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Supplier Says RV Industry Close to Bottom

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April 3, 2009 by   1 Comment

Mel Adams, CEO of Wichita, Kan.-based RV Products, says the RV industry is close to bottoming out.

Sales have fallen to half of the 30-year average, a level that can’t last very long, he said, especially given that the Baby Boomers are reaching prime RV age.

The rebound, when it comes, will be strong, he said, according to The Wichita Eagle.

The industry saw deep recessions in the early 1980s and 1990s that were followed by steep increases.

“The bounce back will be quite remarkable,” he predicted.

In the meantime, the air conditioner and heater supplier is coping the best it can with industry conditions.

If a recent forecast for the industry holds true, this year’s RV sales nationally will fall 45% from last year and nearly 70% from their 2006 peak, a condition Adams likened to “a train wreck.”

The company had 220 employees in 2007, when sales started falling, and the fall kept accelerating. Corporate cost cutting and layoffs followed.

Adams has had to lay off 40 workers since the beginning of the year. The last 10 were laid off Tuesday (March 31), leaving the company with 120 employees.

“That’s the worst,” he said. “You get a dedicated work force that comes to work for you as a career, and that is the cornerstone for their funding their family and, all of a sudden, it’s not available.”

Adams said the company has looked at every expense to find ways to save, including trimming supplies, moving inventory from a rented warehouse into the plant and renegotiating services.

One small saving grace is that the company does sell some product to the replacement market, which is down by only single digits.

Recreational vehicles suffered from a triple blow of high gas prices, a credit crunch for customers and the economic downturn.

Nationwide the collapse in sales has forced several RV companies into bankruptcy, thrown tens of thousands of people out of work, and devastated communities where RV manufacturing is a major employer.

Adams, 63, worked 24 years at Coleman, working his way from assistant foreman to division president before he and three other division executives took RV Products private in 1991 in a leveraged buyout.

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Comments

One Response to “Supplier Says RV Industry Close to Bottom”

  1. Rik Roberts on April 4th, 2009 9:12 am

    While Baby-Boomers may have the desire to travel in an RV, government statistics tells us that they have less savings than our parents did and over 70% may have to work through retirement years. Boomers have less middle class members than our parents and the most well moneyed are not “automotive types” prefering a luxury cruse or a fine hotel in an exocitc place….many of these “technology” or desk types don’t know a screw driver from a hammer which does not bode well for owning a product that requires regular mechanical tinkering.

    Couple that with the thousands of coaches being repossessed and short-sold for cents on the dollar and it will take many, many years to stoke the demand for new coaches at full price.

    Consumers have had a major reality check and the longer it goes on and the more pain they endure the more likely they are to remain conservative in spending habits and not make that $150,000 purchase. Tens of thousands of RV owners are waking up to the fact that they are upside down and would need to bring a wheelbarrow of money to the bank to just break even to buy another coach has a long term chilling effect.

    If you look at how many coach manufacturers have fallen in just the first year of the recession it is doubtful any will survive another 2 to 3 years unless they get small, lean and build coaches of Honda quality so they do not depreciate 30% on delivery.

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