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ON THE LINE: Forest River’s Pete Liegl Sees ‘10 Growth

Posted By Sherman Goldenberg On October 29, 2009 @ 1:48 pm In Breaking News | No Comments

Pete Liegl

Pete Liegl

Publisher’s Note: RVBUSINESS.com touched bases recently on a variety of topics with Forest River Inc. founder and CEO Peter J. “Pete” Liegl. Here’s a verbatim transcript of that on-the-record conversation, which took place in the aftermath of the company’s successful “Pick Your Partners” dealer meeting that drew some 2,000 people from 700 U.S. and Canadian dealerships in late September to the Berkshire Hathaway Inc. subsidiary’s home complex on the west side of Elkhart, Ind. Parts of this interview appear in the upcoming issue of RV Business, the magazine.

RVBUSINESS.com: Pete, your dealer meeting this year was impressive to say the least, as most in this industry are well aware.

Liegl: It was considerably more than last year, obviously. But we’ve got Coachmen in there and a couple of other things we didn’t have last year.

RVBUSINESS.com: What signal or message are you sending these dealers?

Liegl: It’s not different than any other year. We are trying to give the best product at the best price ratio. Obviously, there’s only a couple of financially strong manufacturers in the RV business, and us being one. Dealers have gotten burned severely with a couple of other manufacturers who filed bankruptcy or went out of business and I think they realize that. The opportunity is phenomenal right now for us. We are going to expand the motorized area drastically. We’ve done OK in the towables and we’ve been into motorized quite a few years now, and we’ve got a pretty good handle on the products that we make in motorized and we just need to make more.

RVBUSINESS.com: Those are ambitious goals, considering that RVIA forecaster Richard Curtin predicts that motorized in 2010 is only going to occupy 7.8% of the market. Why would you expect growth in motorhomes?

Liegl: For several reasons. When you look at two other manufacturers that went bankrupt and might be coming back out, there’s a hell of an opportunity. We are completely convinced that the RV business is here to stay. It might be a little different than we’ve known it in the past. In total there is something like 21 manufacturers who used to manufacture some form of RV who are not with us here in the last 12 months.

But things are good. Things are not bad out there. I think it’s going to continually improve. Obviously, we all know the recession is over. It was over at the end of June. The recovery is going to take a little longer, but dealers are selling. Dealers are getting flooring. Customers are getting financing. The RV industry’s not bad right now.

RVBUSINESS.com: The RV industry generally leads in to – and out of –downturns. At least that’s how the old saying goes. Did it appear to hold true this time around?

Liegl: I believe it is holding true. We are doing more in sales and bottom line in the last three months than we did during a comparable period last year. And last year wasn’t a bad year. That’s also a little misleading because we have Coachmen (Forest River last year purchased the RV segment of Coachmen Industries Inc.) now with us. So, obviously we are not comparing true apples to apples. But even if we did compare apples to apples, which I do, we are doing better than we did last year during the same time period. You could just walk that (Forest River’s dealer) show and not hear anybody and look at them and know that the enthusiasm is running high.

RVBUSINESS.com: So, back to your earlier comment, you agree with (Federal Reserve Chairman Ben) Bernanke that the recession is over?

Liegl: Yeah. I think he predicted that sometime back. We still have high unemployment here, but it is improving. Interest rates are low. Gas isn’t expensive. Things are good.

RVBUSINESS.com: Flooring is still a challenge.

Liegl: Yes, in some cases it is. But again, dealers are required to do what they should have done in the last five years. We as an industry, we as a country, got sloppy. We gave people financing that shouldn’t have had it. We were lax on collecting the curtailments, paying the interest. Well, 20 years ago, we didn’t have that problem. Every dealer knew you were supposed to pay your curtailments and your interest. With this sub-prime attitude, giving financing to people who shouldn’t have it, primarily in housing, is a problem.

The big problem that we’ve experienced – and are now getting over – is that you’ve got to pay your interest to a financing institution. You’ve got to pay your curtailments, and they (a lot of dealers) weren’t used to that. They (finance companies) are holding their feet to their fire, and if they (dealers) don’t (pay curtailments), they aren’t going to get any more (credit). Now, people have accepted and understand that, and they’re more current with that situation than they were six months ago.

RVBUSINESS.com: Looking back at your dealer meeting, is it possible that you brought more dealers to Elkhart for your two-day get together than you’ll see at early December’s Louisville Show.

Liegl: I guess so. I don’ know what they (RVIA) are forecasting. But we were blessed with the number of dealers that did show up. I was very favorably impressed. And the attitudes were phenomenal.

We’ve got a lot (of dealers) who still didn’t come for various reasons that we expect to see in Louisville, and we are going to maintain our presence there. And our display this year will be as big, if not bigger than last year. I think we are going to see a lot of dealers down there, too. It might not be as many, but the Louisville Show comes and goes very quickly, and you don’t get to see as many dealers as you want and you don’t get to spend the time with them that you want.
 There might be fewer people coming to Louisville this year, I don’t really know. But I personally think there is going to be a product shortage next year. Some people think I’m crazy if you publish that. But I don’t care. I don’t think there’s going to be a product shortage, I know there is going to be a product shortage.

RVBUSINESS.com: Is this prediction based on growing demand in the market or on the industry’s inability to keep up after a tough year?

Liegl: Primarily on the manufacturers’ ability to beef up and give the market what it needs. It’s my understanding — and I had a list not too long ago — that 21 manufacturers have gone out of business. Obviously, even if the market shrinks, which it has and is going to be smaller next year than it was a few years back, there are not as many people (companies) to build the product. So, we plan on getting our share.

RVBUSINESS.com: What kind of pace are you on dollar-wise in 2009?

Liegl: We are going to do probably in the area of $1.8 billion.

RVBUSINESS.com: How many employees are you now?

Liegl: I think 6,200, nationwide.

RVBUSINESS.com: I know it’s a simplistic view, but a lot of people see the towable side of the industry turning into a what might best be described as a two-horse race between Forest River and Thor over the next few years. Your thoughts on that audacious statement?

Liegl: We are the financially strongest one, obviously. And we will be No. 1. There isn’t going to be any horse race. You just have to look at the recent stats. Our numbers are increasing where our other competitor’s out there are decreasing. We are only a few percentage points different right now when you put together Coachmen, Forest River and Palomino. Last month, I think we had 45% of the camping trailer business, retail. The July numbers are out and we aren’t doing as much as I want, but it’s acceptable.

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