about your industry and about this business. We’ve learned that it’s quite different than the truck industry; that you have to develop your formula and make that work for your customers in a very smart way. But at the same time, don’t be afraid to use the resources that are available to you, so take a smart approach. Find out what works, use what’s available to you. Don’t be afraid to go different paths in the areas.
I think that’s one of the challenges that the company went through since the acquisition, it was trying to find that equilibrium. Trying to find that smart balance between what works here for customers and for this particular industry and then what also can be cost effective.
FC: What’s a priority right now?
Gustafson: Our sales. I think we’re a company right now that is defining itself. We have a legendary brand, a fantastic history. And, we have brought people in from all types of businesses, all types of industry, not just the fire and emergency industry, but others as well. The challenge we have is to create the vision for this company as to what our history will be in the future. So we definitely want to build on our past reputation but we’ve got to deliver on the brand’s promise and the brand’s promise is to build reliable products and to deliver to our trusted customers.
Based on the fire chiefs that I’ve gotten to know and understand what their challenges are, I think the definition of success for any company is if we can create success for our customers then we’ll be successful, that’s our mission. They want to succeed and they can’t afford to fail, so that puts an awesome responsibility on us from the standpoint of building reliable products. So our challenge is to make sure we meet their expectations.
Everybody in this company understands their mission and how to support that. So they’re coming in and focusing on what we’re capable of being, not resting on any past laurels. So I challenge the organization and I challenge myself every day to really benchmark what our potential is, what we’re capable of being rather than what our competition is doing or what we did in the past. Our biggest challenge is ourselves -- reaching our potential.
FC: How is your dealer network?
Gustafson: Under construction, similar to the rest of the company. Initially the company was developed with about 50 Freightliner dealers and those dealers took the American LaFrance franchise on as an extension to their business to get into new segments. Over time, they learned that the truck industry and the fire service industry are two different industries altogether. Some have been successful in their quest and some have found out that it’s difficult. At the same time , we’ve been attracting independent business people that understand this industry very well, it’s their passion and where they want to be so we’ve got a network that’s under development right now. I would say as we broaden our product line and continue with our investment program, that we will build the network up to a level that is much higher today.
FC: What’s your target for the next ten years?
Gustafson: We see an opportunity for American LaFrance to obviously broaden and to make us more universal in the industry and the commercial market. We see keen opportunities and especially with our parent organization.
The acceptance of the Freightliner and Sterling chassis as commercial vehicles in the industry is probably unmatched. We see the opportunity to leverage that at American LaFrance in ways that we’ve not really pursued in the past. In our plant, we are configuring our lines to grow in the commercial market. We have two assembly lines: one is for our custom products and the other one is for commercial vehicles. Some manufacturers have dedicated plants for commercial vehicles and dedicated plants for custom vehicles. Because of the new body technology that we’ve developed, which is applicable to both industries, we can literally build the chassis on a side-by-side basis.
We’re also doing some backwards engineering from the standpoint of taking the commercial vehicles and integrating some of our customer requirements into those vehicles so that when we receive vehicles from our parent organization, they’ll be ready for the mounting of the body. We can take cost down and we can also improve the design of those vehicles for this specific industry. So we’ll take a commercial vehicle and make it even more appealing for this particular industry.
FC: The recent Line-of-Duty Death Summit is really pushing to reduce firefighter deaths.
Gustafson: I think the focus on safety for instance will move from passive to active. Passive safety, as you may know, is consequences of what happens after an accident. Is it crash worthy? Are the seat belts adequate to save lives? Active safety is accident prevention. It’s seatbelt alarms, secondary devices, avoidance systems and that’s something, that the Mercedes Benz company has obviously been the head of, in any industry, whatever the industry was, automotive or commercial vehicles or whatever and so there’s technology there that we can obviously benefit from.
FC: As a corporation, you have a strong family tree to pick from for innovation.
Gustafson: We do from a technology standpoint, and we’ve got a lot of confidence in this organization. We have, I would say, the best of both worlds. We have the people that have come from the industry and worked in small companies and understand how the products are used, understand the custom requirements from the customers. And then we have people that are coming from larger facilities that understand mass production and understand economies of scale, scale benefits. So bringing those two together on a common platform will be to our advantage as we move forward.
Also, I really think that you’re going to see in this industry a divergence between the market leaders and the players that don’t have the scale to be able to keep up with those developments and keep on the track. As time goes on, you’ll see the market polarize. You’ll see the larger players take a bigger piece because they can provide more for their customers and the smaller players will be forced to integrate.
FC: What message do you have for Fire Chief readers?
Gustafson: We see the real opportunity in this industry to become a quality leader. I really believe that the opportunity is there for somebody to really bring awareness to the industry of what the difference is when it comes to quality-assured products and I believe that American LaFrance is that company. I’ve seen this in other industries. We all saw it in the ‘70s when Detroit was pretty satisfied with what they were producing until the Asians came into the market. All of a sudden they sent a wake-up call, which moved the industry to a new level that it probably would have never gotten to had somebody not raised the bar.
Our quest is to raise the bar in this industry and the connection to what our customers want. Our customers want products that don’t fail. They can’t fail. They’ve got seven minutes to save a life. So they need, not conditional reliability, they need absolute reliability. All systems have to work and when you consider that a rescue vehicle or a fire vehicle today has probably got more computing power than the first space craft.
You’ve got to have a good blend of confidence here. You don’t have to develop everything yourself. You need to know that whatever you outsource, that you’ve got good control over your supply chain. The supply chain that I see in this industry needs to be pushed forward. The OEMs have to bring the supply chain to a new level. The percentage of suppliers in the industry that adhere to ISO 9000 is a lot lower than it is in other industries. So if we’re responsible for bringing absolute reliability and quality, we’re as good as the weakest link in our chain and that means our supply bank. We have to actively manage our supply chain and get very involved with them and have the discipline to be able to say to our suppliers, “These are standards that you must operate to if you want to do business with us.”
