How does this expansion compare to recent capacity investments by competitors in the fireâapparatus market?
Spartanâs $20âŻmillion, 40âŻ% capacityâboost at its SouthâDakota plant is a midâsize move in the fireâapparatus sector. By contrast, the most recent capacity upgrades announced by the âbig threeâ competitors have been larger in both spend and scale. For example, Pierce (a subsidiary of Oshkosh) disclosed a $30âŻmillion expansion of its Texasâbased chassis line that will lift output by roughly 35âŻ% and add a new bodyâbuilding line, while KME (a subsidiary of the same REV Group) is earmarking a $50âŻmillion, 2024â2025 plantâmodernisation program that will raise total volume by about 45âŻ% and introduce a nextâgeneration pumpâchassis platform. Those projects are aimed at capturing the premiumâtruck and customâchassis segments, whereas Spartanâs spend is focused on a single product family (the âfully cuâ line) and is more modest in absolute dollars.
From a trading perspective the Spartan expansion signals a clear intent by REV Group to shore up its midâmarket share and to offset the higherâmargin, capitalâintensive builds of Pierce and KME. The incremental spend should improve Spartanâs utilization rates and margins over the next 12â18âŻmonths, providing a nearâterm earnings tailwind for REVG. However, the larger competitor upgrades could compress pricing power in the customâapparatus niche, creating shortâterm pressure on REVâs higherâpriced units. A shortâterm pullâback in REVG on broader market weakness could present a buying opportunity, while a sustained rally in the fireâapparatus index would likely keep REVG in line with its peers. In short, Spartanâs expansion is smaller but more focused than the broader, higherâbudget moves by Pierce and KME, and the net effect should be modest upside for REV Group with upside potential if the capacity lift translates into higher order flow before competitorsâ larger plants come online.