Fleetwood Continues Day-to-Day Operations
Fleetwood Enterprises Inc., the iconic Riverside, Calif.-based maker of recreational vehicles and manufactured housing that has ferried road-trippers and housed owners for 59 years, is continuing day-to-day operations after filing for Chapter 11 bankruptcy Tuesday (March 10).
As reported by the Press Enterprise, Riverside, part of its business will be shuttering its travel trailer division, affecting 667 employees nationwide including 12 at the company’s Rialto, Calif., service center. Other closures include plants in Pendleton and La Grande, Ore., impacting 415 workers, along with a facility in Edgerton, Ohio, that employed 175 employees people.
Fleetwood said that all current orders would be complete at the plants before they were closed down.
In addition, the company laid off another 65 Inland workers in corporate positions Monday. More than 600 workers remain in Riverside.
The company, which will now be concentrating on its motorhome and manufactured housing markets, still has 15 factories and 3,000 employees nationwide. That’s a far cry from its heyday in 1998 when 21,000 people in 62 factories built RVs, trailers and homes.
A Fortune 500 company for 28 years, the company boosted Riverside’s business image and made the Inland region a destination for other RV makers.
Now, bruised and battered by failed attempts to expand, ballooning debt and an economy in tatters, Fleetwood’s stock traded for a penny per share on Tuesday. The company hasn’t made an annual profit since April 2000.
Since then there has been a flurry of management changes, while the company winnowed its losses from $284 million to $1 million by 2008 after shuttering factories and cutting costs. By then, though, Fleetwood was faced with the country’s deep financial slump.
Buyers couldn’t get bank loans to purchase an RV and dealers couldn’t get financing to order new models from manufacturers.
Plus declining property values meant many buyers could no longer draw on their home’s value and use the cash to buy an RV.
“What we are seeing in the RV industry at this time I don’t believe any dealer or manufacturer anticipated,” said Mellanie Ingle, spokeswoman for Giant RV – one of the largest RV dealerships in California with locations in Colton, Corona, Montclair, Murrieta, Westminster and Indio. “Giant RV is confident Fleetwood will emerge from the Chapter 11 filing. Fleetwood is the foundation of the RV industry.”
The Press Enterprise reported that the company was delisted from the New York Stock Exchange in January. It dropped from 7 cents per share to a penny per share in over-the-counter trading on Tuesday.
There will be 609 employees in Riverside – 200 in corporate headquarters, 93 in its manufactured housing operation and 316 building motor homes – down from a peak of a few thousand in the late 1990s.
In 1998, the company was one of the largest makers of motorhomes and travel trailers, with about a 26.1% market share in RVs and 21.6% share of the travel trailer market.
In 2007, it accounted for just 7.6% of the RV market and 5.9% of all travel trailers sold, according to the company’s most recent annual report.
Joe Hixson, a spokesman for Fleetwood, said there are no immediate plans for more layoffs.
The company is seeking bank funding to keep operating, but “we have what we believe to be sufficient cash for the immediate term,” Hixson said.
Monaco Coach Corp. filed for bankruptcy this month. Perris-based National RV sought chapter 11 protection in late 2007. Weekend Warrior Trailers of Perris closed in September last year.
Christian Eddleman, an analyst with Argus Research, said that Fleetwood’s move was just one more in an industry in serious contraction. “It’s just a nightmare scenario for the RV industry that’s not getting better,” he said.
Eddleman has advised stockholders to sell since the last quarter of 2007. “It’s likely that the shareholders are wiped out,” he said.
As for buyers for Fleetwood’s RV and manufactured housing divisions, the marketplace for struggling RV-related companies doesn’t include a lot of suitors.
“It would have to be someone with deep pockets,” Eddleman said.
Thor Industries Inc., Fleetwood’s competitor with more cash on hand and less debt, could be a possible candidate, he said. He also pointed to Warren Buffett’s Berkshire Hathaway Inc., which bought Indiana-based RV company Forest River Inc. in July 2005. Forest River bought Coachmen Industries Inc. in January.
According to the Press Enterprise, Hixson would only say Fleetwood is “moving with a sense of urgency with discussions with our buyers,” without naming those interested.
Several employees at Fleetwood’s Riverside factory where motorhomes are painted say they’re not discouraged by Tuesday’s news.
“You’re never prepared for this kind of stuff, but you see it happening on the street all the time,” said Ralph Montes, a 63-year-old maintenance supervisor who has been with Fleetwood for 21 years. “We might have some bumps and bruises, but we’ll come out of this OK.”
Montes and Andy Villegas, who works with him, said as of noon Tuesday that no employees have been told their jobs are in jeopardy, and they praised Fleetwood’s past employment practices.
“It’s a great company. We’re going to come out of this whole,” said Villegas, 49, who has been with Fleetwood since 1980. “It has good people and good managers. That’s why I’ve been here so long.”
Villegas said he accepts that the company is struggling because people are less likely to buy luxury items during a recession.
But there were weak sales due to the early 1990s recession, and the company survived that, he said.
“The airline companies had their problems, and they came out of it,” he said. “They’re still flying.”