Spartan Motors Announces Strategic Plan for Ambulance Operations

Road Rescue to consolidate ambulance operations at Marion, South Carolina facility

CHARLOTTE, Mich., May 27 -- Spartan Motors, Inc. today announced a strategic growth plan for its Road Rescue(R) ambulance unit, including the decision to consolidate operations at its facility in Marion, S.C. by the end of 2003.

The Charlotte, Mich.-based manufacturer of custom chassis and emergency- rescue vehicles said it would close Road Rescue's St. Paul, Minn. facility and transfer those operations to the one-year old 106,000-square foot manufacturing facility in Marion. The Company said the move should allow Road Rescue to improve its cost competitiveness, broaden its product line, increase customer/dealer service and build market share. Road Rescue will build a full-range of custom, advanced care ambulances -- including Type I, Type II and Type III units -- and will employ approximately 125 people in Marion, S.C. when it reaches full employment levels in the fall. Key employees of the St. Paul facility will be offered the opportunity to relocate to South Carolina, and several have already relocated.

Spartan Motors said it would take a non-recurring pre-tax charge totaling approximately $700,000 during the second and third quarters related to the consolidation. The Company said it expects the consolidation will enable Road Rescue to reduce its cost of doing business and improve operating income, beginning in 2004.

"Our Marion facility represents the future of our ambulance operations and is a significant step toward making Road Rescue the most desired brand and the lowest-total-cost producer in the industry," said John Sztykiel, chief executive officer of Spartan Motors, Inc. "By focusing operations there, we will be more cost competitive and in a better position to leverage our engineering and manufacturing resources. The Marion facility represents a quantum leap forward in terms of streamlined manufacturing, competitive operating costs and access to customers. The facility also allows us to build a full line of products and introduce new innovations -- including custom chassis -- that will drive customer interest and dealer sales. Plus, the facility will be centered in one of the fastest growing areas of the United States -- the Southeast.

"The backlog is growing at Road Rescue -- it is up 38.5 percent since January 1, 2003 due to strong order intake and the overall strength of the ambulance market. The market for medium- to high-end ambulances is strong, and interest in custom vehicles continues to grow, as emergency-service providers set increasingly high expectations for performance, durability, safety and capabilities. Road Rescue is focusing on becoming the number one provider of custom modular ambulances that fit all emergency transport requirements -- and for that to happen, we must make changes such as this consolidation."

Road Rescue, along with fire apparatus maker Crimson Fire, is part of Spartan's Emergency Vehicle Team (EVTeam) segment, which represented approximately 24 percent of the Company's 2002 sales. Spartan said the growth plans for the combined EVTeam should help drive increased sales and profitability, and are an integral part of the Company's overall strategic plan.

Spartan Motors said the decision to consolidate the Road Rescue operations in Marion follows an extensive internal review of operations, the unit's customer and dealer base and market opportunities. Estimated at 5,500 units annually, the domestic ambulance market is growing steadily due to aging Baby Boomers and heightened focus on emergency response. Road Rescue's estimated market share is less than 5 percent of the U.S. market for ambulances and emergency vehicles. Road Rescue focuses primarily on premium vehicles, which represent one of the fastest-growing segments of the emergency vehicle market.

"We have a great opportunity to build market share within our current distributor network, but we need to be more cost competitive to do so," Sztykiel said. "Road Rescue's current distribution base sells approximately 350 units made by competing manufacturers. By becoming more cost-efficient and broadening our product line, we expect to earn many of those orders in the future."

In addition to the consolidation of facilities, other components of Road Rescue's growth plan include:

-- Expanded dealer channel and support: Road Rescue will work closely with its existing dealer network to increase support and training for customers. Additionally, Road Rescue will continue to build its dealer network to ensure comprehensive coverage of each region of the United States. Road Rescue currently has 18 dealers covering 42 states.

-- New product innovation: Road Rescue will continue its accelerated pace of new product development, including the introduction of new technologies such as smart displays, smart glass and other technologies and custom ambulance units built on Spartan(R) custom chassis.

-- Supplier partnerships: Road Rescue's growth plans will call for closer partnerships with suppliers. Road Rescue intends to leverage the engineering and development resources of its suppliers in order to maximize innovation, improve manufacturing and reduce total costs.

"We are positioning Road Rescue to be a leader in the ambulance category," said Charles Drake, president of Road Rescue. "Our focus for the balance of 2003 will be on building exceptional ambulances and delivering customer satisfaction, while laying the groundwork to build market share over the longer term. We will continue to accelerate our pace of innovation and step up our programs to support dealers and customers."

For a more detailed slide presentation regarding the Road Rescue plan, please visit www.spartanmotors.com or www.roadrescue.com .

About Road Rescue: Established in 1976, Road Rescue, Inc. (www.roadrescue.com ) designs and manufactures custom modular ambulances and specialty vehicles. For emergency vehicle personnel throughout North America, the Road Rescue(R) brand name means high quality, innovation and customer care. Road Rescue vehicles are sold through a dealer network that covers the United States and Canada.

About Spartan Motors: Spartan Motors, Inc. (www.spartanmotors.com ) designs, engineers and manufactures custom chassis and vehicles for the recreational vehicle, fire truck, ambulance and emergency-rescue markets. The company's brand names -- Spartan(R), Crimson Fire(R) and Road Rescue(R) -- are known in their market niches for quality, value, service and being the first to market with innovative products. Spartan Motors employs more than 750 at facilities in Michigan, South Dakota, Alabama, Minnesota and South Carolina and is publicly traded on The NASDAQ Stock Market under the ticker SPAR.

The statements contained in this news release include certain predictions and projections that may be considered "forward-looking statements" by the securities laws. These forward-looking statements are identifiable by words or phrases indicating that the Company or management "expects" or "believes" that a particular result may occur, or similar statement. These statements involve many risks and uncertainties that could cause actual results to differ materially, including but not limited to economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and prices. Additional information about these and other factors that may adversely affect these forward-looking statements are contained in the Company's reports and filings with the Securities and Exchange Commission. The Company undertakes no obligation to update or revise any forward-looking statements to reflect developments or information obtained after the date of this news release.