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Riverside Press: RV Sector Showing Recovery

Posted By RVBusiness On April 19, 2010 @ 9:05 am In Breaking News | No Comments

When Gary and Dottie Williams ordered their MVP RV Inc. trailer in April 2009, complete with nameplates attached to the bunk beds for their grandsons, they expected to get it a month later.

They planned a cross-country road trip, but stayed in hotels instead.

When they took a vacation to the lake, they rented a trailer.

In between April 2009 and April 2010, the Moreno Valley company that was building their trailer shut down its factory like several other RV makers had done, according to The Press-Enterprise, Riverside, Calif.

While the company looked for investors and tried diversifying its business by going into the electric vehicle industry, salespeople at Giant RV showed Gary Williams other trailers. He said he couldn’t find anything comparable.

He didn’t need to. Gary and Dottie Williams picked up their finished MVP RV trailer at the Giant RV dealership in Montclair this month.

MVP RV, the Moreno Valley maker of their trailer, didn’t get the funds they needed to build electric vehicles but they found an overseas investor willing to back their RV factory.

“It’s such a great feeling to come back,” said Brad Williams recently in his Moreno Valley office. “We survived.”

Manufacturers and RV dealers are beginning to climb out of the wreckage wrought by the recession much like the industry has done early on during past business cycles when the worst appears at an end.

Would-be campers are hardly stampeding to RV dealers to purchase high-end Class A diesel motorhomes, Class C RVs or even pop-up tent trailers but they are looking, and some are even buying.

“We’re first to get hurt, and the first to recover,” said Tom Powell, CEO of Riverside-based travel trailer maker Pacific Coachworks.

Recession history

In 1979, preceding the 1980 recession that lasted from January to July, RV shipments fell a staggering 48.9% to 199,200 vehicles sent to dealers.

Wholesale shipments fell another 46.2% in 1980 to 107,200 RVs. By 1981, the number picked up 24.6% to 133,600 units. Despite a recession that stretched from July 1981 into November 1982, shipments increased another 5.2% to 140,600.

With the exception of a dip in shipments in 1985, RV production increased nearly eight straight years until 1989. The recession started July 1990 lasting until March 1991. RV shipments picked up 24.6% by 1992.

With the exception of another dip in 1995, RV production grew again year over year for nearly eight straight years until 2000 when it dropped 6.6%. A recession began in March 2001, ending November. That year RV shipments dropped another 14.4%. But by 2002, it was up 21.1%

The most recent recession started December 2007.

Two popular Inland recreational vehicle makers, Weekend Warrior Inc. and National RV Inc., bowed out early on before the economy started to exhibit true signs of stress.

Fleetwood Enterprises Inc., a longtime RV industry icon based in Riverside since 1963, had managed to navigate recessions before usually emerging a stronger company after other competitors blew a tire. This time though, saddled with too much debt, the company filed for Chapter 11 bankruptcy in March 2009 selling off the motorhome division to an equity group out of New York that moved all of the company’s operations to Indiana.

Before, Southern California dealers could pick up the RVs they ordered in Riverside. Now some say they pay extra for shipping.

Elsewhere, Monaco Coach Corp. filed for bankruptcy in March 2009. Country Coach Holding Inc. was liquidated late last year.

In 2007, RV makers shipped 9.5% fewer vehicles. The number dropped another 32.9% in 2008, and continued to cascade another 30.1% in 2009 until there were just 165,000 shipped to dealers, the lowest level since 1991.

First to recover

The Recreation Vehicle Industry Association (RVIA) is expecting shipments to jump 30% this year to 215,900 vehicles.

“When things go down, the RV industry takes it in the gut,” said Joe Laing, director of marketing for El Monte RV which rents ands sells trailers. But it also seems to be one of the first to recover, he said.

Laing said El Monte RV staff noticed year-over-year sales growth since January.

“We don’t know that it means anything,” he said, hesitant to herald economic recovery based on their business. “We’re pretty optimistic that it looks like we’ve come through the worst of it.”

Frank DeGelas, owner of Mike Thompson’s RV Super Stores including locations in Colton and Cathedral City, said he dumped older inventory at a loss to clear out his dealerships for new models being released by the manufacturers who remained.

Usually the recovery after a recession is strong and fast. This one, though, is taking its time.

He sold 11 Coleman folding camping trailers in three weeks, a sign that family buyers are looking for an affordable alternative, as well as Class B motorhomes and the larger Class A diesel RVs.

“I think I’ve been helped by my competitors failing,” he said. The pie may not be any bigger, he said of the RV selling market, but he gets a bigger slice now, he said.

New features

DeGelas credits manufacturers who spent their downtime during the downturn designing new features.

“I’ve been doing this for a long time, over 30 years, and I have never seen the amount of innovation,” he said of new models from manufacturers like Fleetwood RV Inc., now under new ownership. The Encounter, Fleetwood’s latest model, features a bunk bed that converts into a dinette.

“It’s almost like a ‘Transformer’ motorhome,” he said.

Pacific Coachworks Inc., which survived the lean times after having shut down production in the first half of 2009, developed a trailer with a slide-out outdoor kitchen and in another trailer, a slide-out queen bed.

“When things are going extraordinarily well, there’s not as much impetus to be innovative,” said Tom Powell, CEO of Pacific Coachworks.

The company has 100 employees, about half of the staff compared to its height in 2007.

Powell described new orders as solid, “but it’s not sensational” especially compared to stratospherically successful years in 2005 and 2006.

Powell said he wished more Inland RV manufacturers had survived the recession, that way suppliers would take root in the area too. As companies closed, though, so did suppliers and the cost of doing business for those who remained rose.

His company and others are now building based on orders rather than making RVs with the hope someone will eventually order it.

“I think we all learned to be a little more cautious,” he said.

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