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RVB’s 2009 Newsmaker: RV Industry’s Resurgence
Posted By Sherman Goldenberg On December 31, 2009 @ 3:19 pm In Breaking News | No Comments
Rising tides lift most, if not all, ships.
And the tides have been consistently rising in the recreational vehicle arena for the better part of six months as an industry that helped lead the nation into the worst recession in years again helps lead it out.
In light of that, the staff of RVBusiness and RVBUSINESS.com has named “The RV Industry’s Resurgence” as RVB’s 2009 Newsmaker of the Year. Looking back, it’s a natural sequel to 2008’s rather depressing RVB Newsmaker of the Year: “The (Down) Economy.”
Indeed, evidence today of a recovery in this industry is everywhere, even though the RV sector and the American economy clearly are not yet out of the woods. Not until unemployment claims drop and home mortgage foreclosure rates recede around the RV manufacturing center of Elkhart, Ind., (pop. 52,000), can we collectively exhale.
But things are certainly moving in the right direction. Peaking at close to 20% in March, Elkhart County’s unemployment rate in November stood at 14.5%, down from 14.9% in October. And you can pretty much sense it around the stores, restaurants, churches and high school gyms around Elkhart County — a virtual poster child (along with Detroit) for The Great Recession of 2008-2009
Indeed, the upturn is palpable in places like Wakarusa, a small, Amish-style village on Ind. 19 south of Elkhart that, pound for pound, probably bore the brunt of The Great Recession about as badly as any single town in America. Triggered first by spiking gas prices that shook consumer confidence, then by the credit crisis that rung the life out of the U.S. economy, Wakarusa’s biggest setbacks came from the closure of a sprawling Monaco Coach Corp. facility, known for decades as the home of the Holiday Rambler RV brand, and another large complex in which Travel Supreme Corp. had built rather elegant towable and motorized RVs until the privately held firm shut its doors in April of 2008. Numerous smaller shops dependent on those and other manufacturers closed up as well.
In the ensuing months, these daunting economic realities touched almost every element of local society – including school enrollments at NorthWood High School in nearby Nappanee.
So, when did things start changing for the better?
That’s one of those questions for which there’s no simple answer, of course, but, in reviewing the year’s postings on RVBUSINESS.com, a series of positive news stories emerges that chronicles the industry’s climb out of the most dramatic economic setback most anyone can remember.
Chronicling the Climb Out from the Recession
Looking back, an unusual May 14 press event that had little to do directly with RVs may have served as the first wakeup call for Wakarusa and Elkhart County in that it essentially reminded people of the future — for once — more than the past: A press conference in a vacated DeMartini RV dealership in Wakarusa at which Indiana Gov. Mitch Daniels helped announce a partnership between Electric Motor Corp. and Nappanee, Ind.-based Gulf Stream Coach Inc. to manufacture light-duty electric pickup trucks with hybrid electric engines – potentially creating some 1,600 jobs.
In a turn of events that more directly involved RVs, Navistar International Corp. on June 4 completed the $47 million purchase of Monaco’s assets out of Chapter 11 bankruptcy and revealed plans to restart Monaco’s Wakarusa operations as Monaco RV LLC, a wholly owned affiliate of Warrenville, Ill.-based Navistar Inc.
This was big news. Even more than the potential number of jobs involved, the Navistar announcement seemed to signal that a major U.S. corporation — in this case a world-class truck builder — was willing to bet on the future of a key RV manufacturer during a major recession. “The Monaco brand is a market leader with a strong reputation, and Navistar is pleased to add it to our portfolio of leading brands and businesses,” said Jack Allen, president of Navistar’s North American Truck Group.
Things accelerated in early August when Gov. Daniels again came to town on Aug. 4 to praise executives of Dometic LLC, a key supplier led by new President Doug Whyte, for their company’s plans to expand manufacturing operations at two northern Indiana plants, creating more than 350 jobs by 2012. Sweden-based Dometic, which makes air conditioners, awnings and sanitation systems for the RV market, announced that it was investing $10 million to increase production capacity at its Elkhart and LaGrange manufacturing operations. “We’ve never had a doubt,” said Daniels. “RVs will be back. Elkhart will be back and will resume its place as a major center of economic strength for our state.”
About that same time, a new Forest River Inc. towable RV-building division — Prime Time Manufacturing Inc. – was unveiled with plans to add a couple hundred jobs in Wakarusa in the vacant, 160,000-square-foot Travel Supreme complex. Extraordinary as it may have sounded at the time, co-founder Chris Hermon said the fall of 2009 was a perfect time to launch a new RV operation. “In our mind, the timing was exceptionally right with the work force that’s available out here in Wakarusa and Nappanee,” he said. “That’s really one of the things we’re excited about, is the talent pool that this area possesses.”
Those, again, were encouraging words for an area that had reluctantly become the object of a host of negative national news reports, including a special journalism project by MSNBC.com and a high profile “Save Our Town” taping by Fox News talk show host Mike Huckabee.
Obama’s Visit Keeps Spotlight on Elkhart County
More national publicity soon followed as U.S. President Barack Obama came to town on Aug. 5 to keep an unstated promise — after two 2008 campaign stops and a February Town Hall meeting at Concord High School in Elkhart — to see Elkhart through the worst of the recession. This time, from a makeshift podium in Navistar’s Wakarusa plant, Obama announced the awarding of a $39 million federal grant to develop and build all-electric delivery vehicles and bring yet more jobs back to the county.
This, all politics aside, was a galvanizing moment.
In his remarks, Obama enumerated some of the hurdles facing the area, including an unemployment rate that had spiked 10 percentage points in a year. “It’s an astonishing statistic,” said Obama, whose arrival in Wakarusa had been preceded by a wave of Secret Service agents cruising the backroads around town. “And there have been times where nearly one in five people in this area have been looking for work. You’ve seen factories close, and your sons and daughters move away in searches of jobs and opportunity. So this is more than an economic crisis. This goes to the heart and soul of a community. It tests the strength of families and the spirit of good people — hardworking folks who’ve given their all to a company and now don’t know where to turn.
“There are some who see what’s taking place here and suggest that it’s all somehow inevitable, and that the only way for America to get ahead is for (traditional manufacturing) places like Elkhart to be left behind,” he noted. “You hear that argument sometime in Washington. But I know and you know that the truth is exactly the opposite. I’m here because I believe our ability to recover — and to prosper — as a nation depends on what happens in communities just like this one.
“The battle for America’s future will be fought and won in places like Elkhart and Detroit, Goshen and Pittsburgh, South Bend, Youngstown — in cities and towns across Indiana and across the Midwest and across the country that have been the backbone of America. It will be won by making places like Elkhart what they once were and can be again — and that’s centers of innovation and entrepreneurship and ingenuity and opportunity; the bustling, whirring, humming engines of American prosperity.”
In the aftermath of Obama’s visit, The Elkhart Truth noted, was a renewed sense of hope. “It’s a start,” waitress Karen Hundt told a reporter. “Hopefully there will be a good hunk of jobs for people.”
Brian Gildea, economic development director for the city of Elkhart, said the attention focused on Elkhart County due to the presidential stop had resulted in an instant uptick in phone and e-mail inquiries related to business development and expansion plans. “I do expect it and I’m already seeing some of it,” he said.
Positive Developments Surface in Late Summer
In the ensuing weeks, things really began to heat up when Keystone RV Co. President and CEO Ron Fenech on Aug. 12 announced that his Thor division planned to hire 100 full-time employees at its Pendleton, Ore., plant and up to 200 more to work in a vacant 140,000-square-foot manufacturing facility it was acquiring in Goshen.
Then came another telling report — that the Pennsylvania Recreation Vehicle and Camping Show had drawn record attendance of 31,750 on its opening retail day – Sept. 16. Word was that a Chicago-area Camping World dealership had sold nearly 400 units at the East Coast show, and even motorized manufacturers like Tiffin Motor Homes Inc. and Winnebago Industries Inc. – after a tough year – were able to crack a smile or two.
“Traffic was excellent,” said Winnebago Vice President of Sales and Marketing Roger Martin. “We had a very nice mix of products retailed — from Class C’s to Class A gas to Class A diesel. Consumer interest in our new Winnebago Via and Itasca Reyo (downsize Class A’s) was stellar — with lines waiting to get inside the units.”
Next up was Forest River’s 2nd Annual “Pick Your Partner” Dealer Meeting, a Sept. 22-23 event that drew an impressive 2,000 people — 700 retailers – to sprawling outdoor displays at the Berkshire Hathaway Inc. subsidiary’s Elkhart headquarters. There, Forest River showed everything from commercial cargo trailers to mobile latrines and towable ice houses as well as a sea of conventional RVs.
The dealer meeting was twice the size of 2008’s and was inevitably viewed by the rest of the industry as an upbeat omen for 2010. “Obviously, we all know the recession is over,” founder and CEO Peter J. Liegl told RVBUSINESS.com at the time. “It was over at the end of June. Recovery is going to take a little longer, but dealers are selling and getting flooring and customers are getting financing. The RV industry is not bad right now.”
The Forest River factor was big, but other companies played significant roles during the following weeks. On Oct. 23, Thor’s CrossRoads RV division in Topeka, Ind. announced the planned hiring of 125 workers. Nappanee-based Gulf Stream Coach Inc. on Oct. 27 told the press that it had hired back 50 laid-off workers during the prior six weeks in its motorhome division and expected to increase production of “affordable” Class C’s and gas-powered Class A’s by 25% by the first of the year.
And, on Nov. 4, Jayco Inc. told the press that it was recalling 200 workers to meet rising demand because its order backlog was the largest it had been in more than two years. “As a result of improving market conditions, very low dealer inventories and retail incentives provided to dealers, Jayco needs to significantly increase our output in order to meet rising demand for our products,” said President and COO Derald Bontrager, whose firm also expanded employment at its Twin Falls, Idaho, plant. “It has become increasingly clear that 2009 will end better than we had expected and we are encouraged by the prospects for our business in 2010. Our business plan anticipates a substantial increase in sales next year. This is the first tangible indication that the RV industry has turned the corner and can look forward to improved business conditions going forward.”
Heartland Helps Set a Positive Mood for Louisville
On the doorstep of the Louisville Show, Elkhart-based Heartland Recreational Vehicles LLC reported that the privately held firm was planning to hire 400-plus workers by the first quarter of 2010. Brian Brady, president and CEO, said the expansion – bringing the company’s employment up to 1,200 — was mandated by a spike in unit sales that had produced a healthy backlog in dealer orders. “We’re looking for a big year in 2010 and Heartland is already preparing by beefing up our production work force,” said Brady, whose firm had developed a host of new model introductions for early December’s Louisville Show.
Then came RVIA’s 47th Annual National RV Trade Show, Dec. 1-3 at Louisville’s Kentucky Exposition Center, and a wave of relatively positive sales reviews, even though the lukewarm attendance figures were on a par with 2008’s and exhibit space was significantly down.
Fact is, the mood and the reality of the show was a clear step up from 2008. “We thought the show was very positive, much better than last year,” reported Richard Coon, RVIA president. “Most manufacturers have felt the increase in business since the first part of the summer, and business has continued to move upward… So people came to the show thinking and hoping for a better year, and continued on with a lot of buying.”
Indeed, Heartland reportedly sold three times as many units as it did at Louisville 2008. By the same token, motorized RV builder Four Winds International Corp., a Thor division in Elkhart, came away “optimistic” about the 2010 outlook. “We had a good show and good interest across the board on gas and diesel,” said Dana Simon, vice president of sales and marketing. “It wasn’t just specific brands or price points. We had good dealer reception, and fresh, new product out there.”
Moreover, venerable Airstream Inc. reported within two weeks of the show that it, too, had hiked production by 25% since October and, with order backlogs tripled from last year, the Jackson Center, Ohio-based firm was scheduled to expand production by another 25% in January while growing its work force by 35% in the process.
So, at press time, the betting line from RVIA forecaster Richard Curtin of the University of Michigan was for 203,500 unit shipments in 2010, an appreciable uptick of 27% from 2009. And publicly held companies like Winnebago and Thor were posting the kind of quarterly financial results that point to a continued exit from the nation’s recessionary morass, although the motorized segment may face a slower recovery.
And the world as we know it, at least for those good enough or lucky enough to still be in business to enjoy the recovery, has begun to look ahead.
These Were Clearly in the Mix for Top Newsmaker
A very close contender for RVB’s 2009 Newsmaker of the Year was the late Wade F. B. Thompson, the co-founder, chairman, president and CEO of Thor Industries Inc. who passed away Nov. 12 after a 14-year battle with cancer. Thompson left an indelible mark on the industry in the form of Jackson Center, Ohio-based Thor, a highly competitive, multi-divisional firm that he co-founded in 1984 with Peter Orthwein, who now serves as Thor’s chairman and CEO. (See following story.)
Other popular Newsmaker contenders:
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