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Fleetwood Enterprises Leaves Trail of Prosperous Times
Posted By RVBusiness On August 18, 2009 @ 10:40 am In Breaking News | 2 Comments
Editor’s Note: This story appeared in the Riverside, Calif., Press-Enterprise and recounts the history of Fleetwood Enterprises Inc. The newspaper prepared a special Fleetwood interactive package consisting of slideshows, archived stories and a video as well as an opportunity for readers to submit their own images. To view that package. go to http://www.pe.com/reports/2009/fleetwood/ <http://www.pe.com/reports/2009/fleetwood/>.
When Fleetwood Enterprises Inc. needed room to expand its Anaheim factory 46 years ago, its founder looked east, where there was ample land and labor.
John Crean, a pioneer in the recreational vehicle industry, didn’t want a fancy headquarters, “so Riverside suited them fine,” his son, Andrew, said. “It was strictly business.”
That business thrived, spending more than two decades on the Fortune 500 list of largest U.S. businesses.
Fleetwood’s presence in Riverside spawned a West Coast hub for other RV and manufactured housing suppliers and builders.
But a failed expansion starting in the 1990s buried the company in debt that it couldn’t overcome.
Today, a few executives remain to sell off the last vestiges of the RV and housing empire and finalize the company’s bankruptcy by October. Factories scattered around the country have been shuttered or sold. The RV and housing divisions have been split and have new owners in different parts of the country.
Fleetwood Enterprises, the Riverside-based company founded by John Crean and already all but gone, is about to dissolve completely when its bankruptcy becomes final in the next few months.
The company may not have been the first RV manufacturer in Southern California, “but they overshadowed all that came before,” said Allen R. Hesselbart, historian at the RV and Manufactured Housing Hall of Fame in Elkhart, Ind.
The milestones were many — selling $1 billion worth of RVs in 1989 and $1 billion of manufactured homes in 1994. The company broke into the Fortune 500 in 1973 — 230th at its height — and stayed on the list for nearly three decades.
“They filled the shoes as the largest manufacturer for both industries,” carrying the RV and manufactured housing businesses for at least 25 years into the 1980s, Hesselbart said.
For at least one kid growing up in Riverside, the company was a capitalist inspiration. Jeremy Burkhardt, CEO of Riverside-based Speakercraft, said his company’s success is owed in large part to a business deal with the RV maker.
A Fleetwood executive walked into the Speakercraft retail store in the early 1980s to buy box speakers, and Speakercraft got a contract to install its hidden in-wall speakers inside Fleetwood’s motorhomes.
“That was our first million-dollar customer,” Burkhardt said. “If it wasn’t for Fleetwood wanting to put our in-wall speakers in their motorhome, it wouldn’t have led to the Speakercraft brand.”
Fleetwood earned a reputation as an innovator. Crean designed the first motorhome with storage underneath, now an industry standard. Fleetwood also built a vehicle big enough to stand up to dinosaurs, the digital and animatronic stars in “The Lost World: Jurassic Park,” and comfortable enough for Pope John Paul II to use before his Mass at Dodger Stadium in 1987.
Not so Atypical
It was a place where someone could start as an assistant and end up on the company’s board of directors.
It also had the same challenges most businesses encounter — an economy outside its control, decisions about growth, power struggles and lawsuits.
Southern California economist John Husing said Fleetwood’s closure is a “big deal” and another hit at a time when the region’s economy and unemployment rate can’t take much more.
“It couldn’t happen at a worse time,” he said.
Every dollar Fleetwood spent on payroll or contracts or supplies was spent at least one other time by the recipients.
“When you cut off the gold mine, you end up with a ghost town,” he said.
As for Fleetwood’s legacy in Riverside, its current CEO likes to think it was just like any other company that called the city home.
“We were just another significant employer,” said CEO Elden Smith, who started in 1968 as a trainee and eventually led Fleetwood’s RV division before retiring. The board of directors tapped him to return in 2005.
It employed 21,000 people nationwide at one time, with a few thousand workers at the company’s Riverside headquarters and several Inland plants. When it filed for bankruptcy in March, it had 609 Inland workers.
Smith experienced the industry’s wild growth in the 1970s and ’80s, but also the severe challenges from the oil embargoes of that era that almost brought the RV business to a halt.
“It was a real roller coaster ride,” Smith said recently.
A new Fleetwood RV has emerged in Decatur, Ind., after a New York equity firm bought it in a bankruptcy bid. The manufactured housing division was sold to Phoenix-based Cavco Industries. Those companies have a stake in two Riverside factories; whether they will ever use them is unclear.
Now, dealers will get a Fleetwood that’s on solid financial footing again, “which they haven’t had for quite some time,” Smith said.
Mike Thompson’s RV has been one of Fleetwood’s largest dealers, with four Southern California locations, including one in Colton.
Frank DeGelas, the dealerships’ owner, said he’s glad a new Fleetwood emerged, even though it’s based several states away instead of just around the corner.
“If that’s what it requires for them to be successful, that’s a pill I have to swallow,” he said.
DeGelas has two photos hanging in his office — one of his wife and the other a black-and-white picture of John Crean handing him the keys to the very first Bounder that rolled off Fleetwood’s Riverside assembly line.
The Bounder became one of Fleetwood’s most popular RV models.
“I knew it was something special, but it was stone ugly,” DeGelas said of the Bounder.
“Fleetwood was a huge part of our success in our earlier years,” he said. “A lot of what we did was ride their coattails.”
Suppliers moved into the neighborhood to surround the RV maker in its heyday, and with more suppliers, other RV companies arrived to wrestle market-share from the industry’s giant.
“It was Fleetwood and the rest of us,” said Tom Powell, founder of Thor California and now owner of Pacific Coachworks in Riverside.
There had been Fleetwood — “they were the 500-pound ape all over the country,” Powell said — and Thor California, Weekend Warrior, National RV, Forest River Inc.and Cobra.
All of those manufacturers, among others, have since been sold, moved or gone out business.
For the RV makers who remain — Powell included — the cost of supplies has gone up as more vendors have been driven out of business.
When Smith came out of retirement, the company already was steeped in debt amassed in the late 1990s. Executives had spent hundreds of millions buying up shops to sell its manufactured homes directly to the public to fend off competitors.
As soon as he returned, Smith started consolidating factories and selling off the housing retail outlets that proved unprofitable, spending the next few years whittling Fleetwood’s losses.
But the price of fuel was rising, and by the time it stabilized, global financial unrest took hold last year when Wall Street powerhouse Lehman Brothers failed. The ensuing credit crunch and banks’ reluctance to lend made it difficult for consumers to buy RVs, and for dealers to stock their showrooms with new models.
Fleetwood got the cash it needed to survive the winter, but the stock started to free-fall, losing its place on the New York Stock Exchange.
“We were doing all the right things, but we were caught in that once-in-a-lifetime recession,” he said.
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