Private equity investments in public safety software leave rural fire departments with few affordable options

Fire department software may become too expensive 
for rural communities to buy. (Adobe Stock photo)

Rural fire departments have long relied on affordable software to track incidents and operations. But because of changes in software company ownership stemming from a flush of private equity investment "fire chiefs around the country are scrambling to manage shrinking options and soaring costs," reports Mike Baker of The New York Times.

Over the past decade, a handful of private equity firms have backed companies that are "aggressively investing in public safety systems, where tax dollars provide a steady source of revenue," Baker explains.

The fire-software services company, ESO, serves as an example. Investor dollars enabled ESO to buy up its competitors, shut them down, and push fire chiefs with few options to purchase ESO systems, which are priced significantly higher.

When the Norfolk Volunteer Fire Department in northern Connecticut learned ESO had acquired its former software system and was shutting it down, ESO offered Norfolk an alternative system that "would raise the community’s costs from $795 per year to more than $5,000," Baker reports. Norfolk Fire scrambled and found a cheaper competitor, but shortly thereafter, ESO bought that company, too.

Volunteer fire departments are common, comprising 85% of the roughly 30,000 fire departments across the U.S., and many already struggle to maintain staffing and equipment standards. Norfolk's fire department has turned to using "silent auctions and karaoke fund-raisers to help sustain operations," Baker reports.

ESO maintains that its cost increases support innovation. But ESO improvements may never reach most rural fire departments; in fact, climbing costs could push some back to using paper records.

Fire departments can't get trucks or truck repair parts because the industry has consolidated to make big profits

Fire departments can wait years for a new fire truck.
(Adobe Stock photo)

Firefighters and fire trucks are the backbone of fire protection in most communities, but over time, keeping fire trucks repaired or buying replacements has become increasingly difficult. "Fire engine manufacturing is now largely controlled by three companies," report Mike Baker, Maureen Farrell and Serge F. Kovaleski of The Wall Street Journal. "Some departments have waited years for replacement vehicles while hunting the internet for parts to keep their older rigs going."

Wall Street executives sought to eliminate competition among fire truck makers "in a plan to boost profits from fire engine sales," the Journal reports. "One company, backed by a private equity firm, cut its own manufacturing lines as part of a streamlining strategy and then saw a backlog of fire engine orders soar into billions of dollars."

Edward Kelly, general president of the International Association of Fire Fighters, said the pandemic caused production delays, but it isn't the main problem. He told the Journal: "In hindsight, it was masking what ends up being a main driver of higher cost and lag time in production: the monopolizing of fire truck and ambulance manufacturing in the United States. . . . Absent competition, monopoly capitalism is a shakedown.”

With no new competitors in sight, U.S. fire departments have no choice but to order from the three big companies that still make trucks. One of those companies, Rev Group "has created a more standardized vehicle that can be made in less than a year," the Journal reports. "If more fire departments choose this standardized model, said Mike Virnig, a Rev Group executive, it is likely that overall wait times will drop."