The new Fleetwood RV Inc. expects to build 2,500 Class A and C motorhomes within the next year, resulting in about $275 million in sales while “returning the company to its roots” with an emphasis on value-priced motorhomes, according to John Draheim, president of the new company owned by American Industrial Partners Capital Fund IV (AIP), a New York City-based investment firm which bought some of the assets of bankrupt Fleetwood Enterprises Inc.
”A lot depends on the market,” Draheim said during a break Tuesday at Fleetwood’s exhibit during the Family Motor Coach Association’s 82nd International Convention in Bowling Green, Ohio. ”If we are able to build more diesel (units) than gas, it would be higher on the dollar side.”
Fleetwood Enterprises Inc., Riverside, Calif., filed for bankruptcy in March just days after announcing that it would no longer compete in the towable marketplace.
The new motorized RV builder’s headquarters will be in Decatur, Ind., where it purchased two of Fleetwood Enterprises’ manufacturing factories, two RV service plants and Fleetwood’s Gold Shield fiberglass facility along with some equipment in Riverside.
Three production lines are expected to be up and running by Labor Day, according to Draheim.
Fleetwood RV intends to hire about 650 employees to work in Decatur and will engage a temporary work force in Riverside to continue to build motorhomes while the Decatur plant starts up. ”We will be able to utilize the California operation on a temporary basis to produce product for a four- or five-month period,” Draheim said.
While continuing to build higher-priced diesel products, the company’s first new motorhome — unveiled at Bowling Green — is a gas-powered Bounder Classic targeted at value-priced buyers. The new Bounder, a brand that was once Fleetwood’s popular flagship — is intended to begin a return to the days when Fleetwood founder John Crean Sr. placed a premium on practicality, functionality and price sensitivity.
“It will have a lot more drawers, cabinets, cubby holes and shelves behind the sofa where you can put your bedding during the day,” Draheim said.
The Bounder Classic — initially available in three 30- to 34-foot floorplans on Ford chassis — will retail for between $100,000 and $105,000 Draheim reported. “Bounder had migrated to too high in price,” he said. “We felt we needed to get our Bounder to be the most powerful gas brand name and back in the heart of the market.”
Additionally, it’s likely that some Fleetwood brands will be dropped by the new company. “We are right-sizing the company to be break-even at our current revenues,” Draheim said. “Looking at the current industry volume, we have too many brands for that size of market.”
At one time, Fleetwood Enterprises employed more than 1,000 people in Decatur, but eliminated 550 jobs last December. On Friday (July 17), Fleetwood Enterprises’ 700 remaining employees nationwide were terminated and Fleetwood RV began taking employment applications from former Fleetwood Enterprises employees and others. Those rehired in Decatur will have to take a 10% across-the-board pay cut and their benefits will be adjusted, Draheim said.
He said the company was “overwhelmed” when 1,500 people applied for the jobs late last week when word spread around Adams County, just south of Fort Wayne, that Fleetwood was hiring.
In addition to paying $32.2 million for Fleetwood Enterprises’ assets, Fleetwood RV also assumed an estimated $20 million in warranty responsibilities for Fleetwood Enterprises’ motorized products.
”In the acquisition the new company will honor warranties for those customers who had a unit in their possession that still has adequate warranty period left as well as the unsold units on dealers’ lots,” Draheim said.
Fleetwood RV’s dealer base will consist of former Fleetwood Enterprises’ dealers as well as others.
”We are going to be looking for well-capitalized dealers who are the best option in each market,” Draheim said. ”We feel like the old organization had a very strong distribution channel. That was one of its best assets, albeit the channel has been under pressure for the last 18 months based on volume.”
Draheim said Fleetwood RV already has signed a floorplan agreement with one of the nation’s largest wholesale financing lenders and is in negotiations with another.
“We are very optimistic that we will have repurchase agreements with both of them very shortly and I think we will have adequate availability of wholesale funds,” Draheim said. “I don’t see that as an issue.”
The new owner of Fleetwood Enterprises Inc.’s RV manufacturing business in Decatur, Ind., will preserve about 650 jobs, but former employees who are rehired will take a pay cut, according to the Fort Wayne (Ind.) Journal Gazette.
Fleetwood eliminated about 700 jobs when the company completed a $33.2 million sale to American Industrial Partners Capital Fund IV LP on Friday (July 17), Fleetwood said in a statement. New York-based AIP will operate the business as Fleetwood RV Inc.
Decatur-based Fleetwood RV is expected to employ 650 by next month, President John Draheim said. Between 250 and 350 former Fleetwood employees started working for Fleetwood RV on Monday (July 20).
Anyone can apply to work at Fleetwood RV, but Draheim said former Fleetwood workers’ experience will give them an advantage in the hiring process. More than 1,000 applied for jobs Thursday and Friday, Draheim said. The company is accepting applications at its plant in Decatur.
But Fleetwood RV will pay employees less than its predecessor. Draheim said he was not sure what the average wage would be, but former Fleetwood workers who accept positions at the new company will earn 10% less.
Fleetwood RV is making minor adjustments in health insurance and 401(k) plans, but former workers will have to start over earning benefits such as vacation time.
Employees will work more consistent schedules at Fleetwood RV, Draheim said. He estimated that so far this year, production employees had worked the equivalent of only five to six full weeks because of weak RV orders. Employees will be able to earn more by working full weeks for reduced pay.
Although some Decatur residents are concerned about the ownership transition, Mayor John Schultz said most are relieved many local jobs will be preserved.
“It’s very important to us they bring the production back,” he said.
Fleetwood’s Decatur operations employed more than 1,000 in early 2008. The company cut 550 jobs in Decatur last year.
Fleetwood RV’s decision to establish a local headquarters is a positive sign, Schultz said. The previous owner was based in Riverside, Calif.
AIP purchased two RV manufacturing plants, two RV service plants and Fleetwood’s Gold Shield fiberglass subsidiary in Decatur. The company also acquired some Fleetwood equipment in Riverside.
Local investors plan to buy Fleetwood’s manufactured-housing plant in Garrett, Ind., for $1.75 million in a separate deal.
RV shipments during the first four months of this year plunged almost 62% from the same period in 2008, according to the Recreation Vehicle Industry Association’s (RVIA) most recent data. RV manufacturers shipped 43,700 vehicles through April 30.
Almost 450 Fleetwood workers in Decatur worked fewer than half their normal hours during that four-month period, the company said in April.
Industry projections are brighter for next year. Manufacturers are expected to ship 169,500 units in 2010, according to the association. That would be a 24%increase from this year’s projected sales.
The RV industry is close to hitting its low point, Draheim said. If the industry grows, Fleetwood RV will expand with it.
“We’re looking at improvement going forward,” he said.
The city council in Decatur, Ind., bent over backwards earlier this month to seal the deal to keep Fleetwood RV’s motorized operations in business in Decatur under new ownership.
The purchase was announced late Friday (July 17).
As reported by the Decatur Daily Democrat, the American Investment Partners (AIP) purchase of the Fleetwood Enterprises properties in Decatur took a giant step closer to completion on July 7 when the Decatur City Council quickly and without hesitation granted the company the first step of what will lead to a 10-year tax abatement on equpment it will be bringing to the buildings in Decatur.
The preliminary granting of the abatement was termed the “deal sealer” by officials working with AIP. Final approval of the abatement is expected by the end of this month.
The state of Indiana has also put together an incentive package to support the AIP purchase.
The Decatur City Council had only supportive words for the New York-based firm’s purchase and subsequent move into Decatur. It will be bringing approximately $15 million in equipment (legally called personal property) here, and is virtually certain to receive a 10-year tax abatement.
The council bent its own rules in doing do. Normally, the city grants only five-year abatements on personal property and 10 years on buildings. “But as has been said here tonight (July 7), these are extraordinary times,” Mayor John Schultz said. “This will be a change from what we’ve done in the past, but I don’t think we have much choice.”
Under Indiana law, the equipment must come from outside Indiana to be eligible for a tax abatement.
On a unanimous 5-0 vote, the council approved a declaratory resolution and even went so far as to unanimously agree to support a tax abatement for the Gold Shield building should one be sought later.
Adams County Economic Development Director Larry Macklin was the first speaker at the July 7 meeting, asking for support of the tax abatement and adding, “This is huge … we are in competition with other communities.”
Riverside, Calif., home to Fleetwood Enterprises Inc., was cited as one of the competing communities.
He said he has been working with state officials to put together the incentive package now being offered. “We need to open our arms and embrace AIP,” he added.
Macklin introduced Mark Soltys, with RSM McGladrey, an accounting, tax and business consulting firm based in Elkhart, Ind. Soltys, who represents AIP, praised “the tremendous job” Macklin has done in working with him, and pointed to the current “extraordinary times” for manufacturers.
He said granting the abatement and subsequent closing of the deal “will retain jobs locally and new jobs as well – good paying jobs.”
Of the tax abatement, he said, it “will surely make a difference” in getting AIP to close the deal.
Following Soltys was Steve Heim, an official with Fleetwood for many years, including the last 13 in Decatur. “You really have an asset here … the people of this community,” Heim told the council and the mayor. He spoke of the local workforce’s “devotion, commitment, work ethic and industriousness.”
Mayor Schultz asked if the tax abatement related to only “the RV industry,” and was informed that that was correct.
But there is “the potential for Gold Shield in the future” to seek an abatement,” Soltys noted.
“This is our chance to show our support for the Fleetwood employees” and some suppliers, such as Alberding Woodworking and Habegger Abbey Floors, Councilman Ken Meyer said.
Councilwoman Barb Engle then moved to grant the declaratory resolution and Councilman Bill Crone seconded, followed by a 5-0 vote. Another 5-0 vote expressed support for Gold Shield, should a tax abatement be sought for it at a later date.
American Industrial Partners Capital Fund IV LP (AIP) has completed the acquisition of the motorized recreational vehicle business of Riverside, Calif.-based Fleetwood Enterprises Inc.
The purchase price of $33.2 million is inclusive of certain assumed liabilities and is subject to customary post-closing adjustments, according to an AIP press release.
Concurrently, Fleetwood terminated approximately 700 employees associated with this portion of its business.
The final purchase price was well off the $53 million figure initially mentioned when the offer became public on May 15.
Fleetwood started trying to sell its RV and manufactured housing businesses Feb. 6, before it filed for bankruptcy March 10. Fleetwood contacted or heard from more than 75 companies. Of those, 10 met with management or visited Fleetwood’s operations.
In May, Fleetwood Enterprises Inc. had $20.7 million in assets compared to at least $265.2 million worth of debts, according to financial filings the company made in bankruptcy court. Of that, at least $183 million was money owed to unsecured creditors.
What You Get for $33.2 Million
The transaction with AIP was an asset purchase and included two motorhome manufacturing facilities, two motorhome service facilities and Fleetwood’s Gold Shield supply subsidiary, all presently located in Decatur, Ind. It also includes the intellectual property for Fleetwood’s existing motorhome brands and certain machinery and equipment in Riverside.
Fleetwood RV is one of North America’s leading manufacturers of Class A and Class C motorized RVs and has established one of the industry’s broadest and most respected distribution channels and product lines. Fleetwood RV will be jointly run by Chuck Wilkinson, CEO, and John Draheim, president.
Following company meetings with all associates in Decatur, Wilkinson stated, “Our veteran work force is enthusiastic and excited to return to their jobs building the best coaches in the industry.”
Draheim added, “We are confident that the new company can capitalize on the strength of the Fleetwood RV brand and strong relationships with the distribution channel that have been developed over the past 60 years.”
“AIP builds and invests in great American headquartered businesses and we believe Fleetwood RV represents an attractive investment opportunity,” said Dino Cusumano, an AIP partner. “We are pleased to be partners with Chuck, John and all the talented associates at Fleetwood RV. We respect the long and successful history of the company and greatly value the relationships that Fleetwood RV has with its dealers, customers, suppliers and associates and look forward to continuing and improving those relationships over time.”
Cusumano added, “The company’s headquarters and manufacturing operations will be in Decatur, Ind. We would like to thank the city of Decatur and the state of Indiana for their significant support during this process.”
Fleetwood was the country’s largest manufacturer of Class A motorhomes in 2008, accounting for an 18.6% share of the market, according to Statistical Surveys Inc. (SSI). The company held a 20.4% market share the year prior.
According to the latest SSI numbers through May, Fleetwood remained No. 1 in Class A retail sales with a 19.1% market share and No. 3 in Class C sales with a an 11.4% market share.
Paul Bamatter, another AIP partner, said, “Fleetwood RV will be organized as a separate standalone company within our portfolio of companies. Fleetwood RV will have one of the best balance sheets in the industry with no-third party debt and a significant cash balance at close.”
Wilkinson said, “We look forward to partnering with the American Industrial Partners team and have charted a going forward operating agenda focused on developing new and leading products, further improving our quality and service levels and our cost position.”
Draheim noted that, “Our customers and dealers have been extremely loyal to us over the years and we expect to repay that loyalty by ensuring that they are afforded innovative products built with exceptional quality, all at affordable prices. Our near-term outlook has turned positive as our dealer inventories have bottomed and retail sales have accelerated in the past few months.”
American Industrial Partners was founded in 1989 and is a private equity firm that makes control equity investments in mid-sized industrial companies that can benefit from the firm’s systematic approach to implementing strategic and operational improvements. It is investing its fourth fund which recently closed with $405.5 million of committed capital.
For more information, visit www.aipartners.com or American Industrial Partners can be reached at (212) 627-2360.
Employees at the Fleetwood RV manufacturing plant in Decatur, Ind., say the company has asked them to re-apply for their jobs.
Company officials say they “will not confirm, or deny” the move, according the Indiana News Center, a central Indiana news aggregator.
A U.S. bankruptcy court gave Fleetwood the green light to sell $53 million in motorhome assets to New York City-based American Industrial Partners.
That purchase includes two manufacturing facilities, two service centers and Fleetwood’s “Gold Shield” supply unit, all located in Decatur.
Fleetwood spokesmen were unavailable for comment to RVBusiness.
The U.S. Bankruptcy Court will allow Riverside, Calif.-based Fleetwood Enterprises Inc. to pay key executives a total of $873,669 in incentives and bonuses and $571,508 worth of severance payments, after lawyers with the company, the U.S. trustee and the attorney representing unsecured creditors in the case supported the plan’s approval.
Executives who have been promised incentive bonuses ranging from $232,000 to $51,450 include Andrew M. Griffiths, senior vice president and chief accounting officer; Leonard J. McGill, senior vice president, general counsel and secretary; James F. Smith, vice president and operations controller; Paul C. Eskritt, president of the RV division; Charles E. Lott, president of the housing division; and Michael B. Shearin, senior vice president human resources, according to the Riverside Press-Enterprise.
The bonuses are based on the senior executives’ ability to complete a reorganization plan that is confirmed by the court by Oct. 30. The bonus amount decreases the longer it takes. In court filings Fleetwood also said incentives were offered to keep key personnel with the company rather than risk they would leave for work elsewhere during reorganization.
Five other executives would also be eligible for bonuses. Another 32 employees would be eligible for severance.
Elden Smith, Fleetwood’s CEO, agreed to cut his salary from $873,000 annually to $60,000 to compensate for some cost of the incentives.
Hamid Rafatjoo, a lawyer representing the committee of creditors in the case, said he took issue with an earlier proposal with a larger amount of bonuses but was happy with the plan approved by the court Wednesday.
“People did in fact work late in the night and into weekends,” he told Judge Meredith Jury, adding that they did so in an effort to get higher bids for the company’s RV division, to no avail.
“They do deserve combat pay for dealing with that RV buyer,” he said, referring to American Industrial Partners. The New York equity firm bid $53 million for the RV division. The deal hasn’t closed.
Jury agreed, saying an “enormous amount of work” has been done by Fleetwood to attempt to get multiple bidders for its assets.
“To have one bidder is probably lucky,” she said, considering the economy and state of the RV industry.
At the same hearing, Fleetwood informed the judge that a deal to sell its Douglas, Ga., plant had fallen through because the buyer couldn’t get financing.
Businesses in Decatur, Ind., are receiving a much-needed economic boost thanks to hundreds of RV enthusiasts.
Hundreds of RV owners have returned to the birthplace of their home on wheels, Fleetwood RV in Decatur, according to the Indiana News Center, Fort Wayne.
Watch Featured Video at right.
Rally organizers say the annual gathering is more important this year, because of Fleetwood Enterprises Inc.’s economic troubles.
Hundreds of Fleetwood employees have recently had their hours cut, or lost their job when Fleetwood filed for bankruptcy in March.
The gathering is a good opportunity for Fleetwood officials to show the latest RV accessories, in hopes of making additional sales.
Coach owners say they want to give back to the struggling town that made their rolling home.
“This is our third trip down here and so we got to spend a lot of time getting to know the community and just showing them that we are actually coming back home,” rally organizer Marcia Bratsburg said.
Fleetwood officials say despite a 50% loss in sales, inventory is coming into line and the desire to buy an RV is still there, the trick is finding a bank that will lend the money.
“Customers are still using RVs,” said Fleetwood Director of Sales Justin Humphreys. “They still want to see the country. And at times we kinda get upset because there’s not a lot of business out there but I think it’s a great sign for business. The customers are out there using them. They want to go out and use their motor home and eventually they’re going to want a new one and that’s what we’re really excited about, is to build some new ones for them.”
But they will have to make RVs under a new owner. A U.S. bankruptcy court gave Fleetwood officials the green light to sell their motorhome assets.
American Industrial Partners will pay $53 million for assets including several facilities and service centers.
An RV rally in Decatur, Ind., is raising support to keep Fleetwood Enterprises Inc.’s operations there. It comes just weeks after a New York company bought the bankrupt RV maker. Now, the future of Decatur’s plant is up in the air.
This week, nearly one hundred RVs in town for a special rally could help turn things around, according to WANE-TV, Fort Wayne.
The motorhomes come from all over, in different sizes and colors but with one very important thing in common: they were all made by Fleetwood.
“This is where all the motorhomes that people have purchased were built at, here at Plant 44 in Decatur, Ind.,” explained Randy Hendricks, Fleetwood rally coordinator.
And, in the parking lot of Bellmont High School is where you’ll find all those American Coaches.
Ninety-seven have come to town for a special “Coming Back Home Rally.” It’s one of the annual events held by the American Coach Chapter of the Family Motor Coach Association (FMCA).
Every year dozens of RV owners take part in event just like the rally for a little fun and fellowship, but this year, the rally in Decatur also has a special purpose.
“We want Fleetwood to stay and we want to show Decatur how much they mean to us,” Marcia Bratsburg, eastern director of the American Coach Chapter told NewsChannel 15.
After a turbulent year of layoffs and filing for bankruptcy for the company, rally organizers hope the event is also a lifeline for Fleetwood.
Last year, Fleetwood cut 550 of its 600 workers. In March, it filed for bankruptcy.
The struggling RV maker was recently bought by a New York company, American Industrial Partners, and it’s not clear how the purchase will affect the Decatur plant.
Decatur Mayor John Schultz is optimistic the showing of support might convince the new buyers to keep Fleetwood operations right where they are.
“I hope that will have an impact; hopefully, it give us a heads up on any other competition that we’re up against,” explained Schultz.
The RVs will be gone when the rally ends on Saturday (July 18); but just a few days after that, Schultz is hoping for an announcement that Fleetwood won’t be leaving.
City leaders also recently granted Fleetwood a tax abatement to further encourage the company to keep its operations in Decatur.
The principals of Fleetwood Enterprises Inc. and the buyer for its motorhome division, American Industrial Partners (AIP), each commented this afternoon on the bankruptcy court’s approval on Wednesday (June 24) to sell the division to AIP.
The sale of Fleetwood’s motorhome assets to AIP for $53 million is subject to pre-closing conditions and post-closing adjustments, according to a news release. Fleetwood did not conduct an auction because no other qualified bids were received.
“Fleetwood’s motorhome brands are highly respected, and we are confident that this market will recover with the broader economy,” said Dino Cusumano, partner of AIP. “We look forward to continuing to manufacture Fleetwood motorhomes. Fleetwood’s dealers and customers should see no change in Fleetwood motorhomes’ commitment to high quality industry-leading product. We greatly value the relationships that Fleetwood has with its dealers, customers and suppliers and very much look forward to continuing and improving those relationships going forward.”
Elden L. Smith, Fleetwood president and CEO, stated that management, “is pleased to see that the Fleetwood name will be preserved in the RV market place with this sale to AIP. The Fleetwood motorhome group will benefit greatly from having ownership that is well capitalized, experienced, and committed to growth in the RV industry. We are now focused on making this a smooth transition for our dealers, Fleetwood motor home owners, and associates.”
The sale includes two motorhome manufacturing facilities, two motorhome service facilities, and Fleetwood’s Gold Shield supply subsidiary, all presently located in Decatur, Ind. It also includes the intellectual property for Fleetwood’s existing motorhome brands and certain machinery and equipment in Riverside, Calif. AIP may operate the Riverside facility for an undetermined period of time going forward. AIP has agreed to assume certain liabilities, including warranty obligations on Fleetwood motorized products.
The companies expect the deal to close within a matter of weeks.
Additional information about the company’s reorganization may be found online in the news section of www.fleetwood.com or at www.kccllc.net/fleetwood.
American Industrial Partners was founded in 1989 and is a leading U.S. based private equity firm that makes control equity investments, in partnership with management, in well positioned U.S. headquartered industrial companies with leading market shares that can benefit from the firm’s systematic approach to implementing strategic and operational improvements. It is investing its fourth fund which recently closed with $405.5 million of committed capital. For more information, visit www.aipartners.com or American Industrial Partners can be reached at (212) 627-2360.
Founded in 1950, Fleetwood Enterprises Inc. and its various subsidiaries produce, distribute and service recreational vehicles and manufactured housing.
A $53 million sale of Fleetwood Enterprise Inc.’s RV division to a New York equity firm was approved Wednesday (June 24) in bankruptcy court in Riverside, Calif.
American Industrial Partners was the only firm to bid for Fleetwood’s RV division, according to the Riverside Press-Enterprise.
The deal is expected to close July 10.
American Industrial Partners agreed to buy Fleetwood’s intellectual property and RV brands in addition to two motorhome manufacturing plants, two motor home service centers and the company’s subsidiary Gold Shield supply, all located in Decatur, Ind.
Dino Cusumano, a partner with American Industrial Partners, cited a confidentiality agreement signed with Fleetwood and wouldn’t confirm or deny speculation that the RV manufacturing operations would be revived in Decatur and the company’s headquarters moved there.
Details of the deal regarding any possible leadership transitions from Fleetwood to American Industrial’s operations and what fate is in store for Fleetwood’s RV plant in Riverside, which wasn’t part of the sale, remained unclear.