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Hoosier RV Builders Optimistic on Eve of 2010

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December 28, 2009 by   Leave a Comment

Despite its worst sales year since 1982, those in the recreational-vehicle industry say they have reasons to be optimistic.

RV experts say 2009 will be remembered as the year the industry bottomed out during this recession, and they’re looking forward to the recovery in 2010, according to South Bend (Ind.) Tribune).

The past two years have been brutal for the RV industry, which took hit after hit in 2008 as companies in the Elkhart area slashed thousands of jobs.

Elkhart County, where roughly 60% of the nation’s RVs are made, saw unemployment shoot to nearly 19% in March.

Then in the summer the storm showed signs of breaking.

Dometic Inc. announced plans to hire 350 workers by 2012. Monaco RV LLC recalled 200 employees. Keystone RV Co. announced it was hiring 200 workers and ended up adding more than 300. Dutchmen Manufacturing Inc. announced it would add 50 jobs. Jayco Inc. recalled more than 200 workers.

Elkhart County’s unemployment rate declined to 14.5% in November, when Heartland Recreational Vehicles LLC announced it would hire 400 workers. Keystone announced the following week that it was hiring another 100 people.

And those aren’t inflated numbers, said Mark Bowersox, director of the Recreation Vehicle Indiana Council.

If anything, Bowersox said, they’re low estimates.

“From what I’m being told, these (hiring) announcements are conservative,” he said. “They want to make sure the orders they’re getting now are sustainable before they continue to hire more and more of their work force back.”

Discretionary, luxury purchases, such as RVs, are the first things people cut back on during a recession, Bowersox said. They’re also the first things people start buying again after they feel more secure financially, he added.

One major concern that remains for the industry, Bowersox said, is whether the supply chain can keep up with growing production after the recession caused some companies to close and others to shrink.

He said many RV manufacturers are facing 10- to 12-week backlogs.

But “resiliency has been a hallmark of the RV industry,” Recreation Vehicle Industry Association (RVIA) President Richard Coon remarked in his address at the association’s national trade show earlier this month in Louisville, Ky. “We have withstood trying, difficult times before.”

High gas prices in the 1970s led RV shipments to fall 82% from 583,000 in 1972 to 107,000 in 1980.

From there, the industry grew steadily for 26 years, peaking at 390,000 shipments in 2006.

Annual shipments fell to 353,400 in 2007 and 237,000 in 2008.

They’re expected to bottom out this year at 159,500, according to projections from industry expert Richard Curtin of the University of Michigan.

The encouraging trend in this year’s numbers is RV shipments picked up in fall — usually a slow time in the industry — to post year-over-year sales increases in August, September and October.

Curtin predicts RV shipments will climb to 203,500 units in 2010.

And the increased shipments are not the result of government incentives, such as those that have boosted home and auto sales, noted Kyle Hannon, vice president of public policy and media relations for the Greater Elkhart Chamber of Commerce.

“This industry is truly responding to what people want,” Hannon said.

Towable RVs are pulling the weight of the industry, as buyers look for models that are more fuel efficient and less expensive than motor homes, experts say.

This trend repeats the pattern of other post-recession rebounds in the RV industry, said Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County.

“Historically, the towables are the first to recover out of any recessionary period,” she said.

Bowersox said motorhome sales composed nearly 40% of the RV market a few years ago. Now they account for around 10% of sales, he said.

The nation’s demographics, with millions of Baby Boomers on the brink of retirement, also work in the industry’s favor, said Bob Martin, executive vice president of Keystone RV in Goshen.

“Even when things were slow for us, campgrounds were still full,” Martin said. “It’s not a lifestyle that people just give up.”

Baby Boomers are important to the industry, but they’re not the only demographic buying RVs, Bowersox said.

“RV owners continue to get younger,” he said. “It used to be a retiree pastime. Now it’s a family with a couple of kids.”

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