Charles Hoefer Seeking Fresh Slate With Startup
Editor’s Note: The following piece published by theIndianapolis Business Journal offers a followup to Charles Hoefer’s announcement of a new manufacturing company that will build high luxury, high-tech RVs. RVBusiness obtained permission from the publication to reprint the article.
A member of one of the recreational vehicle industry’s elite families hopes to get a fresh start in Indianapolis by launching a manufacturer of super-high-end RVs.
Charles Hoefer had to close the last RV company he led earlier this year, in Marion, Ind., leaving a trail of unpaid bills and angry city officials.
“What we’re doing here doesn’t even share a footprint with what we were doing in Marion,” said Hoefer, 28. “What I will say, what took place in Marion did give me the advantage to see where all the challenges were with trying to move forward.”
Hoefer, son of Elkhart-area RV icon David Hoefer Sr., and business partner Harrison Ding plan to begin production at Global Caravan Technologies Inc. by mid-2014 in Speedway.
The company has about 15 contract engineers and production workers designing an RV that the owners believe will redefine a rattled industry. The company expects to grow to 300 people over five years.
First, Hoefer and Ding need investors to back their product.
They describe their concept as a “futuristic green super-luxury RV” that will target corporate executives, celebrities and others who have a whole lot of money to enjoy lavishness—and camping. The price tags will run from $160,000 to $500,000.
Hoefer and Ding, who left a job overseeing global supply chains for IBM, devised an assembly process that “will not look like any process that’s ever been done before.”
Hoefer would not share the specifics of the process nor how much the company plans to invest. He said those are part of the trade secrets that will make Global Caravan succeed where his Marion company, which focused on traditional RV business models, failed.
Hoefer’s last job was CEO of Earthbound RV in Marion. His father moved the company there in 2010 after starting it a year earlier near Elkhart. The city backed a $2 million bank loan to lure the business.
But the company failed and officially shut down in January. The city had to pay off almost all the debt.
“We were working with them up until the last days,” said Marion Mayor Wayne Seybold. “Now they’re in Indianapolis starting new, and they’ve left a trail behind in Marion.”
Ding, in a phone interview from an RV fair in China, compared Global Caravan to electric car maker Tesla Motors and how it shrugged off old-school manufacturing practices and used a technology-industry approach to its business model.
“If Tesla was started by somebody within the automotive industry, probably, there would be no Tesla today,” Ding said. Silicon Valley billionaire Elon Musk founded Tesla.
Global Caravan, which operates on Main Street in Speedway, has hired IndyCar maker Dallara as an engineering consultant.
Based on details Global Caravan has released, the RVs would incorporate structural designs akin to supercars, or high-priced sports cars such as Lamborghinis or Porsches. The debut product, dubbed the CR-1, would also be the first to use carbon fiber rather than something more common such as aluminum. A lighter weight is supposed to cut fuel consumption in half.
Among other luxuries: master bathrooms with oversized showers, full-height closets, and washers and dryers. Hoefer compared the interiors to the inside of a luxury yacht.
Global Caravan hopes half its business will be standard stock models, with the other half being more lucrative custom jobs—for instance, an RV converted into a mobile office companies use when they send staff on road trips.
Hoefer describes himself as a lifelong member of the RV industry.
“Frankly, from early grade school, I was working in sales and developing products and you name it, ever since before I had a driver’s license,” he said.
His father, David Hoefer Sr., helped launch major RV brands such as Dutchmen and Four Winds. He was running Pilgrim International in Middlebury, near the RV hotbed of Elkhart, when the slumping economy forced the company to close its doors in 2008.
The elder Hoefer turned around and, with his wife, Mary, began Earthbound RV the next year. He opened a 92,000-square-foot Marion factory in February 2010 with $900,000 in performance-based tax credits from the Indiana Economic Development Corp. and a $2 million bank loan backed by the city of Marion.
Charles Hoefer had just earned a master’s degree at Babson College, an exclusive private school near Boston that specializes in entrepreneurship, when his father offered him a job as Earthbound’s CEO.
What he found, he says, was a company with a good idea but costs far ahead of sales. Vehicles sold for $50,000 each when they should have been $100,000, he said.
He shut down operations in 2011 and shifted the strategy from selling basic, fuel-efficient models to “boutique” style RVs that cost about $85,000.
That didn’t work, either. The production process was too geared toward making midpriced RVs at large volumes to profitably shift to the low-volume, high-profit model for luxury RVs.
“The challenges were so great that, frankly, I didn’t know what could be done,” he said. “But I was able to keep it running for two years.”
When Earthbound defaulted on its bank loan, the city of Marion was responsible for the $2 million.
The company never filed for bankruptcy, but the city of Marion, in attempt to recollect on the debt, in January seized the factory and several of David Hoefer’s assets, including two houses, said Don Gallaway, an attorney for the city.
Charles Hoefer said he is the only member of his family associated with the new business.
Not the same
Hoefer is adamant that the Indianapolis business will not repeat the mistakes from Marion.
Ding, 43, has had a large role in setting up the secret system that he and Hoefer believe will make Global Caravan a success.
He has more than a decade of experience managing supply chains and global operations for tech giants IBM and Cisco Systems Inc. His education includes a degree in energy and thermophysics engineering from Zheijang University in China, an MBA from the University of Wisconsin, and a certificate in integrated supply chain management from the Massachusetts Institute of Technology.
A lot of the global strategy that Ding will oversee hinges on Global Caravan’s ability to tap markets that don’t exist today.
China will be key because of its aging population and growing wealth, Ding said.
The Chinese “have plenty of money in their hands at their disposal,” he said. “But they also have plenty of time. The lifestyle in China is rapidly changing.”
The company hired Robert Wiegand, a longtime RV sales consultant, to steer business development and sales.
Wiegand has been collecting feedback from dealers to target new demographics—mainly, people with enough money to afford a six-figure luxury camper who did not find previous offerings nice enough.
Global Caravan might have to work hard to win over some U.S. dealers.
“I would never do business with them again,” said Bill Mirrielees, general manager of Howard RV Center in Wilmington, N.C.
The dealership was an Earthbound customer. Earthbound owes Howard RV $25,000 in warranty claims.
“It’s really a sad thing that the company failed and they didn’t live up to what the agreement was,” Mirrielees said, adding he “felt bad about it,” especially because he knew David Hoefer for several years.
Al Paschen, president of Camp Land RV in Burns Harbor, is more optimistic about Global Caravan.
“They tried their best to take care of everything,” Paschen said about Earthbound. “They tried their best to treat their dealers right.”
When Earthbound turned to high-end RVs, they sold “quite well,” he said.
“They were eye-catching. They just had the feel of a luxury [model] inside. People liked it. We liked it.”