Breaking RV Industry News

Access Breaking News Archives | Subscribe To RVB Daily News


RV Industry Concerned with Tariffs’ Price Impact

March 20, 2018 by   Leave a Comment

Jason Lippert

Ever since President Trump announced in early March that the U.S. would impose stiff tariffs on imports of steel and aluminum — bolstering prices and future prospects for domestic steel and aluminum producers — the U.S. RV industry’s suppliers and OEM’s have been mulling over the impact Trump’s bold announcement might have for a business sector whose manufacturers and suppliers depend so heavily on both commodities.

And while a solid majority of the industry’s typically conservative base appears to favor Trump’s premise in coming to the defense of domestic steel producers in an effort to fend off unfair trade practices by China and other countries, many of them openly harbor concerns for the effects all this might have on consumer pricing — coming as it does at a time of mounting commodity costs in general.

The result, they agree, could amount to a “double whammy” for OEM’s and end consumers – a possibility that obviously would negatively affect the RV industry in the long run.

The tariffs from which both Canada and Mexico are at least temporarily exempted — 25% on steel imports and 10% on aluminum — are slated to go into effect Friday (March 23), according to Jay Landers, vice president of government affairs for the Recreation Vehicle Industry Association (RVIA), which has been unusually critical of the tariffs and their rapid rollout.

So, too, has Indiana 2nd District Republican Congresswoman Rep. Jackie Walorski who has taken the Trump administration to task for blanket tariffs she feels may ultimately harm a lot of commercial sectors, including recreational vehicles, and jeopardize the nation’s current economic boom.

A “double whammy” would be an appropriate description of the impact on the RV marketplace, agrees Jason Lippert, CEO of 11,000-employee Lippert Components Inc., Elkhart, Ind., the industry’s largest supplier.

“Yes, we’ve had some commodity pressures over the last 12 months that were a little uncommon,” said Lippert. “And then right after we thought we were through with all that, the tariffs were announced and what that means for our business is immediate increased prices on commodities, which drives the consumer price up, ultimately. It will take several months for it to flow down to the consumer, but everybody’s trying to figure out how to deal with this second large impact in a relatively short period of time.”

Lippert stressed that his views aren’t based on any sort of partisan politics, but on the realities of running a U.S. business generating $2.1 billion in annual revenues that is heavily dependent on the pricing of commodities like steel and aluminum.

Grand Design President and CEO Don Clark

“I agree with the administration,” added Lippert. “There needs to be fair play with world trade, and tariffs, to some extent, probably make some sense. But the way it was done and the way it’s kind of all fallen back on the manufacturers, it’s not working out well. The long and short is that we don’t buy a lot from China or any of the other countries that might be tariffed. We don’t buy steel and aluminum there in a raw form. Almost 100% of our steel and aluminum raw spend is in the U.S. and they’ve all raised their prices to kind of come up underneath and be opportunistic with where the Asia prices are now. And so that’s having an immediate impact on our business because the prices literally changed overnight with the signing of a tariff bill.”

Lippert, for his part, feels it’s time for the industry to be more vocal about all this and the fact that, while the new tariffs may help retrieve 10,000 jobs in the steel industry, they’re hampering some sectors and fueling inflation in others due to the price increases they’re already triggering.

From all appearances, Lippert is not alone in those views.

“Regardless of whether you’re a Democrat, a Republican, a conservative or a liberal, tariffs are going to affect us all in the same way,” Don Clark, president and CEO of Grand Design Recreational Vehicle Co., Middlebury, Ind., told “On one hand, I see what the tariffs in theory are supposed to do, and that’s evening the playing field for American companies to be competitive with imports. The reality is that unless tariffs are kept in check, the consumer is ultimately the one that is going to take the hit.”

Keystone President Jeff Runels

So, while the overall impact of these tariffs aren’t good, said Clark, whose firm is a unit of Winnebago Industries Inc., there may be a silver lining in all this for an astute company faced with cost challenges like these.

“Yes,” said Clark, “if we see a rise in (pricing of) the materials and parts that we use to manufacture our products, that’s never a positive for our retail consumer. But if this forces us — and I’m speaking for Grand Design — to do everything we can to lessen the ultimate effect to our consumer by finding ways to improve our efficiency and cutting additional costs without compromising the value, structural integrity or quality of our product, then, in the long run, it’s another motivator to become a more efficient manufacturer.

Although he, too, understands the Trump administration’s drive to fend off unfair foreign competition, Keystone RV Co. President Jeff Runels also doesn’t see much of an advantage for Keystone or the industry.

“I think for our industry in particular, right now, these tariffs are going to hurt us because we’re a discretionary good,” said Runels. “I mean, every product category out there is worried about price points outside of just our industry. And we’re sensitive to pricing. But because we’re an elastic (discretionary) good, we’re sandwiched between the expectations of housing and automotive, both of which are necessities. I mean, you have to have them.”

Consequently, said Runels, this could change some buying habits among price-sensitive RV buyers who may want to downsize the size, weight and features of the units they’re inclined to purchase in some cases. “So, these tariffs are going to shift our thinking to an extent, and that’s not just at the OEM level, but also among our suppliers,” he said. “That’s where it’s going to hit the hardest.”

[Slashdot] [Digg] [Reddit] [Facebook] [Google] [StumbleUpon]


Route66 Priority RV Network
Workamper RVDACanada
PRVCA CountryCoachFriends
GoRVingCan GoRVing