Note: This report originally appeared in the December 2008 edition of DOTmed Business News. A list of registered users that provide sales & service can be found at the end.

A look into the ambulance manufacturing industry reveals a small, stable and competitive market that has seen little major change in the past quarter-century.

"The market is stagnant, meaning there is little decline and little growth," said Kim Elick, general manager of Braun Industries, an ambulance manufacturer in Van Wert, Ohio. "There is a significant barrier to entry for new manufacturers who want to come in. They can't capture new customers. It's just not happening."

The ambulance manufacturing industry consists of roughly 28 manufacturers, with an estimated yearly production of 5,500 to 6,000 new units. Ambulance manufacturers purchase chassis - vehicle frames that include the engine and running gear - from vehicle manufacturers such as Ford or GM, convert them into ambulances and sell them to dealers and distributors or directly to the customer.




Historically, Ford has been the predominant chassis supplier in the market, but in the past few years, Dodge and GM have introduced several ambulance chassis options and are edging in on the market share.

"All of these new chassis are suitable for ambulance usage and have become hugely popular in the last few years," said Mark Van Arnam, CEO of American Emergency Vehicles. "What this means for us is that we have to inventory a huge amount of chassis, and we have a lot of affordable options for our customers now."

There are essentially two large classes of ambulances, each offering different price points and intended for different uses. The larger, box-shaped, modular ambulances known as Type 1 and Type 3 will cost anywhere from $100,000 to $200,000 new, Van Arnam said. The smaller van ambulances known as Type 2 will start in the $55,000 to $75,000 range.

"Most models are custom built for the end customer, but it's the equipment that makes it expensive, and that varies for each customer," he said.

Buying New vs. Remounting

Customers have the choice of buying new or remounting existing ambulances, and both options come with their own list of pros and cons. But the bottom line to all customers is reliability and cost savings over the life of the vehicle.
Buying new is a desirable option for some customers because new vehicles offer cutting-edge technologies and manufacturer warranties.




"New ambulances will meet federal diesel emissions standards and are theoretically greener and more fuel efficient," Van Arnam said. "For example, with Dodge's new Sprinter van, we have people getting double the fuel mileage. We have ambulance providers who spend millions a month on fuel, so getting double the mileage - now that's significant. Also, there is the cost savings on maintenance. The older a vehicle gets, you can just assume that maintenance costs are going to get higher."

When the chassis of a modular ambulance wears out, the body can be remounted onto a new chassis for a cost savings of roughly two-thirds to three-quarters of the price of a new vehicle.

"In remounting, you already have your own box, all of your interior cabinetry, your electrical stuff and oxygen equipment," said Eric Vogl, Vice President of Southeastern Specialty Vehicles, an ambulance remount and refurbishing company in West Jefferson, N.C. "So what we do is put it on a new chassis, hook everything back up, re-paint, re-upholster and basically make it a brand new ambulance. A new ambulance these days is typically over $100,000. A remount is between $65,000 and $85,000, depending on what the customer wants. This cost savings can be very significant. If you need three trucks refurbished, that is going to equate to the cost of a new one."

Remounts can be performed several times throughout the life of an ambulance, depending on the location and use of the vehicle.

"It all depends on the wear and tear," Van Arnam said. "It depends if it's a service that runs 20 calls a day or two calls a week. An ambulance running in New York City is going to be different from an ambulance in rural Montana."
To stay competitive in the remount market, some remounters offer to extend the manufacturer's chassis warranty or offer a warranty of their own. However, depending on the brand of ambulance, a significant cost savings is not always achieved by remounting.

"Quite frankly, there is a difference in the products - some can hold up and be remounted and some cannot," said Kim Elick of Braun Industries. "Look at your ambulance over its five-year or eight-year life cycle. You may pay more up front to buy new, but if your cost of maintenance and cost of fuel is significantly lower over the next few years, then overall, you pay less for that product."

There is also a market for used ambulances that are not remounted. These ambulances sell for a fraction of the cost of buying new, but because they are not remounted, they may not carry a new chassis warranty. Many distributors will also offer a refurbishing option, which includes a new paint job and upholstery with or without the remount.

"A used ambulance that is not remounted could cost anywhere from $15,000 to $45,000," said Tom Lehrman of LifeStar Rescue Inc. in Van Wert, Ohio. "We buy some used ambulances and remount them, but a lot of times we use them as our inventory for loaner vehicles. It takes about three months for us to do a remount, so we give customers a used ambulance as a back-up, so that they have something to use while their vehicle is being remounted."
Used ambulances may also be an attractive option for volunteer services, start-up companies, or companies who want to expand their ambulance fleet, Lehrman said.

The Year Ahead

Though many EMS services are still operating on last year's budgets, some say the market could feel the pinch of this year's economic downturn in 2009.
"This year, there is a stronger market for new ambulances, but going forward with this economy, I believe that the remount business will triple," said Eric Vogl of Southeastern Specialty Vehicles. "Most counties are already cutting back, and with the cost savings that remounting provides, it's going to be cheaper for them to remount and use the money for other things."

Although buyers may be facing economic constraints in 2009, some may still feel pressured to purchase new units next year before a new round of EPA emissions standards for diesel engines goes into effect in 2010.

"Stricter environmental standards will mean a more expensive unit in 2010, so many companies will want to buy up in 2009," said Bob Parks, Product Manager at McCoy Miller, an ambulance manufacturer in Elkhart, Indiana. "But when the results of the economy start hitting the tax base next year, I don't know how it's going to go. It should be pretty tricky."

Also, changes to federal and state reimbursement policies could affect private EMS transport services that operate on Medicare and Medicaid reimbursements.

Going Global

With such a competitive domestic market, some manufacturers are beginning to make a splash on the worldwide ambulance market.

Parks said McCoy Miller is currently in contract with Aramco, a Saudi Arabian oil company, for 63 units.

"Our little industry - it's going worldwide," he said. "As the dollar devalued, our products became a better value for people across the world. And if the economies of the world increase, we will have more of a market, I think."
Mark Van Arnam of American Emergency Vehicles said the export business is limited to countries that accept the American chassis. AEV recently shipped 20 units to Dubai.

"You don't see American ambulances being exported to France and Germany," he said. "But the EMS system in the Mid-East is comparable to the American system, so using American vehicles there is a very common thing."

Aside from a few minor influences, an industry that has remained stagnant for the past 25 to 30 years appears to have few major changes in store for the next half-decade.

Kim Elick of Braun Industries said she thinks the manufacturing industry will see more consolidation throughout the next few years, with weaker suppliers dropping out and larger ones merging in an effort to pool resources.

"In the long term, ambulances are a product that people need," said Bob Parks of McCoy Miller. "Municipalities have to supply something to go pick people up and treat them. It's not going to be a booming business, but it will be a steady business with a possible slight increase."

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DOTmed Registered Ambulance Sales and Service Companies
Names in boldface are Premium Listings.

Domestic
Joe Zilberbaum, Med-Electronics, MD
Eugene N. Brown Jr., Metro Ambulance Service, Inc., MD
Igor Vavilov, Welcome Ambulance, Inc., PA
Jennifer McCloskey, Nazareth Ambulance Corps, PA
Louis Bernhardt, Ambulance & Safety Supply of Metro Houston, TX

International
Dmitry Makhotkin, Medmir, Ukraine

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