We’re in a Darwinian shift and it feels like an earthquake

No good deed goes unpunished.

An Allison regional representative invited me and a buddy to dinner at a rootin’ tootin’ restaurant in the basement of a skyscraper … in an area famous for earthquakes.

You guessed it. For a few minutes, it was a scary place, and the poor rep didn’t gain many points. The quake hit at a really bad time for him.

Earthquakes have an interesting trait. What normally is terra firma briefly takes on the characteristics of liquid. We plan life assuming solid stuff is, well, solid.

Considered designs

Architects in earthquake-prone regions have to consider both solid and liquid attributes in their designs.

If this feels familiar, it’s a good metaphor for where we find ourselves right now.

As the industry’s resident dinosaur, I’ve used the comet thing in the past. You know, Earth gets walloped, climate changes and clever cuddly mammals evolve more efficiently than gigundous reptiles.

This is different, though. None of us has seen it before, and we’re all searching for solid ground. Things that used to be foreseeable are now either gone or moving about unpredictably. It’s hard to evolve when we have no idea what the climate will be.

Vulnerable business plan

One thing that’s become apparent is how much of our industry has been operating on a vulnerable business plan. We have debt tied up in fleets designed to serve a seasonal market at its peak. Every day the sun rises, and every year we have spring.

In 1815, an Indonesian volcano erupted and spewed enough ash into the upper atmosphere to cancel the summer of 1816. Crops failed, people shivered and economies contracted all over the Northern Hemisphere. Who could have predicted that, or planned for it?

Even in normal years, there are problems with our seasonal model. We have a surplus of coaches most of the year, which drives pricing down. Cash flow can be painful. This tremor struck when many companies had been burning through reserves, anticipating the annual spring boom.

We know how those folks felt in 1816, and they had no idea if 1817 would be better.

We’re all in this together

Another part of our calculation has been the fact that modern coaches are so durable that they retain value. The risk of overextending was mitigated by the ability to sell buses to eliminate debt or raise cash. The problem comes when everybody is in that same position.

We’re all in this together. Manufacturers, lenders and vendors tailor their planning to our business model. The good news is that they truly understand your pain. The bad news is they’re suffering, too, and looking for ways to make things work. If ever there’s a time for us all to do “enlightened self-interest,” it’s now.

There isn’t much solid ground, so it’s hard to figure out what direction to take. As usual, I won’t be much help.

Some stuff bears repeating — keep in touch with creditors, insurers and vendors. Let them know how things stand. They, too, are looking for solutions. Avoiding them now may make things painful when you fire back up.

A Darwinian shift

When this is over, we’re going to be a smaller industry, leaner and fewer companies. Best guess is that many survivors will be operators who entered the fray with carefully managed debt, fleets sized to meet average demand rather than peak, diversified business and close relationships with clients and suppliers.

This is a Darwinian shift, with an opportunity to rebuild on a different business model that responds less to ephemeral opportunities and generates more respect and profit.

Heaven knows, you’ve earned it.

You know things are tough when I use three major metaphors and two Latin words.

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