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Red Bay, Ala., Copes with RV Industry Downturn

July 6, 2009 by · 1 Comment 

Hope and Bruce Terrell represent two sides of Red Bay, Ala.

Bruce is one of hundreds of workers laid off in this small Alabama-Mississippi border town. He lost his job at Tiffin Motor Homes Inc., makers of high-end luxury coaches, in October and has been unable to find work. He keeps busy as a youth pastor at his church. His unemployment benefits, extended once, run out in July, according to the Florence, Ala., Times Daily.

On the other hand, Hope has been able to keep her job at pet food maker, Sunshine Mills, another key employer in Red Bay.

“If we can make it with what I make, we’re hoping he can stay on,” Hope said.

Red Bay lost nearly a third of its jobs in the past year, by some estimates, because of the recession that dragged down the RV and mobile home markets, which make up the bulk of employment in this town of 3,256 residents.

Since mid-2007, the RV industry nationwide has shed more than half of its work force, and since 2001, shipments of mobile homes decreased by more than half, according to industry data.

Red Bay’s main employer is Tiffin. Other major employers are Sunshine Homes, a mobile home manufacturer, Sunshine Mills and Gates Rubber Co.

“The whole RV industry is in the worst depression it’s been in,” Tim Tiffin, general manager and son of founder, Bob Tiffin, said at his office in the Tiffin complex.

Tiffin’s work force decreased 50% from its peak, he estimated. Production has decreased 70% from its peak.

At its peak two years ago, the factory produced 13 coaches per day. Now, that number is four, up from the three per day this winter and spring.

Still, Tiffin sees the mild upswing as a “bounce from the bottom – three weeks, it could be different.”

“At four per day, it’s not conducive to what we need to do,” Tiffin said.

Ray Forester, general manager at Sunshine Homes, said though there was a greater demand for mobile homes, frozen credit has slowed the industry.

In the past year, shift work declined to four homes a day four days a week from a peak of six homes per day during a five-day work week.

The 2008 federal Troubled Asset Relief Program, or TARP, was supposed to loosen credit, but “financing has not loosened up at all,” Forester said.

The plant laid off 35% of its work force – about 60 positions within the past year – something he said he was uncomfortable with discussing.

“If the Feds do something to fix the housing, it would fix the whole economy because housing drives the economy,” Forester said. “They’re not pursuing the right things.”

Sunshine Mills bypassed the current recession and tainted dog food scandals of 2007 and has not laid off any workers. “We’ve been able to maintain volume even with the slowing domestic economy,” said company President Alan Bostic through a spokesman. About 350 people are employed and, since 2008, the company has been able to hire a few more people, the spokesman said.

Sunshine Homes and Sunshine Mills are owned by the same stockholders, but are run independently. Representatives for Gates Rubber Co. did not return phone calls seeking comment.

Many Red Bay residents say they know someone who was laid off – a brother who went back to school and now works across the valley for a satellite TV company, a father who took retirement after working for a year and who now collects Social Security.

Many unemployed find their way to Weatherfod Library, where librarian Linda Ezzell estimates up to a dozen individuals per day use the computers to work on resumes, search for jobs or follow up on leads. When the layoffs first started, there was a rush of patrons, replaced by a steady stream now, she said.

“People are seeing just a little glimmer of hope that maybe the economy is swinging back,” said Red Bay Mayor Bobby Forsythe. “Even though it may be minute.”

During the winter and spring, monthly sales tax collection fell as much as 18% over the previous year. Recent sales tax collections are nearly on par with 2008.

Even with the uptick in sales tax and RV production, Forsythe said, “There are still many people hurting here in Red Bay that have lost their jobs. I don’t want to paint a rosy picture that people are employed here and making plenty of money,”

Tiffin’s downsizing has had a trickle-down effect with dealers going under and suppliers struggling.

“It’s taken a year to get to this level,” he said. “I don’t see it getting a whole lot better for another year.”

Tiffin estimated 15 to 20 local suppliers also are affected through the trickle-down effect. He declined to name the suppliers.

Progress, however, has been made. “Much of the distressed merchandise has been sold off,” Tiffin said. Distressed refers to coaches left over when a dealership goes out of business.

Until dealers get wholesale financing, Tiffin said financing will remain the same: difficult for consumers at best.

Like the auto industry, tightened credit markets mean greater restrictions for the borrowing public. Down payments of up to 20% can be difficult when buying a car, but when the vehicle can cost as much as a home, that adds to the difficulty.

Fuel prices that tick upwards during the summer also affect the business.

“People who could buy a coach two years ago cannot buy one now,” Tiffin said. “If fuel prices run back up, that’s just going to throw us back down on the mat again.”

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