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The article makes it abundantly clear (down a ways from the top) that much of the cost increase is due to small companies being acquired by monopolists. E.g. >
by 8bitsrule 1y ago
The article makes it abundantly clear (down a ways from the top) that much of the cost increase is due to small companies being acquired by monopolists. E.g.
> Fast forward 60 years, and those businesses were contending with aging founders, depleted municipal budgets, and declining fire-truck orders. Sensing an opportunity, a private equity group called American Industrial Partners (AIP) began to roll up the industry.... the REV Group, now one of the three leading manufacturers of fire trucks in the U.S. REV captures about a third of the country’s $3B in annual fire truck sales ...
- twoodfin 1y ago“About a third” doesn’t sound anywhere near a monopoly to me. This is all demand-side inflation: For any number of better and worse reasons (mostly worse), as building codes have gotten stricter and fires have become rarer, municipal spending on fire departments has exploded. Well-funded fire departments buy more expensive trucks than they probably need, just like well-funded police departments buy military-class SWAT equipment they probably don’t need.
- tomrod 1y agoThat's an HHI of 1089 at best. Pretty high, indicating consolidation is a big deal.
- brookst 1y agoA third of the market isn’t a monopoly, but it is enough economy of scale to allow for reaping huge profits if competing against a long tail of smaller competitors.
- arrosenberg 1y agoMonopoly is a misnomer, because it implies a single seller. In reality any market with a small number of incumbents will exhibit anti-competitive behavior, which is what people usually mean when they talk about monopolies and antitrust law. With a third of the market, a single company can effectively set prices based on desired margins, rather than having to compete on price. Do you have evidence for your claim about well funded fire departments splurging on unneeded equipment? Police departments buy military surplus through federal programs that specifically encourage it [1]. It has nothing to do with how well funded they are, which is why you see that equipment show up even in smaller and poorer areas that don't have particularly well-funded police or the need for a Bradley fighting vehicle. [1] https://www.marketplace.org/story/2020/06/12/police-departments-1033-military-equipment-weapons https://www.marketplace.org/story/2020/06/12/police-departme...
- 8bitsrule 1y agoIf there are two more companies just like that one, that's 3-thirds of the business, right? Point is, what's to stop that from happening? In that business or any other, it's bad for many, good for a very few. In one side-effect, the wait time for a new truck has reached up to 4 years. And the contracts are being written so that the cost can go up during that wait.
- jojobas 1y agoThe article makes this assertion without much proof. The buyout may or may not have caused the price hike. If anything, unified R&D would have allowed to save on costs.
- defrost 1y ago> unified R&D would have allowed to save on costs. which a typical private equity company with a near monopoly on supply would naturally pass on the customer via reduced pricing? That seems at odds with how such things often go.
- jojobas 1y agoAt the very least they'd compete on cost against the other 2/3 of the market and conquer more of that.
- phendrenad2 1y agoSorry, I tend to tune out parts of an article that make statements, and skim until I find a supporting fact. I probably skipped right past it, because there were no supporting facts.