Spartan's new feature: CEO Letter

Spartan Motors has launched a monthly online feature called the CEO Letter.
In an effort to keep stakeholders better informed, CEO John Sztykiel will
share his thoughts on the state of the business in a monthly letter that can
be found on  <http://www.spartanmotors.com> www.spartanmotors.com.
Following is the letter for October, which gives an overview of the
Company's two primary business segments: chassis and emergency vehicles.  If
you have any questions regarding this letter, please call Mary Ann Sabo or
Ben Buursma at 616.233.0500. Thank you,
 
Ben Buursma
bbuursma@lambert-edwards.com <mailto:bbuursma@lambert-edwards.com> 
 







As CEO of Spartan Motors, I'm often asked what the future holds in store for
the Company.


In order to envision future opportunities, it's important to understand
current conditions in the two markets we serve - recreational vehicles and
emergency rescue - and how Spartan is focused on  capturing additional
market share.

 	  	
		


Recreational Vehicles


A recent front-page article in The Wall Street Journal noted that sales of
lifestyle "toys" such as recreational vehicles, all-terrain vehicles and jet
skis are enjoying double-digit sales increases despite continued uncertainty
in the economy.  The Journal quotes several key manufacturers, including
Polaris and Winnebago, who attribute strong 2002 sales to a combination of
convenient credit and the "nesting instinct."

	
		

Our results have also borne this out.  Sales of our custom diesel motorhome
chassis rose nearly 45 percent during the second quarter of 2002, reflecting
the renewed strength of the industry as well as pent-up consumer demand.
The Class A motorhome market remains strong, with diesel pushers now
accounting for nearly 40 percent of all new coaches sold.


It's often said that the RV industry is "first in, first out" of a
recession.  Although the RV industry will remember 1999 as its best year in
more than two decades, industry sales began to slip as we entered 2000.  It
took another 18 months for this slowdown to show up in the rest of the
economy.

	  	  	
		

We began to see sales improvements ahead of the rest of the domestic
economy.  The Spartan brand, which is recognized as both dependable and
innovative by motorhome OEMs, continues to gain market acceptance.


In its most recent forecast, the Recreational Vehicle Industry Association
expects RV shipments in 2002 will exceed the prior year by 14.6 percent,
putting us near the historic high of 1999.   RVIA also expects the first
three quarters of 2003 to outpace the strong sales gains of 2002.


Demographics remain solidly in our favor, fueled by increasing numbers of
Baby Boomers who are embracing the RV lifestyle.  And when these consumers
choose a new motorhome, they are increasingly turning to the power of
diesel, which delivers greater fuel economy and enhanced performance.  We
expect sales of our custom chassis will remain strong through the remainder
of 2002.

	
 	  	  	 


Emergency Vehicles  


Favorable demographics are also driving greater sales of emergency-rescue
vehicles.  Aging Baby Boomers are generating greater demand for ambulances
and other innovative emergency vehicles that offer reliable performance
combined with state-of-the-art lifesaving equipment.


Traditionally, the emergency-rescue market has grown steadily at 2-3 percent
annually. The terrorist attacks of 2001, unfortunately, have brought the
topic of emergency preparedness to the national forefront.  Communities
across the country are assessing their ability to respond to major and minor
crises - and many have discovered that they do not have the equipment,
vehicles or proper training to handle disaster situations.

 	
 	 

That's particularly true of ambulance services.  With the idea of reducing
costs, municipalities began privatizing their ambulance services in the
early 1990s.  But these private companies have found it difficult to turn a
profit, and many of them are going out of business.  The task of providing
ambulance services is reverting to municipalities, who have inherited an
aging fleet ill equipped to handle increased demand from an aging populace.



Fire departments have also suffered over the past 18 months, as lower tax
revenues forced cities and municipalities to put their modernization plans
on hold.  Many departments are now playing "catch up" and replacing outdated
vehicles with new fire and rescue trucks.  


Ambulance services and fire departments around the country stand to benefit
from federal aid designed to boost emergency preparedness.  President Bush
has earmarked more than $3.5 billion for first responders in communities
around the country.  Municipalities can use the funds on new equipment,
increased training and new personnel.

 	
 	 

Opportunity


How do we capitalize on these opportunities? We aim to be the lowest
total-cost producer - and the most desired brand - in the markets we serve.
If we look at these markets, our total opportunity is 60,000 units per year.
We currently hold a 5 percent share of the market, which gives us tremendous
opportunity to grow.


Our game plan is simple:  Stay focused - and execute.  

John Sztykiel
Chief Executive Officer