'Shakedown': Critics slam Wall Street plot to jack up costs of fire trucks

The New York Times reported that many of the problems that cities and towns are having in maintaining their fleets of emergency response vehicles can be traced to "Wall Street executives [who] led an aggressive consolidation of the industry in a plan to boost profits from fire engine sales."

In fact, the Times reported that one engine manufacturing company, under the influence of a private equity firm, cut its production and led to "a backlog of fire engine orders" that soared "into billions of dollars."

The Times noted that the trend toward consolidation in the fire engine manufacturing industry began two decades ago when many small firms struggling to stay afloat started to merge.

From there, wrote the Times, "Wall Street investment firms saw an opportunity to buy these troubled firms for low prices and combine them," while going on to document how one private equity firm bought up "fire truck companies, as well as those making ambulances, school buses, street sweepers and recreation vehicles and combined them into a company called Rev Group" that began a trend for other firms to follow.

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The goal of the acquisitions was to at least double the profit margins that the individual companies had been making prior to their acquisition, which was made far easier thanks to industry consolidation.

In total, just three companies — Rev Group, Oshkosh and Rosenbauer — now control at least 70 percent of the market for fire truck manufacturing.

Edward Kelly, general president of the International Association of Fire Fighters, wasted no time in an interview with the Times pinning the blame on the Wall Street firms for putting city fire budgets under strain.

“At the end of the day, absent competition, monopoly capitalism is a shakedown," he said.