In December, LADOT unveiled its new MCI Commuter Coaches, which are propelled by CNG. The last of the 95 units were set to be delivered by the end of January.

In December, LADOT unveiled its new MCI Commuter Coaches, which are propelled by CNG. The last of the 95 units were set to be delivered by the end of January.

Motor Coach Industries (MCI) recently began delivering its compressed natural gas-propelled (CNG) Commuter Coaches to the Los Angeles Department of Transportation (LADOT) and celebrated the 6,000th vehicle to roll off of the J/E line. The company is also in the midst of its "Business Excellence" program to enhance efficiencies within the company, as well as the reliability of its products.

METRO Magazine recently got the chance to catch up with MCI's CEO Rick Heller to discuss all of the company's recent milestones and initiatives, as well as the company's future plans.

How does it feel to have the 'interim' tag removed from your title?
I'm thrilled, honored and humbled to be the permanent CEO of this great company. I feel it was an opportunity at the beginning for me to get to know the company and the industry, as well as for KPS to get to know me. From the beginning, the intention was to make my role permanent, so I don't view it as a big deal. The longer I stay at MCI, the more I realize it has great people and products, and really great opportunities lie ahead. I am excited to be here to lead the company to the next level.

How do you feel the industry has changed in the year or so since you have been on board?
In the last seven or eight months, the industry really seems to be on a nice path to recovery. Looking back at the data, 2009 and 2010 were very difficult years, but there seems to be real vitality now. The industry is reviving, from a units delivered standpoint, and I assume that's a function of operators seeing positive trends in their businesses.

So, MCI is seeing an uptick in business right now?
Absolutely. Our business is up nicely versus a year ago. The other major trend we are seeing is the interest in alternate-propulsion vehicles. We have done a good job, in terms of developing the CNG market in the motorcoach industry as well as hybrid-powered coaches.

I went to the recent unveiling of LADOT's new buses; tell me about that contract.
It is for 95 units, and we expect to deliver the last of the buses by January. It is really a watershed event in the industry. We are seeing a lot of interest in CNG vehicles. What attracted LADOT to our vehicles were really two primary things: the first was, obviously, it is a much cleaner running engine; that is huge out in California. Just as importantly, though, the vehicles offer a lower cost to operate, right now, compared to diesel coaches. The price of natural gas is down and will stay down because the supply of natural gas in the U.S. has increased exponentially over the last five years. There is a real advantage, from an operating standpoint, to running CNG right now.

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In the first year as interim and now permanent CEO, Rick Heller says he is seeing positive growth in the motorcoach industry.

In the first year as interim and now permanent CEO, Rick Heller says he is seeing positive growth in the motorcoach industry.

Recently, it seems like there's a huge move toward CNG. Is that something you are really pushing in the motorcoach industry?
We have had some interest on the private side, but because of infrastructure costs, not nearly as much as we are seeing on the public side. On the public side, our niche is the services that provide longer rides. A motorcoach is uniquely positioned to do that well, versus a transit bus, because of its comfort. So, those that have longer commutes have tended to buy motorcoaches to satisfy those routes.

You introduced a 'Business Excellence' initiative at MCI. What you would like to accomplish through that program?
Let me step back a bit and put it into a bigger context. MCI is a company with a great legacy, but our plans are to build on that legacy and make it even better. To do that, there are a number of different areas we know we need to improve in, and 'Business Excellence' is sort of our method of managing these improvement projects.

Essentially, what Business Excellence does is it clearly defines the projects' goals and the scope of what is going to be worked on. It provides a very clear, laser focus on what we want to accomplish in a particular project. Then, what it does is it brings together teams of people to work on that project. The teams could be from anywhere in the organization. It could be senior management, union people, a variety of different functions, whatever skill set is important to be able to work on that project and bring it home successfully; those are the people we recruit for these projects. Then, it is a really well-defined process for managing these projects to ensure they are successful. So, it's kind of our way of managing change in the organization, to support our broader goals of building a better company.

What are you looking to improve upon through this program?
First and foremost, we are focused on building the most reliable motorcoaches in North America. We have many Business Excellence projects going on, right now, to enhance the reliability of our coaches. We have also got a bunch of projects going on to make MCI more responsive to the needs of our customers in a variety of different ways, including improving our fulfillment rate in the parts area.

We also have a number of projects going on to lower the cost to build a coach. We are keenly aware that motorcoaches have gotten very expensive over the last 10 years or so, and we think it is very important for us to be able to lower that cost without sacrificing quality. Those are just some primary areas where we have projects going on.

Is there a set timetable to completing these projects or is it something that is more fluid?
It really depends on the project. We could have a project that might only last for a few weeks, if it's a very well defined short implementation project. We could also have a project that could last for six months, if it were larger and more complex. The timetable really depends on the specific needs of each project. What we do is try to sequence them based on prioritizing what's most important to where we want to get to.

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In November, MCI delivered its 6,000th J/E unit to the Shriners of British Columbia and Yukon, who will use the new J4500 to provide medical transport to children.

In November, MCI delivered its 6,000th J/E unit to the Shriners of British Columbia and Yukon, who will use the new J4500 to provide medical transport to children.

You mentioned the parts program; can you discuss the changes there a bit more?
The first thing we are trying to do is to build a better foundation in the parts business; we took all of that organization and consolidated it into our parts headquarters in Louisville [Ky.]. We had a number of parts people that were based out of Schaumburg [Ill.], but it didn't make any sense to have that organization in two places. We consolidated it all into Louisville, so we could run more effectively and efficiently. We also put in about $7 million of incremental inventory in parts during 2011. The third thing we are doing is identifying all of the critical parts that our operators need to keep a coach running and substantially beefing up our inventory, so we will always be in stock on those critical parts. We plan to roll that program out in the first quarter of 2012. We are also improving our inventory management system, so that we can do a better job of making sure we stay in stock on the hundred thousand parts that we have in inventory.

How much of an issue was MCI having with maintaining parts in stock, and what kind of issues were you experiencing by having two locations?
Well, the primary problem really came before KPS' ownership, when the company had liquidity problems. As a result of those liquidity problems, the inventory on spare parts was reduced. Anytime you are dealing with such a complex inventory with so many SKUs, you can't really afford to take down the level of inventory. That is what caused the primary fulfillment problems. As I have mentioned, we have added $7 million of incremental inventory, so we have now clearly addressed that issue.

Transitioning staffing from Schaumburg to Louisville has improved our ability to communicate and work effectively together as a team, because we are all in one place. It is hard when you have two groups of people in two different places to effectively work together as a team, and that is really what we have accomplished by putting everyone together.

All these initiatives, obviously they are all customer driven. How many were actually based on customer feedback?
A great deal of it. I make it my business to talk to our customers. In my first year, I probably spoke to 150 of our customers, either at shows, site visits or a variety of different situations. The most important thing I can do when I am with a customer is listen to them talk about their companies and how we support them in their business. It was clear that one area we needed to improve in dramatically was our parts fulfillment, having more available when the parts were needed.

As a company, one of our goals is to be much more customer focused and customer driven. The way you win in this industry is meeting your customers' needs better than anybody else, and that's not just the product, it's parts, support, everything.

And, you could make the argument the services you provide after the purchase of a vehicle are even more important.
Absolutely. No question about it. They depend on us to keep those coaches running, and we have an enormous obligation to support them.

How exciting is it for MCI to reach the 6,000th vehicle to come off of its J/E line?
It is a testament to the quality and timelessness of the original design. In addition, it shows the ability of our team to improve and add features to keep it the No. 1 selling coach on the road.

On the topic of your vehicles, MCI has made several changes to the best-selling J model; can you please discuss some of the more important changes?
The J is an absolutely fabulous product, but the changes we made really go back to one of our primary goals that I mentioned earlier, which is to become the most reliable coach in North America. We have made dozens and dozens of changes on the coach over the last several years. We have re-engineered critical parts and components in the system to improve both durability and reliability. We have upgraded a lot of different parts on the coach that would have better longevity and reliability, so while you would take a look at a J coach today and you wouldn't see a physical difference from the outside, on the inside there are many changes going on to improve that reliability. We are already seeing that in what's coming off the line right now. 

Are these coaches on the road yet or still in the process of being built?
Over the last year, these improvements started to cut in, and we are starting to build a critical mass of these improvements now. Clearly, the coaches we have been delivering are substantially improving, in terms of reliability, and every month as we roll forward, it will just keep getting better and better.

How important is it to keep the J model, as well as the rest of your products for that matter, evolving?
It is critical. If you are not constantly improving, you are falling behind, in any industry, not just this one. We are on a mission to continually make the product better and better; that is just part of our culture, now. We have regular meetings where we take a look at the things we can do better and create new Business Excellence projects out of them, with the whole goal being to continually take our brand to the next level.

With 2012 just getting started, can you give your outlook on how the year may play out for MCI?
I am hopeful that the trends we are seeing in the industry, in terms of renewed demand for new coaches, continues. I see no reason why it can't. What our plans are for the new year is really to just continue to do the things I mentioned: improve reliability, improve our responsiveness to our customers' needs and work to lower the price of a coach, so that we can start addressing the very expensive nature of these products. 

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