Cavco Industries Inc.’s acquisition of a Fleetwood factory in southern Virginia is playing an increasingly important role in the company’s market strategy by manufacturing a diverse mix of manufactured and park models for a growing dealer base.
According to a press release, before Phoenix, Ariz.-based Cavco acquired Fleetwood’s housing division two years ago, the Rocky Mount factory only built HUD-code homes, as it had since 1968.
But with the Cavco acquisition, the factory’s product mix now includes not only Fleetwood-brand manufactured homes, but Cavco’s own lines of manufactured homes as well as park models.
“We’re pleased with the progress we’ve been making,” said Tom Satterwhite, general manager of the Rocky Mount factory, which employs 60 people.
“We’re happy, too, because the Rocky Mount facility gives us a strategic market reach we didn’t have before,” said Tim Gage, vice president of Cavco’s specialty division, noting the company now has improved access to the Northeast and Mid-Atlantic states because expensive trucking costs have been eliminated.
In addition to manufactured housing, the plant is producing several new park model lines. The Rocky Mount factory initially produced custom-designed park model cabins for campgrounds affiliated with Kampgrounds of America Inc. (KOA). But now the facility builds both cabins and traditional vinyl sided park models for a growing number of independently owned and operated parks as well as KOA-brand campgrounds throughout the Eastern U.S.
Cavco said the factory is also opening up new distribution channels for park models, both through street dealers and at campgrounds that want to sell the products to consumers as weekend retreats or vacation cottages.
“We’re constantly becoming stronger and getting more distribution and more retail turns on our product,” Satterwhite said.
The company said it is also developing growing number of sales leads through its websites and by participating in a growing number of tradeshows, such as the upcoming Pennsylvania RV and Camping Show, which is scheduled Sept. 14-18 in Hershey Pa., the National RV Tradeshow scheduled for Nov. 29 to Dec. 1 in Louisville, Ky., along with North Carolina RV shows in Charlotte, Greensboro and Raleigh.
With more than 40 inches of annual precipitation and three times as many cloudy days as sunny ones, upstate New York seems like the wrong place to determine the extent to which people can satisfy their energy needs with solar energy.
But Dr. Renee Scialdo Shevat argues that it’s actually an ideal place, since most of America has a similar climate. And she hopes to prove it with the energy production and consumption data she collects from the nation’s first “Solar Kolony,” which she is establishing this week at the Herkimer Diamond KOA campground in Hekimer, N.Y., according to a news release.
The “Solar Kolony” is a collection of three fully furnished “park model” cabins, which will be available for rent throughout the camping season. But unlike the “Kamping Lodges” that are available at other KOA campgrounds, Dr. Shevat’s units are powered exclusively by solar panels with a backup propane generator.
“We’re hoping to complete the installation of our ‘Solar Kolony’ in time for Earth Day on April 22,” Dr. Shevat said, adding that she is already receiving reservations from consumers who want to rent the environmentally friendly units.
Herkimer Diamond KOA installed its first solar powered park model cabin from Phoenix, Ariz.-based Cavco Industries last May. But the unit was so popular with campers that Dr. Shevat decided to install two more of Cavco’s solar powered park models this month, thus creating the nation’s first “Solar Kolony.”
But while many consumers will be enticed by the novelty of spending the night in the nation’s first “Solar Kolony,” Dr. Shevat is eager to study the Kolony’s energy production and consumption data, which she plans to share with the New York State Energy Research and Development Authority.
The park models that Dr. Shevat purchased to create the Solar Kolony have been equipped with energy saving lighting and appliances. But no one knows, at this point, whether it’s more cost effective or green to use a propane generator to produce backup power to recharge the Kolony’s batteries or simply to tap into New York’s existing electrical grid, given the relatively low cost of electricity that’s available between midnight and 6 a.m. “This will be one of many questions we hope to answer during the coming year,” Dr. Shevat said.
Beyond this, she said, campers who spend the night in the “Solar Kolony” will also have a chance to learn about other green building and living practices.
The 400-square-foot units, each of which sleep six, are all unique, but still have one thing in common: green technologies. Some of the units feature bamboo flooring, LED lighting, recycled axels and tires, recycled lumber composite decking, on-demand water heating, energy efficient heating and air-conditioning as well as a complete assortment of eco-friendly cleaning and bathroom products, including coreless toilet paper that leaves no cardboard core at the end of the roll. Even the units’ Amish-style furniture has been manufactured from recycled milk jugs and recycled hickory wood.
Storage tanks are also being set up to capture rainwater that falls on the units so that it can be used to irrigate an organic vegetable and herb garden. Park guests will be encouraged to pick vegetables and herbs from the garden during the summer months and to use them in their cooking while they stay at the park.
“Our guests will not only have an opportunity for a great camping experience, but the dwelling itself becomes an educational tool,” Dr. Shevat said, adding, “My hope is that our guests not only come to enjoy our park and our ‘Solar Kolony’ with friends and family, but come away inspired to live a greener lifestyle.”
For more information about the ‘Solar Kolony’ at the Herkimer Diamond KOA, please contact: Dr. Renee Scialdo Shevat at (315) 717-0175 or email@example.com; Tim Gage at Cavco Industries at (602) 763-5488 or firstname.lastname@example.org.
Cavco Industries Inc. announced that the U.S. Bankruptcy Court last week approved a subsidiary of Cavco as the successful bidder for the assets of Palm Harbor Homes Inc. at an auction conducted under Section 363 of the United States Bankruptcy Code.
Palm Harbor is a manufacturer and marketer of factory-built housing and recreational park trailers and a provider of related consumer financing and insurance products.
A newly formed subsidiary of Fleetwood Homes will purchase substantially all of Palm Harbor’s assets comprising its manufactured and modular housing construction and retail businesses and all of the outstanding stock of its insurance and finance subsidiaries, and to assume certain liabilities of Palm Harbor. Cavco and Third Avenue Value Fund (TAVFX) each owns 50% of Fleetwood Homes. Third Avenue Management, the investment adviser to Third Avenue Value Fund, is a New York-based company with expertise in value and distressed investing.
As previously reported, Palm Harbor and certain of its subsidiaries filed for Chapter 11 bankruptcy protection on Nov. 29, 2010. Shortly thereafter, Fleetwood Homes provided a $50 million debtor-in-possession credit facility to Palm Harbor. On March 1, Cavco’s subsidiary was selected as the successful bidder in the court auction with a winning bid of $83.9 million, subject to certain post-closing adjustments and customary conditions to closing.
At the close of the asset purchase transaction, the then-outstanding balance of the credit facility, including accrued interest, will be credited to the purchase price, thus reducing the amount of cash consideration to be transferred at the close of the transactions contemplated by the purchase agreement. The transaction, expected to close on April 1, will be funded by Fleetwood Homes’ cash on hand along with equal equity contributions from Cavco and Third Avenue.
The successful bid included manufactured housing factories, retail locations, equipment, accounts receivable, inventory, intellectual property, and certain warranty and other liabilities. Palm Harbor’s insurance and finance subsidiaries, including Standard Casualty Company, Standard Insurance Agency, CountryPlace Acceptance Corp., and CountryPlace Mortgage, Ltd. were not parties to the Palm Harbor bankruptcy filing, but the shares of these companies are included in the assets to be acquired by Fleetwood Homes’ subsidiary.
Joseph Stegmayer, chairman, president and CEO of Cavco Industries, commented “As a fellow builder with Palm Harbor, we at Cavco and our partners at Third Avenue are thrilled to soon move past the remaining sale procedures, and turn our collective attention toward integrating the Palm Harbor operations. During the entire purchase process, we were and continue to be compelled by our belief in the long-term value of the Palm Harbor brand names and passion of the Palm Harbor people that represent it. We also believe that this combination will make our organization stronger and more capable in the national housing industry.”
“This transaction is consistent with our strategic plans to grow our business while our industry right-sizes in general under currently depressed market conditions. Our intention is to help Palm Harbor continue its heritage of providing quality home building and retailing, financing, insurance products and outstanding customer service,” Stegmayer concluded.
Larry Keener, chairman and CEO of Palm Harbor Homes, commented, “We are pleased and excited that Cavco, through their subsidiary Fleetwood Homes, was the successful bidder for the Palm Harbor assets. Cavco is a financially strong and extremely well managed company. The combination of the Cavco, Fleetwood, Palm Harbor, and Nationwide modular brands and operations creates a powerful nationwide spectrum of products and services. All of us at Palm Harbor look forward to this new opportunity.”
With 67 RV sites, cottonwood trees, rock climbing walls and a three-acre fishing lake stocked with trout and catfish, Rancho Jurupa Park in Riverside, Calif., lives up to its billing as “a perfect setting for a quick escape from the city.”
Operated by the Riverside County Regional Park & Open Space District, it’s also one of a growing number of government-run parks investing in park models as rental accommodations.
“We did a feasibility study and a master plan, and one of the features that was called out was cabins for folks who want to get outdoors and have a nice recreational experience, but don’t have a camping unit themselves,” said Scott Bangle, general manager of park district.
Riverside County just installed six Silvercrest/Western Homes Division park models at Rancho Jurupa Park, and the county plans to add more park models to other county parks in the future. “I could see having a handful of units at every park,” Bangle said. “(They) will be part of our inventory at all of our major regional parks someday.”
Riverside County, of course, isn’t the only government agency that’s investing in park models as rental units. Phoenix, Ariz.-based Cavco Industries Inc. just delivered 25 park model cabins to Lassen National Park in Northern California, and the company is in discussions with other California counties about purchasing parks models for use as rental accommodations, said Tim Gage, vice president of Cavco’s Specialty Division.
“We believe that the government campground parks are a marketplace that hasn’t been fully explored at this point,” said Gage.
Private parks, for their part, have been stepping up their investments in park model cabins in recent years. But despite the significant purchases of park model cabins as rental units by Kampgrounds of America Inc. (KOA), Leisure Systems Inc. (LSI) and operators of independent parks, North America’s private campground sector is still a long way from being saturated with rental accommodations.
In fact, the KOA system, which purchased 317 park models last year, is now waiving royalty fees on park model income for one year on any new units that its franchisees purchase this year.
“The idea is to encourage more KOAs to invest in lodging,” said Mike Atkinson, director of lodging for the Billings, Mont.-based franchisor, adding that park models are “becoming an absolute necessity to grow your campground income.”
Necessity or not, park models accounted for 1,168 of KOA’s 1,530 fully equipped (with bathrooms) rental accommodations systemwide in 2010 and generated over three times as much income as typical RV sites. “Park models have the longest short-term occupancy and you get over three times the money,” Atkinson said.
Atkinson added that most people who could be potential campground accommodations guests have not even been exposed yet to the concept.
Of course, Atkinson cautions that simply purchasing park models doesn’t turn into immediate revenue hikes because they have to be marketed. He says it typically takes three years for them to reach their marketing potential.
Nevertheless, some park operators find that these ordinarily rustic-looking units outperform their expectations.
Scott Cory, managing partner of Ventura Ranch KOA in the mountains southeast of Santa Barbara, Calif., installed four Cavco park models at his park in June of last year. It was the first time his park offered accommodations and he found that his guests responded very favorably to his investment.
“Lodging is the biggest ‘wow’ factor we’ve done at our park,” he said, adding that he plans to purchase six more park models this year. He also complements his park models with glamour tents and teepees.
Manufacturers, for their part, are increasingly rolling out more park model rental options, not only to accommodate rising demand for rental units, but to make up for recent declines in sales to consumers who traditionally purchased park models and placed them on leased campsites for use as their own private vacation cottage.
“We’re looking at doing more rentals because more and more campgrounds are realizing the benefits of having park models versus transient RV sites,” said Tyler Steele, vice president of Canterbury RV in Goshen, Ind.
“Listening to the needs and desires of campground owners and then turning that input into an affordable and profitable cabin design has been a crucial key to our growth,” said Andy Davis, sales manager for Pinnacle Park Homes in Ochlocknee, Ga.
Some park model manufacturers, however, still focus most of their attention on producing units for consumers who want to buy them for use as vacation cottages that they can place on leased or purchased campsites in campgrounds, RV parks or resorts.
“We’re probably about 10% for campground rentals, while 90% of our production is for retail sales,” said John Soard, general manager of Fairmont Park Trailers in Nappanee, Ind.
Joe Follman, sales manager for Chariot Eagle Inc. in Ocala, Fla., added that park operators that rent or lease sites to park model owners can benefit from having a steady income stream. “I think there’s still a lot of room to grow in this industry, both in the Sunbelt and up north,” he said. “There’s still plenty of business out there. We’re such a small percentage of the RV business.”
A continuing roadblock is the availability of financing, both for consumers and parks that want to purchase park models for use as rental accommodations.
“You can show how quickly they can be paid off, and how it’s a great investment to put cabins in. But the lenders are just not buying aggressively,” said Dick Grymonprez of Athens Park Homes in Athens, Texas. “If we could get financing, all of us would be building more cabins. I can’t tell you how many campgrounds tell me, ‘If you can get us financing, we’ll buy six.’ I can’t tell you how many roadblocks we face getting them financed.”
But there is money out there. Parks are continuing to purchase park models. And, increasingly, manufacturers say that the best sources are local lenders rather than nationally known lenders that have little knowledge or experience with the park model product.
The same approach can also help consumers find sources of financing for park models they’d like to purchase as private vacation cottages. “We’re recommending that dealers work with their local banks and educate them about the lack of defaults in the park model world and why it’s a good business model for them,” said Steele of Canterbury RV.
Even as manufactured-home sales continue at their lowest levels in about 50 years nationwide, Phoenix-based Cavco Industries Inc. is attempting to grow more by buying another one of its rivals, The Arizona Republic reported.
Cavco in August 2009 bought one of its largest competitors, Fleetwood Enterprises Inc., out of Federal Bankruptcy Court for $26.6 million and now is attempting to buy Dallas-based Palm Harbor Homes Inc., for $57.5 million.
Palm Harbor filed for bankruptcy reorganization in November, and the purchase would be subject to an auction and court approval. The company’s products are sold in Arizona and it has a manufacturing plant in Tempe.
“We are trying to grow in a down market and get positioned for when things turn around. That is our strategy,” Joseph Stegmayer, Cavco’s chairman, president and CEO said on Friday (Jan. 28).
He said a number of rivals have shut down and that Cavco officials believe their balance sheet is strong enough to support acquisitions.
A Palm Harbor purchase would be expected to give Cavco more sales in the Southeast, from Florida to Texas, where Palm Harbor is strongest, Stegmayer said. With the purchase of Fleetwood, Cavco was able to boost is distribution to 35 states, from 10.
Cavco, also a builder of recreational park trailers, is the second- or third-largest maker of manufactured homes. Stegmayer said he couldn’t be sure because Champion Home Builders Co., a Pennsylvania company believed to be among the top three, is private and doesn’t report its sales.
At any rate, he said the potential purchase definitely would not boost Cavco into the No. 1 spot because of the sales power of No. 1 Clayton Homes, a Tennessee firm owned by Berkshire Hathaway and Warren Buffett. Palm Harbor is believed to be the third or fourth largest, ranking behind Cavco, Stegmayer said.
Over the past two years, the manufactured-home business sold the lowest number of homes since records were first kept in 1959, Stegmayer said. About 50,000 homes were sold nationwide in 2009 and 2010. Cavco expects to sell about 5,000 in its current fiscal year, which ends March 31.
While financing has become more available for qualified buyers, he said the biggest problem is a lack of confidence.
“Our retailers say customers come in and look,” he said. “But they just don’t want to make a decision now because they lack confidence in the economy, where the economy is going.”
The company last week reported net income of $24,000, or 0.4 cents a share, for the quarter ending Dec. 31, compared with a loss of $1 million, or 16 cents a share, a year earlier.
“That’s not a lot of profit this quarter but a big swing from last year, so we are pleased to move from the red to the black,” Stegmayer said.
Net sales grew 9% to $39.6 million compared with the same quarter a year earlier. It was the first quarter since the Fleetwood purchase in which sales could accurately be compared with the previous year.
Editor’s Note: Wall Street Cheat Sheet, a newsletter for investors and entrepreneurs, filed comments on Sunday (Dec. 19) following last week’s quarterly report by Winnebago Industries Inc. Excerpts of the newsletter follow.
Winnebago Industries Inc. sports a $443 million market cap and has beaten estimates in six of the past 12 quarters.
The company’s balance sheet remains very strong with no debt and about $3 per share in cash.
Operating margins were 3.5% excluding a $644,000 asset sale gain.
Gross margins rose from 0.6% all the way to 9.1%.
Did You Hear That? CEO Bob Olson said on the call that “the outlook for 2011 looks good and labor availability is the one possible constraint the company could have later in fiscal 2011.”
Analysts at Morningstar noted that they “think Winnebago can be successful if it does not leverage up the company over time to make deals and only pursues acquisitions with a high probability of sufficient return. We will reduce our fair value if management starts to constantly make acquisitions simply to bring in more revenue without sufficient regard to long-term profitability.”
Competitors to Watch: Thor Industries, Skyline Corp. and Cavco Industries Inc.
Technicals: After last week’s rise, shares of WGO are not far from completing a cup-shaped base dating back to this past May. The stock’s 50-day moving average is poised to break above its 200-day line in the coming days, and volume has been steadily increasing for the past four weeks. All are bullish signals, and a breakout above $17.43 may be the beginning of the company’s next move higher. However, understand that cup-shaped bases often have handles, meaning that initial breakouts often fail, with the following “handle” breakout being the move that augurs in favor of future gains.
Commentary: WGO swung to a fiscal first-quarter profit that handily topped analysts estimates. Higher deliveries and a rise in average selling prices were behind the gain. The RV maker has returned to profitability in recent quarters, recovering from an industry crisis that saw some competitors file for bankruptcy. Still, it faces consumers who are reluctant to make big purchases due to persistent high unemployment and housing woes. The company is an interesting play for those seeking exposure to large-scale consumer purchases.
Cavco Industries Inc. reported a 249% increase in sales for the first quarter ending June 30.
The Phoenix-based builder of manufactured homes and recreational park trailers said on Thursday (Aug. 5) that net sales for the quarter totaled $47,505,000, up from $13,595,000 for the first quarter of fiscal year 2010. The first quarter 2011 results include the Fleetwood Homes operations which, as previously reported, were acquired during the second quarter of fiscal year 2010.
Net income attributable to Cavco stockholders for the fiscal 2011 first quarter was $518,000 compared to net loss of $1,449,000 reported in the same quarter one year ago. Net income per share based on basic and diluted weighted average shares outstanding was $0.08 versus basic and diluted net loss per share of $0.22 last year.
“We are pleased to report positive earnings for the first quarter of the new fiscal year, however there remain a number of impediments to the company’s achievement of sustained, satisfactory operating results,” said Joseph Stegmayer, chairman, president and CEO, while commenting on the quarter. “Incoming order rates are still turbulent, limiting our factories’ opportunities to increase production levels and hampering efficient production planning and execution. Additionally, gross margins continue to be adversely impacted by a product mix favoring smaller, less amenitized homes.”
Stegmayer continued, “Challenges pertaining to consumer manufactured home lending abound including restrictive underwriting guidelines, irregular appraisal processes, and limited secondary market availability for manufactured home loans. To address these negative forces, we and the industry as a whole continue to work with lenders and regulators on ways to improve the prospects for the borrowing needs of buyers of affordable factory built housing.”
“The second quarter of fiscal year 2011 that we have now begun marks the one-year anniversary of the Fleetwood Homes business combination. We believe the integration of Fleetwood Homes has gone well, and that we are properly positioned to take advantage of opportunities to further improve our operating performance,” Stegmayer concluded.
Phoenix-based Cavco Industries Inc. is helping create a market for campers who don’t want to pitch a tent, tow an RV or buy or rent a pricey cabin.
The company’s main business is making manufactured homes, but it has developed a small but steadily growing niche of making recreational park trailers that can be purchased for about $35,000 and up, or rented at affordable prices, according to the Arizona Republic.
Cavco is even producing a solar version and recently installed what it claims to be the first solar-powered park-model cabin that can be operated off an electrical grid at a KOA campground.
Officials with Kampgrounds of America Inc., the world’s largest camping company, credit the little units with expanding its customer base, bringing in more minorities and “jump-starting” a new camping segment that wants an affordable camping experience with some comfort.
“They opened up camping to an entirely new market for us. There’s a level of camper out there who wants the comfort and is willing to pay for it,” KOA spokesman Mike Gast said.
Jim Rogers, president and CEO of KOA, predicts that the commercial-campground industry will become more aggressive over the next five to 10 years in buying units like these.
The 400-square-foot lodges that Cavco makes for KOA are rented for $75 to $150 a night and come with bathrooms and full-service kitchens, and can sleep four to six people. “We call it Marriott camping,” Rogers said.
KOA and Cavco came together about eight years ago. The 48-year-old KOA, headquartered in Billings, Mont., had been renting smaller “Kabins” and “Kottages” for several decades to give customers alternatives to tents and RVs. But most of those units don’t have bathrooms and kitchens. KOA found them to be expensive to maintain and buy.
And for about the past dozen years, 45-year-old Cavco had been making smaller 400-square-foot versions of its manufactured homes as second homes. They are called park models because they designed for RV parks.
Cavco proposed the idea of making more rustic-looking park models for camping. For several years, the two companies tested various materials and the durability of the homes.
Gast said of a typical Cavco lodge: “It looks like it belongs in a campground. It either has cedar or log sides. It comes in on wheels. You add a porch, and all of a sudden you’ve got a cabin in the woods.”
The company bought 250 last year and expects to buy an additional 300 this year, he said.
The lodges have proven to be popular with customers.
“We can’t get enough of them fast enough,” Rogers said of the lodges. “That’s the future of camping in the U.S. It’s looking very good for Cavco Industries as a result of the popularity.”
The bulk of KOA’s business is renting tent or RV spaces, and only about 15% is its lodging business, Gast said. But rentals of the Kabins, Kottages and now lodges have been growing because they offer affordable vacations at a variety of locations.
“We found out last year that camping is hotter than we thought. We had our best summer in 48 years. We did a lot of surveys, and it was the affordability and the desire for a quality affordable vacation close to home that really rang true to customers,” Gast said.
Rogers said Cavco is KOA’s main supplier but it hasn’t been able to buy all its lodges from Cavco because of the cost of freighting them from a plant in Goodyear, Ariz.
Cavco hopes to resolve that issue by starting production at a Fleetwood Enterprises Inc. plant at Rocky Mount, Va., that Cavco acquired last year.
Cavco and other makers of manufactured homes have been struggling during the recession because would-be buyers are having trouble getting financing. Cavco last year lost $3.37 million, after making a profit of almost $500,000 the year before.
Cavco sells about 750 to 1,000 park models a year, and about half of those are recreational types such as the KOA lodges, said Tim Gage, a Cavco vice president.
“The rental market is kind of an up-and-coming market,” he said, and has been expanding every year for the past five yeas.
Cavco has been going to RV industry conventions and seminars to promote the recreational units. Now, it is pushing into solar-powered units for remote campgrounds or campsites that don’t have electrical connections.
Its first “off grid” park-model cabin was installed at a KOA campground in Herkimer, N.Y., to be used as a rental cabin and to showcase green-living practices.
It has solar panels on its roof that can produce two kilowatts of power. It also has a backup propane generator, bamboo floors, axles and tires made of recycled materials, recycled-lumber composite decks, and energy-efficient heating and cooling. Even its furniture was made from recycled milk jugs and recycled hickory wood.
Last year, Cavco delivered its first solar-powered park model to Sacred Rocks Reserve and RV Park near San Diego but that one is connected to an electrical grid.
“One reason for solar is to stay ahead of the game of what everyone else is doing,” Gage said.
The National Association of RV Parks and Campgrounds (ARVC) is considering changing some of the duties of association and CEO after the current president and CEO, Linda Profaizer, retires at the end of this year.
“Our current president and CEO has vast responsibilities and we may consider some realignment of duties going forward,” said ARVC Chairman David L. Berg. “We are looking at all staff positions and responsibilities within the organization and may restructure some positions.”
Berg talked about staffing and other initiatives underway at ARVC in an address to members of the Texas Association of Campground Owners (TACO), who had gathered at Guadalupe River RV Resort in Kerrville for TACO’s annual spring meeting and convention. Their convention began Sunday and ends today (May 18).
In a subsequent interview, Berg cautioned that no final decisions have been made about the approach ARVC will take to replace Profaizer, who retires Dec. 31. “We want to make sure that our selection process enables us to recruit the best possible candidate for this position,” he said.
In his address to TACO members, Berg also said that ARVC is heavily promoting the GoCampingAmerica website with both print and online advertising initiatives.
He also said ARVC is continuing to take steps to improve communication with its state affiliates and that the national association hasn’t given up on the idea of having TACO become an affiliate of ARVC once again. “We’d like to have you back in the family,” he said, adding, “We (ARVC) need to improve our communication and treat the states as equal partners.”
Berg also lauded former ARVC Chairman Jeff Sims, also in attendance at the meeting, for his volunteer work reaching out to non-ARVC member parks to educate them about the merits of ARVC membership. As of mid-May, Sims had personally visited more than 400 parks at his own expense.
Monday’s TACO meeting also included a presentation by Bob MacKinnon of Murrieta, Calif.-based GuestReviews. “Texas has strong participation in the (GuestReviews) program,” he said, adding that Texas parks had an average score of A-minus in overall guest satisfaction.
Monday’s activities included a tradeshow with roughly 40 vendors, including Topeka, Ind.-based CrossRoads RV, Phoenix, Ariz.-based Cavco Industries Inc. and Athens Park Homes of Athens, Texas, each of which had park models on display.
The day’s activities also included a seminar on Wi-Fi marketing by Frank Drew of Austin, Texas-based TengoInternet and a seminar on “Expanding Your Park” by Kathy and Tony Palmeri of Jellystone Park Camp-Resort in Estes Park, Colo,. and Leisure Systems Inc.
The campground business has been the most resilient sector of the travel and tourism business throughout the recession. But it’s not just because campgrounds offer the most affordable vacation option, according to The Daily Exchange, Waterloo, Ontario.
“Campgrounds increasingly offer rental accommodations, so they’re no longer solely dependent on tent campers and RV owners,” said Linda Profaizer, president and CEO of the National Association of RV Parks and Campgrounds (ARVC), adding that roughly a third of America’s campgrounds now offer park model rental accommodations.
But most campgrounds aren’t building their own rental accommodations from scratch. In most cases, they are ordering factory-built cabins and cottages, which are being delivered to their parks just in time for the camping season.
Many of them look like miniature log or cedar-sided cabins. But these 400-square-foot units are actually recreational park trailers or “park models,” and are technically classified as recreational vehicles.
“They’re completely turnkey,” said William Garpow, executive director of the Recreational Park Trailer Industry Association (RPTIA), which represents park model manufacturers. “All the campground owner has to do is hook each unit up to the utilities and they’re ready to rent.”
And, perhaps best of all, since “park models” are technically classified as recreational vehicles, they do not require building permits in most jurisdictions, so campgrounds can literally order them over the phone and have them delivered to their parks within a matter of weeks.
“Manufacturers construct these units in factories to conform with approximately 500 safety requirements contained in the National Safety Standard for recreational park trailers,” Garpow said.
Industry insiders see the campground industry’s increasing investments in park models and other rental accommodations as a shrewd business move, particularly given rising fuel costs and the dramatic decline in towable and motorized RV sales in recent years as a result of the recession.
“To a certain extent, the campground industry has insulated itself from the economic downturn by installing rental units,” Profaizer said.
Indeed, by providing rental accommodations, campgrounds are drawing not only tenters and RVers, but anyone who would normally stay in a hotel or motel while they travel.
“With park model cabin rentals, we can appeal to families who don’t have to worry about going out and purchasing an RV or having a tow vehicle or whatever the case may be. They can just get in their car and come to one of our parks,” said Rob Schutter, COO of Milford, Ohio-based Leisure Systems Inc., which franchises Jellystone Park Camp-Resorts.
Campgrounds have been gradually investing in park model cabins and other rental accommodations for many years. But the focus on rentals has intensified in recent years.
In fact, the competition for campground business has become so fierce that park model manufacturers are facing increasing competition from RV manufacturers, who are now marketing some of their own products as rental accommodations for campgrounds.
For more than 13 years, in fact, the Breckenridge Division of Damon Corp. in Nappanee, Ind., was the only Thor Industries Inc. subsidiary that produced rental accommodations for campgrounds. Now there are four Thor subsidiaries vying for a piece of the campground rental business, with Topeka, Ind.-based CrossRoads RV, Goshen, Ind.-based Keystone RV Co. and Jackson Center, Ohio-based Airstream Inc. each competing for a piece of the campground accommodations business along with Breckenridge.
Some of the major campground chains, for their part, are busy working out exclusive arrangements with leading park model manufacturers, which are building custom-designed rental units for their parks.
Phoenix, Ariz.-based Cavco Industries Inc., for example, is building units for Kampgrounds of America Inc. (KOA), while CrossRoads RV recently landed an agreement to build custom designed park models for Yogi Bear’s Jellystone Park Camp-Resorts. Another RV resort developer, Memphis, Tenn.-based RVC Outdoor Destinations, is working with Athens Park Homes in Athens, Texas, to furnish its resorts with park models.
But while some see the growing demand for rental units in campgrounds as a result of rising fuel costs and declining RV sales, it also reflects significant sociological changes taking place across the United States, Profaizer said.
“Families are increasingly time deprived and the dynamics of the summer vacation have changed,” she said. “People are camping closer to home because they don’t have as much time off to take extended trips across the country. Oftentimes, both parents are working and their kids are often involved in extracurricular activities, which limit their ability to travel.”
In addition, she said, many families are finding that it’s easier and more convenient to rent a cabin for a weekend getaway than to spend their limited free time packing, setting up and taking down tent camping equipment. For others, she said, having a cabin rental gives them an opportunity to experience camping in the great outdoors even if they don’t have an RV.
Schutter of Leisure Systems said campgrounds are also finding that park model rentals are particularly appealing to women, especially mothers. “In our particular system,” he said, “one of the major decision makers is Mom. And Mom finds all the comforts of home in these units. That’s a big selling point.”
Thomas Heneghan, CEO of Equity LifeStyle Properties Inc., also said park model accommodations have wide market appeal. “In today’s economy,” he said, “the park model extends the outstanding value and experience of the outdoor lifestyle to families who are either unfamiliar with tent camping or RVing or who prefer the conveniences offered by staying in a park model.” He added that park models “allow one to have all of the comforts and conveniences of home with the ability to have a change of scenery and reconnect with family.”
Park model manufacturers, for their part, find it behooves them to pay attention to campgrounds and their growing accommodations needs.
“Many of our manufacturers are literally racing to get these units in place in time for the summer camping season,” said Garpow of RPTIA, adding that the pre-summer rush can be a nail-biter for campgrounds, many of which have already booked the park models they have ordered for this summer.
Such is the case at West Glacier KOA in Glacier, Mont., which just received six park model cabins in late April. “We’re hooking them up to septic and electric utilities right now,” said park co-owner Theresa McClure, adding that five of the six units are already booked May 14, when the park opens for the summer camping season.
“It’s just crazy,” McClure said of consumer demand for park model cabins, which KOA markets as Kamping Lodges. “We could probably put in 12 and they’d all be booked.”
Later this month, the Kampground of America (KOA) campground in Herkimer, N.Y. is going to start renting out the nation’s first park trailer to achieve “Emerald” status from NTA Inc., a Nappanee-based company that specializes in certifying “green” manufacturers.
Phoenix, Ariz.-based Cavco Industries Inc. received the Emerald status for the Herkimer park trailer in late April after proving that the unit met NTA’s highest green standards.
Indeed, the Herkimer KOA unit, believed the first “off-grid” park trailer in the country, features numerous green features, including solar panels capable of producing 2 kilowatts of power, bamboo flooring, LED lighting, recycled axels and tires, recycled lumber composite decking, on-demand water heating, energy efficient heating and air-conditioning.
But while this unit may demonstrate one company’s efforts to prove how green it can be, in reality, park trailer manufacturers in Elkhart County, Ind., and across the country are increasingly seeking green certifications, not only for their products, but for their manufacturing processes.
And several consulting engineering firms are helping them obtain their green certifications. In the past year, TR Arnold & Associates in Elkhart has certified Elkhart-based Trophy Homes Inc. and Forest River Inc. as well as Middlebury-based Woodland Park as green manufacturers, while Athens, Texas-based Athens Park Homes also met NTA’s requirements for green certification. Elkhart-based Country Log Cottages, for its part, has also obtained green certification from Anderson, Ind.-based BIS LLC, as has Chariot Eagle Inc., an Ocala, Fla.-based park trailer manufacturer.
Olin Wenrick, president and CEO of Trophy Homes, said consumers are becoming increasingly educated about the merits of green products and it may eventually get to the point where manufacturers are at a disadvantage if they aren’t able to tell their customers they are green.
“It’s coming. So why not start now?” Wenrick asked. “It at least tells people out there that I’m trying to do the right thing for the environment.”
In Trophy’s case, it already was. Trophy had already adopted environmentally friendly manufacturing practices, such as recycling its construction waste, so it was relatively easy for the company to get green certified, Wenrick said.
Dave Burrows, national sales manager for Middlebury-based Woodland Park, said his company also achieved green certification with relative ease.
“We didn’t really have to change anything,” he said. “We had been manufacturing to green standards for quite a while. There was just not a certification process or a verification process for our industry.”
But TR Arnold & Associates, NTA, BIS and other consulting firms have tried to fill that void, and park trailer manufacturers are finding it’s worth their time and effort to seek green certifications.
Burrows, in fact, said Woodland Park’s dealers applauded its green certification. “Basically, the dealers looked at it as a move in the right direction. They looked at it as another tool for them to sell our product. And my Canadian dealers absolutely loved the thought of a green product.”
Mandy Leazenby, TR Arnold & Associates’ green program manager, said her company looks at several criteria before determining whether a company’s manufacturing operations can be green certified. “We look at indoor air-quality, resource efficiency, energy efficiency, water efficiency, operations and maintenance and innovative practices,” she said. “We also look at the attitude of the company and the extent to which they recycle materials during the construction process.”
But while obtaining “green” certification has been relatively painless for several Elkhart County manufacturers to achieve, selling “green” units is another matter, said Wenrick, adding that his company’s green status hasn’t yet translated into increased sales.
That day may come, however.
In fact, while many consumers may not yet be ready to purchase an “off grid” green park trailer with all the bells and whistles, such as solar panels with backup generators, consumers are showing interest in purchasing park trailers with energy and water saving features, such as LED lighting, low flow faucet and showerheads and energy saving appliances.
Dick Grymonprez, vice president of marketing for Athens Park Homes, which achieved its green certification last year, said his company is seeing increased demand for instant hot water heaters.
“Some people just focus on solar panels, but there are different shades of green,” said Leazenby of TR Arnold & Associates, adding that there are many green features in today’s park trailers that are very positive features for consumers, such as units with low-VOC paints and finishes as well as formaldehyde-free carpets, wall materials and flooring.
Phoenix-based Cavco Industries Inc. is the largest park model manufacturer in the western United States and Mesa-based RV Traders has consistently been its largest dealer, a distinction that recently prompted Cavco to name RV Traders its “Dealer of the Decade.”
But while RV Traders co-owners Ken Dugwyler and Jack Crays are obviously pleased with Cavco’s recognition, they are equally enthused about the timing of Cavco’s announcement, which coincides with a sharp upturn in consumer demand for park models after two years of lagging sales, according to a news release.
“The park models really seem to be reviving this year,” Dugwyler said, adding that RV Traders’ sales are up 30% over 2009 figures.
RV Traders, which has locations in Mesa and Apache Junction, sells both park models as well as travel trailers, fifth-wheels and toy haulers. But Dugwyler said park models, which are used as seasonal cottages in RV parks and resorts in Arizona and throughout the Sunbelt, have withstood the economic downturn better than towable RVs and, consequently, have helped his dealership weather the recession.
“The demand for everything declined in the past couple of years. But the regular RVs suffered considerably more than the park models,” Dugwyler said, adding, “We’re definitely doing a lot better with park model sales this year than the past couple of seasons, especially last year. Our RV business is improving as well.”
RV Traders has been involved in the park model business in Arizona since its inception in the late 1970s. Dugwyler said demand for park models has grown in Arizona and across the Sunbelt because park models offer Snow Birds an attractive, roomy and sturdy alternative to travel trailers, fifth-wheels and motorhomes.
Unlike towable or motorized RVs, park models are 400-square foot cottage-like units with full size kitchen appliances, showers and interior furnishings. Park models are also better insulated than towable or motorized RVs, which makes them more comfortable for use as a seasonal dwelling.
“Park models are technically classified as recreational vehicles, but they are sort of a hybrid between a factory-built home and an RV,” Dugwyler said. “They are approved by zoning laws to go into RV parks, but they are built more like a small home.”
And while RV Traders initially sold park models almost exclusively to Snow Birds, Cavco’s decision to broaden its product offering to include cabin-style park models has helped open up a new market for working professionals, families and retirees who want to have a weekend or seasonal getaway cabin in the mountains of northern Arizona, the Rockies and the Pacific Northwest.
“Our geographic reach is growing every year,” Dugwyler said. “We’re shipping units to California, Oregon, Washington and Colorado. We’ve even sold some units in Montana and Wyoming.”
And because RV Traders is also a full-service RV dealership, it can accept towable RVs and motorhomes as trade-ins for park model units.
“We resell just about every park model we take in trade for a new one,” Dugwyler said, adding that older park models are typically sold for use in some of the more economical RV parks.
Cavco, for its part, is pleased that RV Traders continues to enjoy market success. “They’ve been our number one dealer for sales and customer service ever since we signed them on,” said Tim Gage, vice president of Cavco’s Specialty Group, adding, “We fully expect that RV Traders will continue to grow with us in the years ahead.”
For 14 years, roughly 80 employees at Fleetwood Enterprises Inc.’s 135,000-square-foot factory in Rocky Mount, Va., produced nothing but manufactured homes.
And while most of them retained their jobs after Phoenix, Ariz.-based Cavco Industries Inc. acquired the company last fall, the seasoned team of employees had to learn a new product: a custom designed park model for Kampgrounds of America Inc. (KOA) East Coast franchisees, according to a news release.
But after seven months of intensive training, including specialized training sessions for key production employees at Cavco’s park model factory in Goodyear, Ariz., the Rocky Mount employees succeeded this month in producing Cavco’s first “Kamping Lodges” for KOA’s East Coast franchisees, with the first unit being delivered to the KOA in Allentown, Pa.
“I’m very impressed,” said Mike Atkinson, KOA director of lodging. “It’s a daunting task to go from a manufactured home plant to a park model plant, especially when you try to put KOA specifications into the mix. It’s the toughest park model you can build because it’s so far outside the norm of what park model companies do.”
The units include tongue and grove interiors, specialty floor materials, and composite siding. The walls are glued together instead of nailed together and the dormers in the rooflines have to be trimmed out. “It takes real craftsmanship to build a KOA unit,” Atkinson said.
Atkinson, who visited the Rocky Mount plant this week, credited Tim Gage, vice president Cavco park models, Dave Blank, vice president and general manager of Cavco’s Goodyear, Ariz., operation, and Tom Satterwhite, general manager of the Rocky Mount factory, for developing the teamwork and training necessary to produce a high quality product for KOA franchisees.
Several Fleetwood employees spent time training at Cavco’s park model factory in Arizona, but the job was made easier because Satterwhite had already created a culture of teamwork at Rocky Mount.
Satterwhite, for his part, said all the accolades go to Cavco’s park model experts. “We just executed the plan they put together,” Satterwhite said, adding, “I think all our people in the plant are just glad KOA selected us as their lodge provider and glad we have the opportunity to work with Cavco.”
For more information on Cavco’s Kamping Lodges, park models and other specialized living units, contact Tim Gage at (602) 763-5488 or visit www.cavcoparkhomes.com. For more information on KOA’s use of park model cabins as Kamping Lodges, contact Mike Atkinson at (406) 248-7444 or e-mail him at email@example.com.
The first “Kamping Lodge” park model manufactured for Kampgrounds of America (KOA) has rolled off the production line at Fleetwood Homes in Rocky Mount, Va., according to The Franklin News-Post, Rocky Mount.
Cavco Industries Inc., the Arizona-based company that purchased Fleetwood’s manufactured housing business in August 2009, is supplying KOA Inc. and its franchisees with park model Kamping Lodges.
The lodges also are being manufactured in Litchfield, Ariz., and in its Texas operation.
Tom Satterwhite, production manager of Fleetwood, said production in the Rocky Mount plant began the first of March.
KOA has 475 campgrounds throughout the United States.
“We sent our production people to Phoenix for training in February. Each group stayed a week. Tim Gage, vice president of speciality sales, and Dave Blank, general manager of the Litchfield plant, came here to help get us started,” Satterwhite said.
The plant’s approximately 85 employees took a break Thursday morning (March 18) to pose for a picture with the first lodge to roll off the production lines.
When Cavco announced the purchase of the Fleetwood plant in Rocky Mount, the company said that acquisition of the facility will enable Cavco to serve “hundreds of KOA franchises in the eastern section of the United States.”
“The first unit is being sent to Allentown, Pa., but we will be shipping the lodges as far north as Herkimer, N.Y., as far south as Naples, Fla., and as far west as Townsend, Tenn.,” the general manager said.
The Rocky Mount plant will save East Coast franchises money in shipping costs, Gage pointed out.
The first lodge produced is 28 feet long and more than 11 feet, wide. The lodges are shipped complete with furniture and bedding. It is set up to sleep four to six people.
Tongue-and-groove wood is used on the interior.
Satterwhite and Luis Figueroa, production manager, explained that lodges come with an option of a 5-foot-long front porch.
The different models are constructed using the same floorplan. There are two bunk beds and a bathroom at one end of the lodge and a larger bedroom at the other end.
There also are several other options including a loft with a ceiling fan.
Cavco has said that camping in a Kamping Lodge is like “roughing it” in a vacation home. Satterwhite explained that some of the models come without a stove as outdoor gas grills are used instead.
The company worked with KOA to develop a custom line of floorplans designed specifically for KOA customers.
While the lodges being produced in Rocky Mount are to fill KOA orders, Satterwhite said Cavco, in the future, will be selling to dealers who in turn will sale to the public.
Satterwhite said that since the local facility was purchased by Cavco, the plant has been closed for only five work days.
“Three of those were due to the big winter storms and the other two was because of lack of production work,” Satterwhite said.
KOA franchisees purchased more than 200 Kamping Lodges from Cavco in 2009, company officials have said.
Cavco is a leader in manufactured homes, park models and camping cabins. It is a primary supplier to campground and RV park owners and developers for rental homes, lodges and resale models.
Cavco Industries Inc., a builder of park models for the campground industry and manufactured homes for the retail market, Thursday (Jan. 28) announced financial results for the third quarter and first nine months of its fiscal year 2010 ended Dec. 31.
Net sales for the third quarter of fiscal 2010 totaled $36,369,000, up 45% from $25,093,000 for the third quarter of fiscal year 2009. The third quarter 2010 results include the Fleetwood Homes operations which, as previously reported, were acquired during the second quarter of the current fiscal year.
Net loss attributable to Cavco stockholders for the fiscal 2010 third quarter was $1,030,000 compared to net income of $110,000 reported in the same quarter one year ago.
For the first nine months of fiscal 2010, net sales decreased 12% to $79,341,000 from $90,632,000 for the comparable prior year period. Net loss attributable to Cavco stockholders for the first nine months of fiscal 2010 was $2,642,000 compared to net income of $1,481,000 last year.
“The financial results of our operations during the third fiscal quarter ended December 31, 2009 are reflective of the difficult market environment. Low margins and a lighter production schedule resulting from the holidays were compounded by seasonally depressed sales volumes that characterized the period,” said Joseph Stegmayer, chairman, president and CEO.
He continued, “Wholesale and retail financing availability continues to be a key challenge for the factory built housing industry. However, our collaborations with wholesale lending companies have provided, and continue to supply, much needed inventory financing to the retailers of Cavco and Fleetwood brand homes. In addition, we are working alongside our industry peers to encourage favorable legislative action on behalf of the mortgage financing needs of potential homeowners. While some progress has been made in this area, such as increased loan limits for government backed home-only loans, a meaningful positive impact in the form of increased home orders at our factories has yet to be realized.
“We are pleased with the transition and integration of Fleetwood Homes and the exemplary efforts of the people comprising the combined company. As a newly expanded organization, we continue to aggressively pursue traditional and niche markets where our diverse product lines and custom building capabilities provide our company with a competitive advantage. These efforts, coupled with our national presence, have positioned us well to seek out and develop varied sales opportunities.”