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0:00 In January 2025, all these trucks sat here unmoving in a parking lot in LA, 20 m away, this was unfolding. The deadly wildfires, more wildfires. Six different wildfires turned some of the most iconic neighborhoods in the world into moonscapes. According to LFI chief at the time, Christine Crowley, we have over 100 fire apparatus out of service. That's a big chunk of the LFI department's fleet. So why were they being used? Something's been happening behind closed doors. And it's finally reached a breaking point. Fire trucks now cost double or triple what they did in the 2010s. Even if fire departments have the money to pay for them, they might not even get them for years. The US is facing a fire truck shortage. But why isn't so obvious. It's not just
0:45 inflation, production issues, or budget cuts to local departments. There's a lot of money moving around, but not in the right places. So, who's got it? And what's going on with these trucks? Take a look at this post I found from the Chicago Fire Department celebrating the 30th birthday of the fire engine D545. It's funny, but the truth is 30 years is double the expected lifespan of a fire engine. This is another 30-year-old fire engine from the same second battalion a month later. It lost a wheel on the way to an emergency. This one was only 20 years old. They're celebrating geriatric birthdays because old trucks like these are now a precious resource. This is how long it took before the pandemic to get a new fire
1:31 truck delivered. Less than a year. This is how long it takes now. Anywhere between 2 and 4 and 1/2 years. And a lot of trucks don't even make it to the 30s like D545. Old and broken trucks can end up sitting in parking lots like the one I showed you earlier. And this isn't just an LA and Chicago problem. Major cities like Seattle, Houston, and Atlanta are also struggling with a lack of fire trucks. The reason why isn't a mystery. Here's the first clue. Listen to what LA Fire Department veteran told CNN during the fires. We either going to have a fire department that's going to reflect 2025 or we're going to have a fire department that's going to reflect the 1960s. There, pause there. There's a reason why he's bringing up the 60s. In the 50s and 60s, small and medium manufacturers, usually familyowned like
2:18 E1 in Florida and Ferrari in Louisiana, popped up all over the country. And the reason those small manufacturers were successful, is because we had rules in place that made it so that the biggest manufacturers couldn't buy up all the small businesses. Basil Musha Bash is an antitrust lawyer who's going to help me tell the story of fire trucks. He wrote a big article in January 2025 about the rules he just mentioned. These regulations helped smaller manufacturers access materials like steel at competitive prices rather than being squeezed out by larger firms with more purchasing power. For decades on end, firetruck manufacturing was this locally oriented industry where most of the businesses were owned and operated by families that were based in those same
3:06 regions in those same uh communities. And this was great because these manufacturers tailored the trucks to the region specific needs. So for example, in the northern part of the US, you would need firet trucks that can adapt to snow, whereas in the southern you wouldn't. Anyway, it was fire apparatus heaven. And when I say fire apparatus, it's what people in the industry call all the type of fire vehicles. Most of them is what a 5year-old would call a fire truck, but just so that we all know, it also includes planes, boats, you get the drill. So yeah, production and sales climbed up to the highest point in 2008. But the price of fire trucks, the price of fire equipment didn't skyrocket in those years because it was an open industry where lots of small businesses participated. You know,
3:52 if there was ever a situation where, you know, demand was outstripping capacity, a new manufacturer could always enter the business and meet that demand until the financial crisis changes everything. Municipal budgets got huge cuts and on the chopping blocks were fire trucks. For John Kovich III, this really hit home. His father, John Sonikovich, Jr. left him a firetruck manufacturing business in Nesquaning, Pennsylvania. The company was called KME and it was one of those that bloomed after the 60s. But demand for fire trucks was plummeting and his son John III struggled with it through the 2008 crisis and Wall Street X smelled an
4:38 opportunity thinking that desperate owners would sell their businesses for a low price. American Industrial Partners was a leading private equity group founded in 1989 and by 2008 had invested over 1 billion in industrial companies. But a lot of these family-owned companies didn't feel compelled to sell at those at those low prices that were being offered in 2008 2009. So AIP only managed to acquire one called E1 for now. Meanwhile, John III's company KME pulled through the great financial crisis. By 2016, the firetruck industry was still diverse in small and midsize manufacturers. Municipal budgets were starting to recover post recession and demand for fire apparatus was climbing
5:25 up again. And guess who was ready to show up again? AIP, that private equity firm. By 2009, they had pulled E1 out of debt. And by all accounts, E1 was making a good product under their ownership. Fast forward again to 2016, and despite having weathered the crisis and having John IVth in line to take over the company, the KME family decided to sell to AIP, which had created a conglomerate called Rev Group to manage fire truck manufacturers. For a lot of those businesses, it seemed that an offer of tens or hundreds of millions of dollars from American Industrial Partners became too too good to refuse. Between 2016 and 2021, Rev Group, backed by American
6:12 Industrial Partners, systematically acquired several major fire apparatus manufacturers. This is when everything starts to get tricky. Coinciding with the 2016 acquisition of KME, Rev Group published this video. Now, we build 23 different models. They will always be those models. We do not plan to change those with the name of the company. Rep group promised each of the brands would remain autonomous and valued for the unique positions in the market. But there's more. By 2021, not only were they closing plans, we can see in this internal presentation for rep group investors, that they also had plans to centralize control and standardize designs. Efforts to centralize control like this aren't anything unique, of course. In fact, many industries have a similar pattern. And when these takeovers happen, the whole industry changes, which opens up opportunities
7:00 for smaller players. So our team has put together a report on the 10 industries where major players have quietly taken control. For each one, you'll get a full report on what's broken, why it's happening, and where smaller players are already stepping in. So check it out by scanning the QR code or clicking the link in the description to get a full report on the 10 industries that are ripe for disruption. Back to Fire Tracks. According to the New York Times, around the time Rev Group started acquiring all those companies, their CEO told analysts at the time that the companies they were acquiring were operating with a profit margin of 4 to 5%. And that they were on a path to get all of them above that 10% level. In case you were wondering, yes, all this consolidation came with big consequences for fire departments, those that led to the LA fire truck problem. Take a look at this document that the Colorado State
7:46 Fire Chiefs released highlighting the major problems fire departments encountered when buying equipment in 2021 and 2022. There are two major things to note here. First is the unexpected price increases for ordered vehicles after the contracts resigned which have been justified by floating price clauses in the contracts between fire departments and manufacturers. These clauses allow manufacturers to raise prices during the waiting periods, essentially benefiting themselves from those very delays. It would be as if right now, midway through the video, I asked you for a 20% tip. No, I'm just kidding. But seems
8:31 pretty convenient to have delayed orders, right? and second quote completely unreasonable end quote build times and delivery dates. These back orders are part of the reason why communities are using old unsafe fire trucks that keep breaking down and some towns are left with no fire protection at all when their equipments fail. When we reached out to Red Group, they cited inflationary pressures, supply chain, and labor constraints as reasons for the backlog and the price increases. According to the New York Times, industry officials agree that labor shortages and supply chain issues contribute to the problem. But the market consolidation does too, and it looks pretty crazy when you see it
9:17 visually. Firet truck sales in the US today could be anywhere between three to5 billion dollars. Before the industry roll up that would have been split between the diversity of larger and smaller manufacturers. But today 66% of it is consolidated among only three big firms and the biggest share which exceeds 1 billion goes to Rev Group. All these acquisitions gave RevG Groupoup control over two things. On the one hand, it was selling 33% of the fire trucks in the country. On the other hand, these acquisitions gave the Rev group control over something like 90% of the supply of firetruck chassis or firetruck like bodies to smaller
10:05 firetruck manufacturers. We spoke to the fire apparatus sales rep that gave Basil this information. And while we couldn't confirm the 90% figure, he told us that almost all independent fire apparatus manufacturers use Spartan cabs and chassis, which meant that like the Rev group controlled what prices they could sell their firet trucks at. Rev group also basically controlled, you know, the amount of firetrs that those small manufacturers could actually produce because if they didn't have chassis, they couldn't produce firet trucks. So, the smaller manufacturers that still survived in the market were essentially dependent on Rev Group. When we asked the Rev Group what they were doing to fix the backlog problem, they told us about a new modular fire truck they designed, one that can be made faster
10:50 since it has fewer customizations. San Bernardino County in California bought 10 of these in January of 2025 to help with the fire truck shortage while they wait for the new fully customized fire trucks they ordered. The Rev group says that these can be delivered in less than a year as opposed to two to four and a half year, which is how long most fire departments are waiting now. Meanwhile, SSC reports reveal that Reb Group's 24 month backlog is marketed to shareholders, especially AIP, as a positive, providing strong visibility into future net sales. So these crazy delays are literally woven into the profitability narrative for investors. Now do you remember what Rev Group
11:35 promised that they would improve profit margins from 4 to 5% to 10%. Look at this. According to that New York Times article, in 2024, Rep Group's profit margins jumped to what Rev Group described as an exceptional 8.9% for the division that includes fire trucks. When you look at the bigger picture of the fire practice industry, it starts to look like a tactic called artificial scarcity is being used. That happens when a company deliberately limits how much there's available even though they could make more. because when there's scarcity, you can set higher prices. I'm an antitrust lawyer and in a competitive market, no one can get away with that. But, uh, when a
12:21 company has monopoly power, um, they can get away with that. And so, yeah, that's what suggests that, uh, the Ref Group does have that kind of monopoly power. Now, just as we were making this video, the US Senate hopped on this and sent a letter to the CEOs of Rev Group and two other fire apparatus conglomerates demanding answers for the quote massive consolidation end quote in the fire truck market. As we wrap this video, industry source fire rescue 1 reached out to Rev Group and the two other fire apparatus conglomerates for comment and Rev Group confirmed that they had responded to Senator Howley and Senator Kim with background information. Depending on how this unfolds, they could face substantial fines or force break up of the business. A court should break up the Rev Group's uh components,
13:07 try as much as possible to restore the independent brands. What would happen if Rev Group was found guilty of having created a monopoly? Depending on the choices made by the enforcers, they could seek civil penalties uh against the Rev group. They could seek damages from the Rev Group for all of the harm that they have caused to to fire departments. Potentially they could seek criminal sanctions against executives of uh the Rev Group and perhaps American industrial partners. While the US Senate is investigating the three major players for this market consolidation, there are entrepreneurs who are carving out a gap in the market to provide solutions. This is Brindle Mountain Fire Apparatus and
13:53 they've created a marketplace that connects apartments looking to sell older equipment with those that cannot pay the exorbitant prices or wait years for new fire trucks. Like a Facebook marketplace of sorts. And as new truck prices skyrocket and delivery times extend, Fire Trucks Unlimited thought, why not keep the old rigs but make them better? So for half the price and half the weight, you essentially get a new truck. And for all of those trucks that are out of service because they're missing parts or they don't arrive for months, maybe even years, Idex Fire and Safety is maintaining a consistent supply chain and stock of parts, but also incorporate solutions designed to enhance safety and efficiency for first responders. What began as a diverse
14:40 ecosystem of family-owned businesses has been transformed into a Wall Street profit machine with communities paying their price in safety. We have all the tools we need in order to break up this uh monopolization scheme and restore competition to the firetruck manufacturing industry. We just need to use them. America is facing a firetruck shortage. But when it comes to play trucks, you wouldn't be able to find a small one anymore. If you want to know what happened to them, check out my colleague Matt's video on it. But before you do that, download our breakdown of the industries that are ripe for disruption right now. And as always, subscribe to the Hustle YouTube channel for more videos like this.
