Wow. This is great. No one has paid attention to this issue - fire and emergency truck costs - which has a major impact local govt budgets. To say nothing of safety and insurance (property ) costs. Thanks for writing this.
There's a guy named Matt Stoeller who wrote about this on his Substack years ago. It's titled BIG (a commenter below straightened me out; thanks!) He's all over PE anti-trust stuff. FYI
Matt Stoller has the Substack BIG. He covered the firetruck monopoly story at length last year. He wrote a book on the history of American antitrust cases called Goliath, which is worth the read.
With the enormous amount of fraud related to government expenditures, this is small potatoes. It’s outrageous, but not enough to generate necessary clicks or votes to merit much bandwidth.
I get the point and he is right. This is very small potatoes. Close one fraudulent child care center and buy 3 fire trucks. There is billions in fraud in every large city and no politician cares but these few fire trucks are a big problem.
While I appreciate your point I'm not sure I agree. The alleged fraud, except where proven is federal money. Unless the Cities are more than a passthrough they're not on the hook for the recovery. Funding fire trucks on the other hand is a function of the local government. So while might not encompass the scope of the alleged federal fraud is a much more immediate concern to local government. In my opinion ofcourse.
First, I think we are all better off when we begin to think of ourselves as Americans - not by the color of our state.. And no this is not fraud, simply unchecked capitalism at work. Sometimes regulation can be helpful against greed. Next time you or your communiy needs a fire truck you may not think this is bread crumbs.
Much like the fraud in MN, it's just one of the most obvious. Almost anything purchased by a local government or school district costs more. Sometimes it's due to requirements of the purchaser, but often it's just due to the purchaser not really caring since it's not actually their money. Procuring goods isn't much different than people who will never be there to suffer the consequences handing out too generous of salaries and pensions to public sector unions.
I think that is a pretty broad stroke on government and not entirely fair. I think a lot of government employees do care. I also find it interesting that we do not make the same comparisons to corporations. Have you ever thought how much cheaper stuff would be - if executives did not make so much money, have private jets, private clubs, have three homes? Who do you think pays for that?
It’s not our taxpayers paying for that, though. It’s privately earned revenue and income. I do agree, though, that many government employees do care. The system encourages spending, though. I’d agencies get my on less, their savings gets spent on other departments, and they don’t get the funding next year if needed.
You're right spending is encouraged. That's why the government has the money. If surplus occurs taxes are obviously too high. Police and Fire are the major cost centers in municipalities and when the budget gets to capital items everything the two want are real expensive. R&R on the trucks many times is the compromise but that's expensive too! But in this kind of environment I'm not what a sound strategy is for the fire truck manufacturer? It's not like selling Autos I think.
The price of a stock does not reflect the pricing policies in the industry. It does reflect market position, margins, profitability and the overall change in market valuations. That being said I would hope we would see 2-3 new competitors from manufacturers looking to diversify into this industry.
I agree if there are only 3 legitimate sources of fire trucks in the US, prices will increase some due to lack of competition. But it’s also supply and demand and I’m sure theCOVID/IFA monies have increased demand. But it sounds like rightly so, since municipalities waited to replace existing equipment.
That being said the LA situation is a disaster and has been brewing for years. City leadership has refused to allocate the necessary capital to modernize the fire department. Ask Rick Caruso who should have been voted in as Mayor. The LA situation is far more complicated than what you have referenced and requires an entire investigation.
I agree that consolidation can create risks, but it’s also worth noting that in mature, capital-intensive industries - such as the fire-truck equipment market - consolidation is often beneficial for buyers, not harmful.
Larger, better-capitalized manufacturers can spread fixed costs, invest more consistently in engineering and compliance, maintain supply-chain resilience, and remain viable through downturns - advantages that smaller, fragmented players often lack. In sectors with long lead times and complex customization, scale can improve reliability and long-term availability rather than undermine it.
Consolidation deserves scrutiny, but it isn’t inherently anti-customer; in many cases, it’s what allows suppliers to deliver complex products sustainably at all. That said, your larger point is a good one - pricing changes could be due to any number of factors, such as the situation in LA, increases in demand, or supply-chain effects. Without more information, it’s challenging to attribute causation.
Agreed. Excellent commentary by the way. As alluded to in your comment, specialty equipment manufacturing presents huge financial barriers to entry. For example, a twenty year veteran in the industry, let’s say a tech who rose through the ranks to shop foreman or plant manager, who knows the manufacturing process inside and out, would never be able to get the credit required to get a plant up and running.
Factory, materials acquisition, sales force, HR, compliance, etc. etc.
Given the public need for this equipment it’s a tricky wicket.
One thing I’d push back on, though, is the idea that high barriers necessarily lock an industry in place.
If incumbents get fat and happy earning excess returns, that’s often what invites disruption—especially when innovation changes how products are designed, built, or delivered in ways that benefit customers. That was the core insight of Clayton Christensen’s work.
That’s also where venture capital and private equity can play a valuable role. Funding new entrants means assuming real risk that innovators and traditional lenders often can’t. They’re not always villains. In many cases, they’re the mechanism that makes competition and innovation possible in the first place.
Markets don’t stay static forever when the incentives line up. Creative destruction can be a wonderful thing.
If you don't mind the question, because there may be simple answer that I'm totally missing, but since the LA fire departments lacked water due to an inoperative freshwater reservoir, why didn't they pump seawater? That would have been easy to do. LA and Bakersfield are mature to post-mature oil patches and there are likely hundreds of 6" and 8" hi-pressure water pumps on trailers ready to go in rental yards and contractor yards. Each one will pump 2,000 to 3,000 gpm a mile if it's not too steep. If you need more pressure to get it further or higher, you add a second pump somewhere in the middle. We do this almost daily at the mine.
That takes time. Ships pump seawater every day. Outboard motors use seawater for cooling. Simple solution to prevent corrosion -- rinse with freshwater after use.
Since each 8-inch pump can deliver ~3,000 gpm, which is equivalent to the hourly capacity of 60 large pumper trucks, it seems the cost of a used pump (~$50k) is a small price to pay when compared to the value lost in burned up communities.
On ships, the equipment is stainless steel. Fire pumping equipment is made with cast iron and brass. The salt eats them up much faster than stainless steel.
I was a Coastie (1980-84) and stationed on board a ship built in 1942. There were no stainless steel fittings on our fire pumps and bilge pumps.
I'm not talking about using fire trucks with seawater, I'm talking about used portable pumps that are available by the hundreds in the LA basin. Firetrucks can only deliver ~3,000 gals to a fire site. One 8 inch pump can provide the water that 60 pumper trucks can and do so for 24 hours per day.
Alternatively, via valves, connect seawater to the freshwater fire hydrant supply. When done with the seawater, flush with a little freshwater.
Part of the problem is the amount of money printed by the Fed. 2/3 of the money in circulation has been printed in the past 13 years. That money needs to go somewhere, so Wall Street has invented "money sponges" to absorb it all. Private equity, private credit, hedge funds, special-purpose acquisition companies, cryptocurrencies, thematic ETFs, CMOs, CDOs, etc., etc.
The reason there are only three of these companies is because they are chips in a huge poker game being played by private equity. PEs have access to a firehose of cash and that cash needs to produce a return in order to keep the spigot flowing. So companies - and it doesn't matter what kind - are bought, merged with a competitor, taken public, then taken private by another PE, busted up with the pieces sold to other PEs and around and around it goes. The merger fees, the bust-up fees, securitized debt offerings, the public offering fees and the milking of the underlying businesses are all part of the poker game, with the chips moving from one player's pile to another.
Look at the number of companies in any industry over time. Most industries that had healthy competition a generation ago are now dominated by a few huge players. America used to make stuff. Now that stuff is nothing but the product for America's main industry - financial engineering. Played by a select few of very, very wealthy people who've amassed billion dollar fortunes for doing nothing but moving the Fed's money around.
This is exactly the problem. The Fed has been stuck in a cycle of printing money since 2008 that it can't get out of without a huge crash, and since all of the dollars are created via debt, it all accumulates at the top. The solution would be to tax the dollars out of the system, but the owners won't allow that, so it's all "banking" now where companies that make and do things are just lines on a spreadsheet.
"costs have doubled in the past decade." That is called inflation. Costs of everything have doubled in the past decade. Or increased by 85% or more.
This sounds like a plea to pay more in taxes. As if Los Angeles has removed all the fat from their budget and is left with police, fire, water, and garbage collection.
As Minnesota has highlighted, every place in America needs to use their tax money more wisely.
AND, perhaps, someone could introduce some competition by starting a Firetruck company. Instead of pointing fingers at the EEEEEVIL bankers.
Not evil bankers --evil private equity groups who have been doing evil: corner the market by buying up as many related businesses as possible, then sell-off, run-down the companies to skeletons and then raise the prices.
ZD, you don't sound like someone living on his/her social security checks. Sound like someone who's clutching your comfortable status quo position in a death grip.
The banking system is entirely evil, but so are the cartels that saturate our markets with waste and fraud, including the federal, state and local
bureaucracies. Sure, government has been tacking on new spending for a variety of useless vanity projects and grifting operations for decades.
However, the fed itself is an unelected taxing body, while the big banks have used the stock market to completely undermined the stability of every business and asset class, by turning every investment mechanism into what amounts to a labyrinthine a casino.
Putting together investment money to start a business building fire trucks is capitalism. Purchasing those companies with huge amounts of highly leveraged capital and consolidating them to manipulate price markets is predatory crony corporatism.
And our capricious and ‘independent’ bureaucracy has not only not prevented or mitigated that predatory behavior. They facilitate it.
Doesn’t one of those bloated agencies exist solely to regulate competition for the purposes of fairness under our vast anti-trust laws?
This can’t all be chalked up to covid supply chain disruptions or inflation simply because it started way before 2019.
This article lands with a decided thud. 15 years old recommended retirement age and only three suppliers. Sympathy meter unmoved. We're retirees, and both of us drive cars older than 15 years. With only three US "suppliers" ( sort of). More foreign suppliers to be sure - but same for firetrucks. Yet we are expected to cope with such crippling handicaps.
And spare me the "cars aren't firetrucks" ploy. We maintain our cars regularly and have no problem extending their lives. So can the government unions who run fire departments.
Excellent point and perspective- I rode a diesel train engine built before I was born recently and I am 54. They are often overhauled and/or refurbished. There must be cost effective ways to do this with fire engines as well.
Does the writer know nothing. The whole thing is a scam by the Hedge funds and Private Equity who bought off the US governments years ago. Watch Kevin Walmsly, Inside China business for an explanation of the scams. The only reason Detroit improved their junk vehicles was foreign competitors. Of course they left the "Trucks" and with a little PR, the suckers couldn't buy them fast enough. Now, Volunteer firefighter software has been bought out by Wall Street again and they're screwing the people who risk their lives to save your lives and they work for free. Face it, Americans, Wall Street owns your governments and it's no where more obvious than the cabinet of the current regime and the obomber cabinet came from the same place, Wall Street. The producer of nothing and the exploiter everything.
The board of the NFPA, the primary governing body for fire equipment standards is basically a bunch of industry insiders without any one who represents the tax payers who pay for this crap. We have a tiny volunteer fire department in our town and they hire a consultant who tells them how to buy the newest and best equipment. It is a scam based on selling fear. A fire truck is a truck with a high pressure pump. A gold plated truck.
Been a long time since I retired, and I was never really an antitrust expert despite some experience in that sort of litigation (I worked for Ma Bell for thirty-plus years). That said, if the DOJ's Antitrust Division were to bring an enforcement action alleging Sherman Act Sections 1 and 2 violations (restraint of trade, monopolization/attempt to monopolize), the ultimate result could be something like what happened to...Ma Bell.
I live in a wildfire area in western Colorado, served by volunteers. I believe they have access to lots of surplus lines from local governments and even military. There are also numerous construction type water trucks available with all types of pumps. But generally they are not red and shiny, and hence cost much less. Personally, for my own property, I have an old 5 ton 6x6 with a water tank and pump. It’s not rocket science. I understand that municipalities have standards, but getting water to a fire should not be a million dollar proposition. You could have an entire fleet of fully refurbished tankers for much less.
C H I N A! You get your truck on time for a fraction of the private equity company virtual monopoly Scam. Wall Street is destroying the USA more than any foreign country. Your enemies aren't Russia or China; your enemy is financial rather than industrial capitalism and it owns your government.
It's America's Sestercentennial, and that means (though this part is controversial to say the least: https://www.reddit.com/r/AskHistorians/comments/r0dnwv/comment/hls7czi/ ) the national warranty has officially run out; it's time to renew it the exact same way it was set the first time. We even have the exact same enemy.
Dan have you heard of Pierce fire trucks? Just asking because they are very popular here in Wisconsin, being a local source. Have the cities not budgeted correctly to upgrade their fleets and now are having issues with the old fleet? I saw pictures of old fire hydrants in the Palisade area that weren't even the correct size for modern equipment but the fire chief or water dept lady was being paid $800G a year. A Peterbuilt semi truck goes for around $350k and so $1million for a fire truck doesn't seem out of line to me. Just sayin...
Eric, the comment, “It’s been quite successful for investors. AIP launched an IPO for Rev Group in 2017 and sold a portion of its stake in the company for $275 million, and then got out completely in 2024 by selling its remaining shares for $127.6 million.” is missing a very significant modifier - total amounts invested in this by AIP. Right now your piece reeks of sensationalizing the issue without that information. Using your figures, AIP sold or monetized the investment at about $403M. But what did they invest? If it was $350M that is a relatively poor return to the market. If it was significantly lower amounts invested, your comment could have merit. To me, it leads me to question what other information in the article was cherry picked.
Your prior reporting is significantly better than this.
Reading this post was like eating a bag of Cheetos. It delivered a quick rush of moral certainty, but in the end it left me feeling bloated and unsatisfied.
With that in mind, I gave ChatGPT a general outline and asked it to flesh out a response. Here’s what it came back with.
This article raises real public-safety concerns, but it ultimately turns tragedy into proof of malice in a way that oversimplifies a complex industry.
Aging fire trucks are a serious problem. Mechanical failures can cost lives. But those outcomes do not, by themselves, identify a cause. Fleet age is largely a function of municipal capital budgeting, bond cycles, and political trade-offs that often delay replacement for years. Reliability and equipment failures often reflect the effects of deferred maintenance and local budget choices. Los Angeles, cited prominently, is a particularly weak example for industry-wide conclusions given the well-documented, long-standing challenges facing its fire department that predate recent consolidation.
The article treats price increases as evidence of exploitation without meaningfully engaging with cost structure or production realities. Fire trucks are low-volume, highly customized vehicles with 12–18 month build cycles. In that context, escalation or “floating” price clauses are a common way to manage input-cost risk. Whether those clauses are sufficiently transparent is a fair question, but their existence alone does not establish abuse. It is also worth noting that the strongest criticism of these clauses comes from union leadership, whose mandate is protecting jobs rather than designing sustainable procurement economics. That perspective matters, but it is not neutral.
The outrage over a “28% incremental margin” is especially misleading. Incremental margin is not total profit; it excludes most fixed costs. The company’s actual operating margins remain modest. Highlighting incremental margins while ignoring reported operating margins creates a distorted picture of profitability.
The article also frames consolidation itself as inherently harmful, without grappling with why it occurred. Specialty vehicle manufacturing is capital-intensive, highly regulated, and operationally fragile. Consolidation has improved access to capital, engineering depth, supply-chain resilience, and long-term viability—benefits that matter in an industry where failure or exit would worsen availability and safety, not improve them. Consolidation may deserve scrutiny, but it is not prima facie evidence of wrongdoing.
Finally, rising stock prices are treated as proof of exploitation, when they more plausibly reflect expectations of improved pricing alignment and operational stability after years of inflation and disruption. Allegations of anticompetitive behavior should be tested rigorously in court. But conflating investor returns with public-safety failures substitutes narrative for analysis.
The problems described are real. The diagnosis is far less certain.
I appreciate the comment, but incremental margin does include fixed costs and REV groups operating margin is on the very high end for its peer group. That is why I included REV Group CFO comments in their latest earnings call. REV and Oshkosh had huge backlogs of orders from 2022, victims of the supply chain crisis. However, with their floating cost contracts, or as the CFO labeled it “price realization” I believe, based on their operating and incremental margins, they took advantage on price escalators.
Eric, thank you for the thoughtful reply — this is exactly how these comment sections should work. I’ve been a subscriber going back to the TK News days and especially appreciate the site’s work on free-speech issues. With that goodwill noted, I’d like to respond more narrowly to the substance of your argument.
Many of the failures described in your article reflect long-standing, politically driven capital-budgeting and spending-priority decisions by state and local governments. Los Angeles and California are not representative cases; their fire-equipment challenges predate recent industry consolidation and reflect controversial fiscal trade-offs that have been debated for years. The same caution applies to union commentary, which is valuable but not neutral given its mandate to protect jobs rather than design procurement economics.
On REV Group specifically- this is a small-cap, capital-intensive manufacturer in a mature industry. Its valuation multiples, revenue scale, and operating margins look broadly reasonable in that context. Nothing in its reported financials suggests an outlier level of profitability. REV’s results are consistent with a solid management team and a well-run company, operating within the constraints typical of this kind of business.
That’s why I think the narrow focus on a “28% incremental margin” is misplaced. Incremental margin is a flow-through metric derived from changes in GAAP operating income; it is not total profitability, and it does not by itself establish that fixed costs were recovered unfairly or that pricing was abusive.
I understand that management, including the CFO, highlighted this metric on the earnings call. It is an important indicator of operating leverage, but it remains only one element of overall performance. REV’s actual operating margins remain in the mid-single digits, which is within the range one would expect for a reasonably well-run, small, capital-intensive specialty vehicle manufacturer. Elevating incremental margin above that broader context risks attributing motive where the metric alone cannot support it.
Similarly, price-escalator clauses are not inherently abusive. In long-lead, highly customized manufacturing, they are a standard mechanism for allocating input-cost risk. Without them, manufacturers would price that risk upfront, raising initial costs to municipalities. Whether escalators were misused is a serious question - but the article does not substantiate that claim beyond pointing to the existence of the clauses and a single performance metric.
The public-safety issues you raise are real. I’m less convinced that the financial evidence, as presented, supports the conclusion that corporate exploitation is the primary cause. It’s also worth noting that the antitrust allegations referenced are now playing out in court. To date, we’ve heard only one side of that story, and those claims will need to be tested through the legal process.
Just one reader’s view based on a general legal and business background. BTW, I have no relationship with the company or any of the parties involved. And the fact that I took the time to write this is meant to signal genuine engagement and respect for the work you and Matt do.
while the thesis is supported by evidence, the case studies occur in jurisdictions where spickets for FD funding may be stuck but the spickets for erroneous, incredibly wasteful efforts (homelessness, high speed rail, SJW efforts that would make one laugh if they weren't so stupidly wasting taxpayer $) are gushing. Cities with spending per student is out of control with either no better, and often worse outcomes captured by teachers unions. Sounds like a market ripe for disruption, which a city cannot control, while it can control its fiscal spend. Whether a truck is fresh off the line or 100 years with manual pumps old doesn't matter if leadership won't go in a zone because of "endangered plants" and beetles. Literally can't make that up.
Investors know that the big money lies with the taxpayers and government contractors suppliers. Municipal bonds are rated based on? Oh right, ability to keep taxing.
I’m convinced the U.S. will not have indoor plumbing or running water in a couple decades. Hope I’m wrong
They tell us we need government to do these admittedly useful things, like building roads, bridges, firefighting, etc. Then they expand government to do all sorts of other things, and to redistribute wealth to boot. Then they don’t have resources to do the actual useful stuff.
I think there is more than a little BS here; the US Air Force is FLYING B-52's that are over 50 years old. Municipalities are notorious for funding capital expenditures but giving the short end of the stick to O&M. I'm sure new rigs ARE better, but to just have general failures points to lack of maintenance. As to costs increasing during production, those would seem to be contractual issues and I'd expect the municipal attorneys who let/advised those contracts to do a better job defining the terms.
This is not my area of expertise, but there is an alternative to this: do competent repairs of old fire trucks. I suspect a lot of the difficulty is insurance companies and local codes require more and more safety, backup, and control systems in order to be permitted to operate. It's an admirable desire, but probably more indicative of regulatory capture than anything. I'm sure these three fire truck manufacturers lobby hard to keep it that way. Does a fire truck have to be that complicated? A related item are fire pumps on offshore platforms, that are deliberately made very simple, with few if any shutdown signals. For instance, if a pump runs out of oil (these are usually engine driven pumps) it will not shutdown until it fails. For obvious reasons. It would seem fire trucks should be treated the same way; be made as simple as possible. And a competently repaired old truck should be allowed to be put back in service, as long it meets performance requirements.
So many things in modern life are obsoleted, with ever more requirements and complication. This behavior particularly hits low income places. I suspect a lot of these fire truck incidents are similarly affected.
A Murphy switch will prevent the meltdown of the engine if the oil pressure drops. Blowing a seal and losing oil pressure is the most common cause of diesel engine failure.
Just to make sure you get what I said, things like Murphy switches are deliberately omitted on those pumps, because they need to have the highest chance of continuing to operate during a platform fire. The old KISS principle. (Keep It Simple, Stupid)
I'm trying to make sense of that. If an engine loses oil pressure, it's only going to run for a few more minutes before it seizes up. The short term fix might be as simple as adding oil, as needed. The better solution is to have back up pumps.
It’s a platform fire, nobody’s going to add oil. Back when I was a mechanic (before I got onto engineering), more than once I ‘ve seen non-starting skids precisely because the Murphy switch or associated wiring had an issue. The whole idea is to make it simple so it can run to failure, the opposite of what we normally do. It’s an extreme case, I admit, but I am trying to get across the thought of the benefits of simplicity over ever increasing complication.
Okay, thanks for explaining that to me. I've never been on an oil platform, but have been in the mining industry (geo & mine manager) for almost 40 years, where, of course, we try to do everything to prevent engine failure & lost time.
Of course, it’s what O&M normally does. But I think there is a point of decreasing returns on some of the things we do. A community that can’t afford a fire truck because they’ve been made too expensive is a good example.
Wow. This is great. No one has paid attention to this issue - fire and emergency truck costs - which has a major impact local govt budgets. To say nothing of safety and insurance (property ) costs. Thanks for writing this.
There's a guy named Matt Stoeller who wrote about this on his Substack years ago. It's titled BIG (a commenter below straightened me out; thanks!) He's all over PE anti-trust stuff. FYI
Minor clarification to the above comment:
Matt Stoller has the Substack BIG. He covered the firetruck monopoly story at length last year. He wrote a book on the history of American antitrust cases called Goliath, which is worth the read.
Thanks man. Just fixed it.
His book is depressing. So's his blog; I had to unsubscribe as a paying follower. I still get free posts now and then, but it's depressing.
"His book is depressing. So's his blog; I had to unsubscribe as a paying follower."
Yikes, you just reminded me why I stopped reading Stoller. See my comment below. I suppose too much bad news.
Thanks. I had subscribed to Stoeller some time ago, but for a variety of reasons dropped that one.
With the enormous amount of fraud related to government expenditures, this is small potatoes. It’s outrageous, but not enough to generate necessary clicks or votes to merit much bandwidth.
A few million is chump change for a big city, but a deal breaker for small rural places.
Missing the point, aren't you? Or is this simply a distraction attempt?
I get the point. It’s going to be very difficult to find a solution without a great deal of public support.
I get the point and he is right. This is very small potatoes. Close one fraudulent child care center and buy 3 fire trucks. There is billions in fraud in every large city and no politician cares but these few fire trucks are a big problem.
Oh sweet irony!
Agree 100%
This compared the the Somali fraud is bread crumbs
Fix the fraud mostly blue states: Minnesota, California, NY, Illinois
While I appreciate your point I'm not sure I agree. The alleged fraud, except where proven is federal money. Unless the Cities are more than a passthrough they're not on the hook for the recovery. Funding fire trucks on the other hand is a function of the local government. So while might not encompass the scope of the alleged federal fraud is a much more immediate concern to local government. In my opinion ofcourse.
First, I think we are all better off when we begin to think of ourselves as Americans - not by the color of our state.. And no this is not fraud, simply unchecked capitalism at work. Sometimes regulation can be helpful against greed. Next time you or your communiy needs a fire truck you may not think this is bread crumbs.
Death by paper cuts…
https://open.substack.com/pub/mattstoller/p/did-a-private-equity-fire-truck-roll?r=eb3a2&utm_medium=ios&shareImageVariant=overlay
Much like the fraud in MN, it's just one of the most obvious. Almost anything purchased by a local government or school district costs more. Sometimes it's due to requirements of the purchaser, but often it's just due to the purchaser not really caring since it's not actually their money. Procuring goods isn't much different than people who will never be there to suffer the consequences handing out too generous of salaries and pensions to public sector unions.
I think that is a pretty broad stroke on government and not entirely fair. I think a lot of government employees do care. I also find it interesting that we do not make the same comparisons to corporations. Have you ever thought how much cheaper stuff would be - if executives did not make so much money, have private jets, private clubs, have three homes? Who do you think pays for that?
It’s not our taxpayers paying for that, though. It’s privately earned revenue and income. I do agree, though, that many government employees do care. The system encourages spending, though. I’d agencies get my on less, their savings gets spent on other departments, and they don’t get the funding next year if needed.
You're right spending is encouraged. That's why the government has the money. If surplus occurs taxes are obviously too high. Police and Fire are the major cost centers in municipalities and when the budget gets to capital items everything the two want are real expensive. R&R on the trucks many times is the compromise but that's expensive too! But in this kind of environment I'm not what a sound strategy is for the fire truck manufacturer? It's not like selling Autos I think.
The BIG substack has talked about this: https://www.thebignewsletter.com/p/did-a-private-equity-fire-truck-roll
The price of a stock does not reflect the pricing policies in the industry. It does reflect market position, margins, profitability and the overall change in market valuations. That being said I would hope we would see 2-3 new competitors from manufacturers looking to diversify into this industry.
I agree if there are only 3 legitimate sources of fire trucks in the US, prices will increase some due to lack of competition. But it’s also supply and demand and I’m sure theCOVID/IFA monies have increased demand. But it sounds like rightly so, since municipalities waited to replace existing equipment.
That being said the LA situation is a disaster and has been brewing for years. City leadership has refused to allocate the necessary capital to modernize the fire department. Ask Rick Caruso who should have been voted in as Mayor. The LA situation is far more complicated than what you have referenced and requires an entire investigation.
I agree that consolidation can create risks, but it’s also worth noting that in mature, capital-intensive industries - such as the fire-truck equipment market - consolidation is often beneficial for buyers, not harmful.
Larger, better-capitalized manufacturers can spread fixed costs, invest more consistently in engineering and compliance, maintain supply-chain resilience, and remain viable through downturns - advantages that smaller, fragmented players often lack. In sectors with long lead times and complex customization, scale can improve reliability and long-term availability rather than undermine it.
Consolidation deserves scrutiny, but it isn’t inherently anti-customer; in many cases, it’s what allows suppliers to deliver complex products sustainably at all. That said, your larger point is a good one - pricing changes could be due to any number of factors, such as the situation in LA, increases in demand, or supply-chain effects. Without more information, it’s challenging to attribute causation.
Agreed. Excellent commentary by the way. As alluded to in your comment, specialty equipment manufacturing presents huge financial barriers to entry. For example, a twenty year veteran in the industry, let’s say a tech who rose through the ranks to shop foreman or plant manager, who knows the manufacturing process inside and out, would never be able to get the credit required to get a plant up and running.
Factory, materials acquisition, sales force, HR, compliance, etc. etc.
Given the public need for this equipment it’s a tricky wicket.
Spot on about the high barriers.
One thing I’d push back on, though, is the idea that high barriers necessarily lock an industry in place.
If incumbents get fat and happy earning excess returns, that’s often what invites disruption—especially when innovation changes how products are designed, built, or delivered in ways that benefit customers. That was the core insight of Clayton Christensen’s work.
That’s also where venture capital and private equity can play a valuable role. Funding new entrants means assuming real risk that innovators and traditional lenders often can’t. They’re not always villains. In many cases, they’re the mechanism that makes competition and innovation possible in the first place.
Markets don’t stay static forever when the incentives line up. Creative destruction can be a wonderful thing.
If you don't mind the question, because there may be simple answer that I'm totally missing, but since the LA fire departments lacked water due to an inoperative freshwater reservoir, why didn't they pump seawater? That would have been easy to do. LA and Bakersfield are mature to post-mature oil patches and there are likely hundreds of 6" and 8" hi-pressure water pumps on trailers ready to go in rental yards and contractor yards. Each one will pump 2,000 to 3,000 gpm a mile if it's not too steep. If you need more pressure to get it further or higher, you add a second pump somewhere in the middle. We do this almost daily at the mine.
Any thoughts on this?
The pumps can’t handle salt water due to corrosion. It destroys them.
That takes time. Ships pump seawater every day. Outboard motors use seawater for cooling. Simple solution to prevent corrosion -- rinse with freshwater after use.
Since each 8-inch pump can deliver ~3,000 gpm, which is equivalent to the hourly capacity of 60 large pumper trucks, it seems the cost of a used pump (~$50k) is a small price to pay when compared to the value lost in burned up communities.
On ships, the equipment is stainless steel. Fire pumping equipment is made with cast iron and brass. The salt eats them up much faster than stainless steel.
I was a Coastie (1980-84) and stationed on board a ship built in 1942. There were no stainless steel fittings on our fire pumps and bilge pumps.
I'm not talking about using fire trucks with seawater, I'm talking about used portable pumps that are available by the hundreds in the LA basin. Firetrucks can only deliver ~3,000 gals to a fire site. One 8 inch pump can provide the water that 60 pumper trucks can and do so for 24 hours per day.
Alternatively, via valves, connect seawater to the freshwater fire hydrant supply. When done with the seawater, flush with a little freshwater.
Part of the problem is the amount of money printed by the Fed. 2/3 of the money in circulation has been printed in the past 13 years. That money needs to go somewhere, so Wall Street has invented "money sponges" to absorb it all. Private equity, private credit, hedge funds, special-purpose acquisition companies, cryptocurrencies, thematic ETFs, CMOs, CDOs, etc., etc.
The reason there are only three of these companies is because they are chips in a huge poker game being played by private equity. PEs have access to a firehose of cash and that cash needs to produce a return in order to keep the spigot flowing. So companies - and it doesn't matter what kind - are bought, merged with a competitor, taken public, then taken private by another PE, busted up with the pieces sold to other PEs and around and around it goes. The merger fees, the bust-up fees, securitized debt offerings, the public offering fees and the milking of the underlying businesses are all part of the poker game, with the chips moving from one player's pile to another.
Look at the number of companies in any industry over time. Most industries that had healthy competition a generation ago are now dominated by a few huge players. America used to make stuff. Now that stuff is nothing but the product for America's main industry - financial engineering. Played by a select few of very, very wealthy people who've amassed billion dollar fortunes for doing nothing but moving the Fed's money around.
This is exactly the problem. The Fed has been stuck in a cycle of printing money since 2008 that it can't get out of without a huge crash, and since all of the dollars are created via debt, it all accumulates at the top. The solution would be to tax the dollars out of the system, but the owners won't allow that, so it's all "banking" now where companies that make and do things are just lines on a spreadsheet.
Our industry has become little more than a swarm of dust devils, spinning scraps of paper.
"costs have doubled in the past decade." That is called inflation. Costs of everything have doubled in the past decade. Or increased by 85% or more.
This sounds like a plea to pay more in taxes. As if Los Angeles has removed all the fat from their budget and is left with police, fire, water, and garbage collection.
As Minnesota has highlighted, every place in America needs to use their tax money more wisely.
AND, perhaps, someone could introduce some competition by starting a Firetruck company. Instead of pointing fingers at the EEEEEVIL bankers.
Not evil bankers --evil private equity groups who have been doing evil: corner the market by buying up as many related businesses as possible, then sell-off, run-down the companies to skeletons and then raise the prices.
ZD, you don't sound like someone living on his/her social security checks. Sound like someone who's clutching your comfortable status quo position in a death grip.
If somebody starts a firetruck company, they'll be offered a big wad of cash by private equity and we'll be back at square one.
Prices have increased just over 35% in the past decade, not 100%.
See https://www.bls.gov/data/inflation_calculator.htm
The banking system is entirely evil, but so are the cartels that saturate our markets with waste and fraud, including the federal, state and local
bureaucracies. Sure, government has been tacking on new spending for a variety of useless vanity projects and grifting operations for decades.
However, the fed itself is an unelected taxing body, while the big banks have used the stock market to completely undermined the stability of every business and asset class, by turning every investment mechanism into what amounts to a labyrinthine a casino.
Putting together investment money to start a business building fire trucks is capitalism. Purchasing those companies with huge amounts of highly leveraged capital and consolidating them to manipulate price markets is predatory crony corporatism.
And our capricious and ‘independent’ bureaucracy has not only not prevented or mitigated that predatory behavior. They facilitate it.
Doesn’t one of those bloated agencies exist solely to regulate competition for the purposes of fairness under our vast anti-trust laws?
This can’t all be chalked up to covid supply chain disruptions or inflation simply because it started way before 2019.
This article lands with a decided thud. 15 years old recommended retirement age and only three suppliers. Sympathy meter unmoved. We're retirees, and both of us drive cars older than 15 years. With only three US "suppliers" ( sort of). More foreign suppliers to be sure - but same for firetrucks. Yet we are expected to cope with such crippling handicaps.
And spare me the "cars aren't firetrucks" ploy. We maintain our cars regularly and have no problem extending their lives. So can the government unions who run fire departments.
Excellent point and perspective- I rode a diesel train engine built before I was born recently and I am 54. They are often overhauled and/or refurbished. There must be cost effective ways to do this with fire engines as well.
True…15 year replace sounds like it’s one big racket. From government to union to supplier?
So the play may be to start a fire truck refurbishment firm, not try to compete in the manufacturing arena.
Hi Matt - I have researched this industry in the past, mostly before REV became a big deal. A few comments:
1. Small towns hold equipment for 20 years as it gets less use, big cities wear them out in 5.
2. Los Angeles problem likely traceable to mismanagement. Even with three players a big city department should e able to negotiate.
3. Return on invested capital is the appropriate metric; incremental margin is not AND it is volatile.
No doubt they are raising price but I am skeptical about the extent of this as an issue.
Sincerely,
Brian
Would it make sense to rotate the 5 year old urban trucks after rebuild to small towns, thereby helping to finance the purchase of new city trucks?
I suspect improper and irregular maintenance is also a factor, especially in larger jurisdictions.
Does the writer know nothing. The whole thing is a scam by the Hedge funds and Private Equity who bought off the US governments years ago. Watch Kevin Walmsly, Inside China business for an explanation of the scams. The only reason Detroit improved their junk vehicles was foreign competitors. Of course they left the "Trucks" and with a little PR, the suckers couldn't buy them fast enough. Now, Volunteer firefighter software has been bought out by Wall Street again and they're screwing the people who risk their lives to save your lives and they work for free. Face it, Americans, Wall Street owns your governments and it's no where more obvious than the cabinet of the current regime and the obomber cabinet came from the same place, Wall Street. The producer of nothing and the exploiter everything.
The board of the NFPA, the primary governing body for fire equipment standards is basically a bunch of industry insiders without any one who represents the tax payers who pay for this crap. We have a tiny volunteer fire department in our town and they hire a consultant who tells them how to buy the newest and best equipment. It is a scam based on selling fear. A fire truck is a truck with a high pressure pump. A gold plated truck.
Volunteer firefighter here.
What’s the solution?
Been a long time since I retired, and I was never really an antitrust expert despite some experience in that sort of litigation (I worked for Ma Bell for thirty-plus years). That said, if the DOJ's Antitrust Division were to bring an enforcement action alleging Sherman Act Sections 1 and 2 violations (restraint of trade, monopolization/attempt to monopolize), the ultimate result could be something like what happened to...Ma Bell.
Getting a tanker truck to a fire with two or three functioning pumps on it should not be a million dollar problem.
Okay. What’s the solution?
I live in a wildfire area in western Colorado, served by volunteers. I believe they have access to lots of surplus lines from local governments and even military. There are also numerous construction type water trucks available with all types of pumps. But generally they are not red and shiny, and hence cost much less. Personally, for my own property, I have an old 5 ton 6x6 with a water tank and pump. It’s not rocket science. I understand that municipalities have standards, but getting water to a fire should not be a million dollar proposition. You could have an entire fleet of fully refurbished tankers for much less.
C H I N A! You get your truck on time for a fraction of the private equity company virtual monopoly Scam. Wall Street is destroying the USA more than any foreign country. Your enemies aren't Russia or China; your enemy is financial rather than industrial capitalism and it owns your government.
It's America's Sestercentennial, and that means (though this part is controversial to say the least: https://www.reddit.com/r/AskHistorians/comments/r0dnwv/comment/hls7czi/ ) the national warranty has officially run out; it's time to renew it the exact same way it was set the first time. We even have the exact same enemy.
Dan have you heard of Pierce fire trucks? Just asking because they are very popular here in Wisconsin, being a local source. Have the cities not budgeted correctly to upgrade their fleets and now are having issues with the old fleet? I saw pictures of old fire hydrants in the Palisade area that weren't even the correct size for modern equipment but the fire chief or water dept lady was being paid $800G a year. A Peterbuilt semi truck goes for around $350k and so $1million for a fire truck doesn't seem out of line to me. Just sayin...
Eric, the comment, “It’s been quite successful for investors. AIP launched an IPO for Rev Group in 2017 and sold a portion of its stake in the company for $275 million, and then got out completely in 2024 by selling its remaining shares for $127.6 million.” is missing a very significant modifier - total amounts invested in this by AIP. Right now your piece reeks of sensationalizing the issue without that information. Using your figures, AIP sold or monetized the investment at about $403M. But what did they invest? If it was $350M that is a relatively poor return to the market. If it was significantly lower amounts invested, your comment could have merit. To me, it leads me to question what other information in the article was cherry picked.
Your prior reporting is significantly better than this.
Reading this post was like eating a bag of Cheetos. It delivered a quick rush of moral certainty, but in the end it left me feeling bloated and unsatisfied.
With that in mind, I gave ChatGPT a general outline and asked it to flesh out a response. Here’s what it came back with.
This article raises real public-safety concerns, but it ultimately turns tragedy into proof of malice in a way that oversimplifies a complex industry.
Aging fire trucks are a serious problem. Mechanical failures can cost lives. But those outcomes do not, by themselves, identify a cause. Fleet age is largely a function of municipal capital budgeting, bond cycles, and political trade-offs that often delay replacement for years. Reliability and equipment failures often reflect the effects of deferred maintenance and local budget choices. Los Angeles, cited prominently, is a particularly weak example for industry-wide conclusions given the well-documented, long-standing challenges facing its fire department that predate recent consolidation.
The article treats price increases as evidence of exploitation without meaningfully engaging with cost structure or production realities. Fire trucks are low-volume, highly customized vehicles with 12–18 month build cycles. In that context, escalation or “floating” price clauses are a common way to manage input-cost risk. Whether those clauses are sufficiently transparent is a fair question, but their existence alone does not establish abuse. It is also worth noting that the strongest criticism of these clauses comes from union leadership, whose mandate is protecting jobs rather than designing sustainable procurement economics. That perspective matters, but it is not neutral.
The outrage over a “28% incremental margin” is especially misleading. Incremental margin is not total profit; it excludes most fixed costs. The company’s actual operating margins remain modest. Highlighting incremental margins while ignoring reported operating margins creates a distorted picture of profitability.
The article also frames consolidation itself as inherently harmful, without grappling with why it occurred. Specialty vehicle manufacturing is capital-intensive, highly regulated, and operationally fragile. Consolidation has improved access to capital, engineering depth, supply-chain resilience, and long-term viability—benefits that matter in an industry where failure or exit would worsen availability and safety, not improve them. Consolidation may deserve scrutiny, but it is not prima facie evidence of wrongdoing.
Finally, rising stock prices are treated as proof of exploitation, when they more plausibly reflect expectations of improved pricing alignment and operational stability after years of inflation and disruption. Allegations of anticompetitive behavior should be tested rigorously in court. But conflating investor returns with public-safety failures substitutes narrative for analysis.
The problems described are real. The diagnosis is far less certain.
I appreciate the comment, but incremental margin does include fixed costs and REV groups operating margin is on the very high end for its peer group. That is why I included REV Group CFO comments in their latest earnings call. REV and Oshkosh had huge backlogs of orders from 2022, victims of the supply chain crisis. However, with their floating cost contracts, or as the CFO labeled it “price realization” I believe, based on their operating and incremental margins, they took advantage on price escalators.
Eric, thank you for the thoughtful reply — this is exactly how these comment sections should work. I’ve been a subscriber going back to the TK News days and especially appreciate the site’s work on free-speech issues. With that goodwill noted, I’d like to respond more narrowly to the substance of your argument.
Many of the failures described in your article reflect long-standing, politically driven capital-budgeting and spending-priority decisions by state and local governments. Los Angeles and California are not representative cases; their fire-equipment challenges predate recent industry consolidation and reflect controversial fiscal trade-offs that have been debated for years. The same caution applies to union commentary, which is valuable but not neutral given its mandate to protect jobs rather than design procurement economics.
On REV Group specifically- this is a small-cap, capital-intensive manufacturer in a mature industry. Its valuation multiples, revenue scale, and operating margins look broadly reasonable in that context. Nothing in its reported financials suggests an outlier level of profitability. REV’s results are consistent with a solid management team and a well-run company, operating within the constraints typical of this kind of business.
That’s why I think the narrow focus on a “28% incremental margin” is misplaced. Incremental margin is a flow-through metric derived from changes in GAAP operating income; it is not total profitability, and it does not by itself establish that fixed costs were recovered unfairly or that pricing was abusive.
I understand that management, including the CFO, highlighted this metric on the earnings call. It is an important indicator of operating leverage, but it remains only one element of overall performance. REV’s actual operating margins remain in the mid-single digits, which is within the range one would expect for a reasonably well-run, small, capital-intensive specialty vehicle manufacturer. Elevating incremental margin above that broader context risks attributing motive where the metric alone cannot support it.
Similarly, price-escalator clauses are not inherently abusive. In long-lead, highly customized manufacturing, they are a standard mechanism for allocating input-cost risk. Without them, manufacturers would price that risk upfront, raising initial costs to municipalities. Whether escalators were misused is a serious question - but the article does not substantiate that claim beyond pointing to the existence of the clauses and a single performance metric.
The public-safety issues you raise are real. I’m less convinced that the financial evidence, as presented, supports the conclusion that corporate exploitation is the primary cause. It’s also worth noting that the antitrust allegations referenced are now playing out in court. To date, we’ve heard only one side of that story, and those claims will need to be tested through the legal process.
Just one reader’s view based on a general legal and business background. BTW, I have no relationship with the company or any of the parties involved. And the fact that I took the time to write this is meant to signal genuine engagement and respect for the work you and Matt do.
Thanks again, and take care.
Thank you for taking the time Larry. You’ve given me a lot to think about!
while the thesis is supported by evidence, the case studies occur in jurisdictions where spickets for FD funding may be stuck but the spickets for erroneous, incredibly wasteful efforts (homelessness, high speed rail, SJW efforts that would make one laugh if they weren't so stupidly wasting taxpayer $) are gushing. Cities with spending per student is out of control with either no better, and often worse outcomes captured by teachers unions. Sounds like a market ripe for disruption, which a city cannot control, while it can control its fiscal spend. Whether a truck is fresh off the line or 100 years with manual pumps old doesn't matter if leadership won't go in a zone because of "endangered plants" and beetles. Literally can't make that up.
Spigots.
Investors know that the big money lies with the taxpayers and government contractors suppliers. Municipal bonds are rated based on? Oh right, ability to keep taxing.
I’m convinced the U.S. will not have indoor plumbing or running water in a couple decades. Hope I’m wrong
If you don't get a grip on the corruption of your governments by Wall Street you're probably right.
They tell us we need government to do these admittedly useful things, like building roads, bridges, firefighting, etc. Then they expand government to do all sorts of other things, and to redistribute wealth to boot. Then they don’t have resources to do the actual useful stuff.
I think there is more than a little BS here; the US Air Force is FLYING B-52's that are over 50 years old. Municipalities are notorious for funding capital expenditures but giving the short end of the stick to O&M. I'm sure new rigs ARE better, but to just have general failures points to lack of maintenance. As to costs increasing during production, those would seem to be contractual issues and I'd expect the municipal attorneys who let/advised those contracts to do a better job defining the terms.
This is not my area of expertise, but there is an alternative to this: do competent repairs of old fire trucks. I suspect a lot of the difficulty is insurance companies and local codes require more and more safety, backup, and control systems in order to be permitted to operate. It's an admirable desire, but probably more indicative of regulatory capture than anything. I'm sure these three fire truck manufacturers lobby hard to keep it that way. Does a fire truck have to be that complicated? A related item are fire pumps on offshore platforms, that are deliberately made very simple, with few if any shutdown signals. For instance, if a pump runs out of oil (these are usually engine driven pumps) it will not shutdown until it fails. For obvious reasons. It would seem fire trucks should be treated the same way; be made as simple as possible. And a competently repaired old truck should be allowed to be put back in service, as long it meets performance requirements.
So many things in modern life are obsoleted, with ever more requirements and complication. This behavior particularly hits low income places. I suspect a lot of these fire truck incidents are similarly affected.
A Murphy switch will prevent the meltdown of the engine if the oil pressure drops. Blowing a seal and losing oil pressure is the most common cause of diesel engine failure.
Just to make sure you get what I said, things like Murphy switches are deliberately omitted on those pumps, because they need to have the highest chance of continuing to operate during a platform fire. The old KISS principle. (Keep It Simple, Stupid)
I'm trying to make sense of that. If an engine loses oil pressure, it's only going to run for a few more minutes before it seizes up. The short term fix might be as simple as adding oil, as needed. The better solution is to have back up pumps.
It’s a platform fire, nobody’s going to add oil. Back when I was a mechanic (before I got onto engineering), more than once I ‘ve seen non-starting skids precisely because the Murphy switch or associated wiring had an issue. The whole idea is to make it simple so it can run to failure, the opposite of what we normally do. It’s an extreme case, I admit, but I am trying to get across the thought of the benefits of simplicity over ever increasing complication.
Okay, thanks for explaining that to me. I've never been on an oil platform, but have been in the mining industry (geo & mine manager) for almost 40 years, where, of course, we try to do everything to prevent engine failure & lost time.
Of course, it’s what O&M normally does. But I think there is a point of decreasing returns on some of the things we do. A community that can’t afford a fire truck because they’ve been made too expensive is a good example.