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ON THE LINE: Heartland’s Brady Expects 2010 Upswing

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November 2, 2009 by   2 Comments

 

Brian Brady

Brian Brady

Publisher’s Note: When you do a head count of the key surviving RV builders coming out of this recession, make sure you include Heartland Recreational Vehicles LLC. Indeed, Heartland President & CEO Brian Brady and his management team have made a lot of market share headway since the 775-employee, Elkhart-based, towable RV manufacturer launched production in 2004 on the north side of Elkhart, Ind. And the industry can look forward to more of the same from Heartland coming out of the current downturn if Brady, a former Damon executive and die-hard Notre Dame fan, has anything to say about it. Here are the highlights of Brady’s interview last week (Oct. 29) with RVBUSINESS.com.

RVBUSINESS.com: How is Heartland doing right now and how do things look for next year?

Brady: We’re doing well. You know, I look at the most current Stat Surveys (Statistical Surveys Inc.) data, and of the top 14 manufacturers in the industry, irrespective of brands and product categories,13 have sold at retail fewer units this year than last year. The one exception to that is Heartland.

So, speaking for Heartland, we are very confident that 2010 is going to be a fabulous year. In fact, our revenue this year versus last year is going to end up being just about the same. Our year-over-year comps (comparisons) became positive in July and, of course, much like everyone else, we’ll have a huge year-over-year increase in Q4 sales.

RVBUSINESS.com: That’s a pretty upbeat outlook coming out of a deep recession.

Brady: Look, our guys (employees) were absolutely grinding it during this whole time in terms of building the organization, in terms of investing in the business, in terms of product development, and I feel very confident that 2010 is going to be an absolutely outstanding year for Heartland and for our dealers.

And with that said, I think it’s important that dealers maintain their discipline. It could be argued that from a dealer perspective part of the dislocation (in the downturn) was the result of dealers losing their discipline, having too much product in inventory, maintaining relationships with companies or product lines that didn’t turn. And at Heartland, we talk to dealers as investors. And it doesn’t make any difference as an investor whether you buy (stock in) Microsoft or you buy (stock in) a new startup software company. You know, they’re in the same space. They’re both software.

But the real question is: Where are you going to get the return on your investment? I think it’s apparent that Heartland provides our dealers with a consistently good return on their investment. Our market share – total RVs – is up 45% this year. Our travel trailer market share is up 185%. Our fifth-wheel market share is up 18%, and that’s in a year that’s experienced considerable distress.

RVBUSINESS.com: So, you’re growing in both dollars and volume?

Brady: We are growing in absolute terms. And again, according to Stat Surveys, we’re growing in absolute retail market share. And 2010, in terms of absolute dollar revenue, will be considerably larger than last year.

RVBUSINESS.com: Characterize, if you would, the market you see next year.

Brady: This market is going to be what it has always been. It’s going to be very competitive. A premium is going to be placed on right product, right dealer, right buyer. And financing, both at the dealer wholesale level and at the consumer retail level, is going to continue to be challenging.

RVBUSINESS.com: There’s a lot of new ideas out in the marketplace right now, as companies look to find their way. Your thoughts on product development trends?

Brady: My view is that there’s no magic elixir. There’s no silver bullet out there. And I think you look at the product categories and you go to the middle of the bell curve. And that’s where you want to be. The middle of the bell curve has been, is and will continue to be dominated by best value products – value defined as the spread between the inherent quality of the product and its price. And so I think the theme of weight and economy and efficiency is not going to go away.

As far as ‘green’ products go, I think as an industry that still needs to be sorted out. When you look at these niche-type products, the main consideration is weight savings, which usually raises questions about usability. At Heartland, we don’t have any insight on this that’s any better than anybody else’s – other than that we’re aware of it and we’re paying very close attention to it. We talk to our dealers about it considerably, but I think dealers as investors are wisely going to be cautious about taking flyers. You know, this isn’t 2005 anymore.

RVBUSINESS.com: What do you mean by that?

Brady: I think you had a totally different consumer and credit environment in 2005, when dealers could afford to take chances. I think dealers now have cleaned up their operations, have tightened up costs — particularly fixed operating costs – and they’re going to partner up with fewer manufacturers and more robust relationships. And I don’t see the major guys doing a lot of niche work.

RVBUSINESS.com: What are your strongest selling product lines?

Brady: We’ve built our foundation on fifth-wheels. And so Heartland produces the Bighorn, with about a 5% share of total fifth-wheels – the No. 4 best-selling fifth-wheel in the industry. We also produce Sundance, a mid-profile fifth-wheel, which is No. 6 in the industry. So, our pedigree, going back 5 1/2 years, has been fifth-wheels.

We flip back and forth between No. 3 and No. 4 in terms of total fifth-wheel market share. And at this point, in terms of travel trailer share, Heartland ranks No. 11. There’s a disconnect between No. 11 in travel trailers and No. 3 or 4 in fifth-wheels. And so a big theme for Heartland is to close that disconnect.

RVBUSINESS.com: Your strongest travel trailer brands?

Brady: We produce really exciting, fresh and creative travel trailers, and if you look at our travel trailer market share, you know, we’re up 185% this year. We have a North Trail, a light-weight line of aluminum-frame, laminate-wall travel trailers, and then North Country, an exceptional line of traditional wood-framed, aluminum-skinned travel trailers. We’re also launching a very competitively priced line of travel trailers that will really have their debut at Louisville (the 47th National RV Trade Show in Louisville, Ky.) – Trail Runner. And we are going to be relentless in terms of growing our travel trailers. There’s no question about that. That is a key theme for Heartland.

RVBUSINESS.com: In closing, Brian, the Heartland story is not one that we’ve read a heck of a lot about lately, and we appreciate the time you’ve taken to speak to us.

Brady: It’s a great story, Sherm. I mean, you know, in 5 1/2 years we’ve gone from one unit a week to No. 4 in the industry, and we’re not done yet.

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Comments

2 Responses to “ON THE LINE: Heartland’s Brady Expects 2010 Upswing”

  1. Bob Rogers on November 2nd, 2009 6:14 pm

    Why has Heartland dropped the Bighorn 3400RL (Which I’m told was their #1 floorplan) from their 2011 5th wheel lineup”

  2. adam on November 20th, 2009 10:43 am

    why is heartland building 2011 when its not even 2010 yet. they mess up the entire industry doing that, and also leave their dealers out to dry on 2009 product. way to go!!!!

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