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Americans Once Again Rolling with Their RVs
Posted By RVBusiness On March 5, 2010 @ 1:48 pm In Breaking News | No Comments
Elkhart, Ind., is the groundhog of the recovery, according to U.S. News & World Report.
As home to much of what’s left of the recreational vehicle industry, Elkhart has been the poster child of the Great Recession. It is regularly cited as an example of what’s not working with the economy. So, when we say that signs of a recovery are appearing in the RV industry, let’s hope Elkhart doesn’t get frightened by its shadow and disappear for another six months. Like other early indicators of the recovery, this one is not as robust as we may like.
RVs got hammered by soaring oil prices, the credit crunch and the recession. People were turned off by the industry’s gas-guzzling image. If they did have the resources to buy, they found credit had dried up and attractive purchase terms were hard to find. As 2008 dragged into 2009, of course, fewer and fewer people had the resources to even think about buying an RV. Industry shipments of all RVs — from small towable campers to motorhome luxury liners — cratered at fewer than 6,000 units a month as 2008 ended.
For all of 2008, shipments totaled only 237,000 units, off by nearly a third from 2007, according to the Recreation Vehicle Industry Association (RVIA). And 2007 itself fell 10% short of 2006 glory days, when close to 400,000 new RVs were shipped. But sales started to pick up slowly later in 2009. And though annual shipments for the year were only 165,000 units — off another 30% from 2008 — year-over-year monthly comparisons turned consistently positive. Forecasts for 2010 shipments exceed 200,000, according to the RVIA.
“We’ve just gone through a pretty trying time the last couple of years, both as a company and as an industry,” Robert J. Olson, head of Winnebago Industries Inc., says in an interview. While Winnebago continues to be the largest motorhome producer, it was precisely those high-end units that took the biggest hit. Winnebago laid off roughly 2,500 of its 4,200 employees, says Olson, who began working at Winnebago more than 40 years ago as an hourly production employee.
In many respects, he notes, RV sales had their own bubble economy, just as stationary housing did. “We were no different than some of the housing loans out there. You didn’t need a down payment. You didn’t have to make what you said you made” on income disclosure statements. People were offered 20-year loans.
With many manufacturers and dealers forced out of business, a gradual recovery began last fall. Dealers had been forced to deplete their inventories, both to survive and because financing dried up for the purchase of showroom models. Today, Olson says, “we are back to working 40-plus hours a week for our employees. We have hired 340 workers back and dealers are starting to replenish inventories.”
Still, it is a difficult market environment, and the recovery has been slowed by continuing tightness in credit markets. Sid Johnson is director of marketing for Jayco Inc., a large maker of towable RVs. By numbers, he notes, towables dominate the RV industry, and they were less affected than expensive motorhomes during the downturn. Still, Jayco sales were hurt, and it, too, laid off many employees, cutting payrolls from 2,200 to 1,200. “Starting last fall, the business started to pick up again, and that has continued ever since.”
However, many loans that would have been approved before the recession are being rejected today. “We’re currently in the retail show season throughout the country,” Johnson says. At a show in Detroit on a recent weekend, the Jayco dealer reported brisk sales. “One of our dealers sold almost 70 units,” he recalls. “But only 40 of those 70 cleared credit.” Several years ago, nearly all those sales would have received financing.
As consumers slowly rediscover RV dealer showrooms, they will notice models with substantial fuel economy gains, a slew of environmentally friendly features such as lighting with light-emitting diodes (LEDs), and lots and lots of big, flat-screen TVs and other electronics. Jayco is making a fuel-cell prototype, and hybrids have started appearing as well. As often happens during a steep downturn, a number of new companies started up last year, with lower-cost business models and new approaches. One of them, EverGreen Recreational Vehicles in Middlebury, Ind., was the first company to receive a special “green” certification late last year for using lightweight composites that can be recycled and following environmentally friendly manufacturing practices.
“There are many times that this industry has been written off as dead,” Winnebago’s Olson says. “But the RV lifestyle reflects a type of culture you’re not going to take away from the American people. This is a way of life. And what we’re finding is that a lot of people, when they were kids, their folks took them on camping trips.” Now, they want to give those kinds of memories to their children and grandchildren.
“We’re memory makers.”
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