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Thread: Prevost to Detroit Diesel: Drop Dead

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  1. #1
    ken&ellen Guest

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    Jeff, I fear that like in many corporate mergers the company that is taken over looses it's identity. We only have to look at the Beaver Motor Coach take over by Monaco in 2000. One by one the people who knew anything about the coach were replaced by Monaco people. Last year the Beaver manufacturing site was closed. Now the Beaver coach is just another Monaco product with the Beaver logo. Is that the future for the Prevost Car Company? Unfortunatley it is about cost cutting and " lean " manufacturing....which is corporate speak for eliminating everything from quality control, engineering, and personnel who may have been working a long time with older benefit packages. The move from Detroit Diesel was made on the basis of economics and not in an attempt to improve the product! Ken

  2. #2
    Jeffery Raymond Guest

    Default Ken...

    ...glad to see that your posting problems have seemed to clear up!

    I think you are onto something very important here. Volvo appears to be much more deeply involved in getting a significant return on their investment with all their holdings, and in this case with Prevost Car. I do know that they have set profit and revenue goals down to branch and business unit levels which are very aggressive. It does not seem that Prevost is able to meet those return on asset levels.

    The brand, "Prevost" is not going to go away, as it has good standing in the marketplace, but as you say, other 'brand names' last even if the true companies have been fundamentally changed. Usually when an acquisition is made, the buyers of companies let the management run it for some period of time to see how they do. If it is successful during that period, then there is a 'hands off' attitude. If it is not profitable, then the parent company gets more and more involved. This seems to be the case with Prevost Car.

    I am not an MBA or any kind of corporate guru by any means, but basic business sense suggests to me that we can forecast one of the following two scenarios to unfold: Either Prevost is bought from Volvo Bus Corporation at an agreed upon price and Volvo walks away from the entire operation or there will be more and more Volvo involvement in finances, operations and there will be Volvo buses with a Prevost name on them.

    Volvo didn't get to the be the company it is by having non-performing assets in which they have invested large amounts of cash.

    In the motorhome industry, we have seen, as you say, brands which have been acquired and only the name remains. Prevost is a little different in that the motorhome part of the business is only one sector of its overall business; don't forget about the seated coach business and the entertainer coach business. There is tremendous pressure on Prevost to perform in these sectors as well. And the competition here is fierce; neither of those two businesses are particularly profitable and there are many good alternatives, MCI, Setra and others who are actively seeking inroads in what had been Prevost-only businesses.

    The question is going to be, from where I sit, only what will happen and when.

    We should be happy with our coaches, as our Prevost-built coaches may wind up being the most highy prized coaches over the longer run, like the "real' Harleys of the past and the 'real' Fender guitars.

    The general trend in business in general is to have fewer, larger corporations. A friend of mine, who has been an investor for many years believes that ultimately there will be about 3 big corporations which own just about everything. That is a gross over-simplification, but his idea is about right. It takes a tremendous amount of capital for any assembly or manufacturing concern to thrive. The guys with the biggest cash in their pockets are the ones who will be calling the shots.

    Sorry for such a long and boring response to an honest question and I may well be way off target here. This opinion and $5 for a Starbucks cup of coffee are about the same value.

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