In a rather eloquent address to his company’s dealers, staff and key suppliers, Fleetwood RV Inc. President and CEO John Draheim discussed the market, his company’s quest for quality and the health of the two-year-old firm during Fleetwood’s 2011 National Dealer Meeting Wednesday (Aug. 24) at the Grand Wayne Center in Fort Wayne, Ind.
Indeed, within seconds of stepping to the stage at Fleetwood’s dealer meeting, which took place Tuesday through Thursday in Indiana’s second largest city and about a half hour north of Fleetwood’s headquarters in Decatur, Ind., Draheim set out to dispel negative perceptions about the economy as it relates to the U.S. motorhome arena.
“I visited with several of you last night and, of course, have been in touch with many dealers and customers at events in the past 60 to 90 days, and it’s a tough market,” said Draheim, before a crowd that included about 85 dealer personnel. “We’re flying into very difficult economic headwinds today. Retail traffic is spotty. In some areas it’s pretty good; in other areas it’s not so good. I talked to a dealer last night who said for two weeks he didn’t see enough (traffic), then, all of the sudden, he was covered up (with business) over the weekend.”
As for Fleetwood itself, which was established in 2009 when American Industrial Partners Capital Fund IV LP of New York acquired the Decatur operation for $53 million from its bankrupt predecessor, Fleetwood Enterprises Inc., Draheim said Fleetwood and its sister divisions in Allied Specialty Vehicles (ASV) are all profitable.
ASV is a billion-dollar-a-year, 3,000-employee network of ten companies and 13 brands located throughout the country into which Fleetwood was integrated in February. ASV is comprised of divisions for fire and safety (fire trucks and ambulances), RVs (Fleetwood and its high-end American Coach division) and commercial and industrial products (including bus companies, Gold Shield fiberglass and sweeper products).
Draheim said Fleetwood’s retail turn rates right now remain respectable, averaging 100 to 110 days, and with the company’s best selling Discovery Class A posting a mean turn rate of closer to 84 days.
And he insisted that business exists for those willing to work hard enough to get it.
To illustrate that point, he said that July was Fleetwood’s best retail month in the past year. “We’ve lowered our dealer inventories 12% in the last 90 days,” he said. “That’s over 180 units that have come out of the channel in these economic times. We had high water marks set in record sales on American Eagle, Expedition, Bounder Classic, Storm, the new Tioga Jamboree DSL’s and Searcher Montera. All had their highest sales since we’ve launched those products in the new company in the month of July – in this economy.
“There is business out there,” he added. “You’ve got to fight for it, and, yes, we’re all under margin pressures. But there is business to be had.”
Meanwhile, he says, Fleetwood’s pursuit of a lean manufacturing format, a “cultural transformation” the company has pursued for 18 months, continues today.
“Lean is about limiting waste, not being a batch manufacturer and building one unit at a time,” said Draheim. “Thankfully we’ve made this investment in this process in the last 18 months because, when you’re in an economy like today’s, it would be very difficult to run our plants the way we used to. We can respond to market demand very quickly now because we no longer build batches of products. We build one at a time.”
As part of this transformation, they’re involving suppliers and have implemented an internal certification process for their associates, who are recognized for becoming certified.
Draheim, in turn, commented on the general quality of industry products, Fleetwood’s included.
“You’re not satisfied,” he told the dealers. “We’ve done some research on all this, and we know that you’re not satisfied with us or with some of our competitors. Sometimes, it’s (product quality) good, and sometimes it’s not so good. It’s inconsistent. The fact of the matter is that we’re also not satisfied. This is all part of the journey, the process. To have quality product, you’ve got to have quality people and suppliers. We’re working on this on our journey as well.”
In an effort to elevate expectations at Fleetwood, Draheim is promoting the use of Customer Response Teams that inspect every unit, and he even closed plants last week because he didn’t find some of the quality audits acceptable and he wanted “to recalibrate everybody on what we will accept and what we won’t accept.”