They have drawn rave reviews from around North America, and now Earthbound Recreational Vehicles LLC is bringing environment-friendly “Dillon” and “Morrison” RVs to Abbotsford, British Columbia, this weekend, the Abbotsford Times reported.
The new models will be on display at this weekend’s Earlybird RV Show and Sale at the Tradex trade and exhibition center in Abbotsford. Each model weighs between 1,500 and 2,500 pounds less than most conventional RVs, which should help users save roughly 12% in fuel, said David Hoefer, vice president of sales for the Marion, Ind.-based company.
“There really is nothing like it in the RV industry,” said Hoefer.
The Earthbound models, which have been on display at other shows in Tampa, Fla., Chicago and Toronto, have received numerous positive reviews from the public and RV publications, such as roamingtime.com.
The two new models are made of recyclable, low-organic, volatile-compound construction materials, which are also used in other motor vehicles, as well as airplanes.
Part of what makes these new RVs so light, said Hoefer, is the absence of wood, which is usually found in other models.
That feature, along with the material the RVs are constructed out of, make it possible for mid-sized SUV’s to tow the trailer, he said, adding customers do not need a separate tow vehicle to use these models.
The Earlybird RV Show and Sale began Thursday (Feb. 3) and hauls on right through Sunday evening, and provides visitors with a variety of other features on display.
Ed Garner sees more enthusiasm in the people who prowl his lots these days. He likes it.
“It seems like we’re getting more traffic,” said Garner, owner of Autorama RV Center in Des Moines, Iowa, where business this year is up an estimated 40% from the worst-in-a-decade decline of 2008. “A lot of people seem to be coming farther away than what they used to. We’re getting people coming from 100, 125 miles away.”
Part of that, Garner conceded, may be that his pool of customers is larger now that several former competitors have closed. But readiness to buy, he said, also provides hope that America’s bottom-dwelling recreational vehicle industry now finally seems pointed upward, according to The Des Moines Register.
“I think there’s still room for improvement,” said Garner, who over the weekend sponsored an RV and boat show in the Varied Industries Building at the Iowa State Fairgrounds. “I don’t think a lot of the retirement people that we used to get are probably the strongest buyers right now. But the farm people who are still farming, they seem to have a little more money than they’ve had.”
Ron Lichtsinn, owner of Lichtsinn Motors Inc. in Forest City, agreed that a troubled business seem to be trending up. The world is not yet as rosy for Lichtsinn, who sells motorhomes with six-digit prices in comparison to Garner, who sells mostly travel trailers.
“If you were going to compare it back to the record years of ’04 and ’05, yeah, it’s still lousy,” Lichtsinn said this week. “But we’re certainly starting to see a lot of energy.”
That’s important, analysts said, because RVs generally are a good indication of whether consumers are ready to spend money on big discretionary purchases.
“The RV industry is always the first in and the first out, and there’s already been a noticeable beginning of it coming out of the current recession,” Dave Hoefer, an adviser to Earthbound Recreational Vehicles in Indiana, told Bloomberg News earlier this month.
Data from the national Recreation Vehicle Industry Association (RVIA) show wholesale sales of RVs in the United States peaked at 390,500 in 2006, slipped to 353,400 the next year, then dove to 237,000 in 2008.
Shipments from factories to dealers are projected to total less than 150,000 in 2009, according to an association report released last week. But July’s monthly decline was the smallest it’s been since October, and analysts now project the tide to turn in 2010, with factory shipments of roughly 185,800.
Industry news reports describe a creeping optimism that in recent months has included slightly stepped-up production at RV makers around the nation and several new manufacturers arising from the assets of bankrupt firms.
Winnebago Industries Inc. of Forest City said this week that it has gradually begun to rehire portions of a work force that layoffs have halved in the past 18 months to 1,650 people at the end of May.
“There have been a few that have been called back, but nothing of significance,” Winnebago spokeswoman Sheila Davis said. “I think we are being cautious.”
Winnebago, which lost nearly 60% of its stock value between September 2006 and February 2009, has seen its stock triple in price since then, from $4.05 per share to $12.62 at Friday’s close.
Iowa dealers said most current buyers seem more interested in low- to moderate-priced travel trailers but that buyers also are interested in the tiers above entry-level products.
Denise Roberts, owner of Imperial RV Center in Ankeny, said consumer confidence seems to be building slowly. Her business has been picking up since April.
“I think in the early part of the year, it was more that nobody knew what was going on,” Roberts said. “I think it was fear. For a while there, it got a little scary.”
George Graber was unemployed for three months this year after the shutdown of an RV plant in Elkhart County, Ind. Now, he’s building $15,000 travel trailers at startup Heritage One RV Inc.
His job-hunting luck reflects a rebound in RV demand that may signal the end of the worst U.S. recession since World War II. In the last four domestic cycles, Winnebago Industries Inc. and other RV makers foreshadowed the economy’s decline and heralded its recovery, government and trade-group data show, according to Bloomberg.com.
“The RV industry is always the first in and the first out, and there’s already been a noticeable beginning of it coming out of the current recession,” said Dave Hoefer, 66, an adviser to Earthbound Recreational Vehicles, which was founded this year on the site of another bankrupt maker in Middlebury, Ind.
Elkhart County builds more than half the RVs sold in the U.S., making it the center of a $14 billion domestic market. Evidence of a turnaround is showing up in new companies like Heritage One sprouting from the remains of failed manufacturers, and in no-vacancy signs at a motel favored by RV-hauling truckers.
Analysts watch RV sales because motorhomes and travel trailers are discretionary purchases that consumers defer in an economic slump. Industrywide deliveries may rise in 2010 to end a three-year decline, said Richard Curtin, director of consumer surveys at the University of Michigan.
Sales in July, the latest available, ran at the strongest annual rate since October, according to the Recreation Vehicle Industry Association (RVIA). By year’s end, those shipments should show their first monthly gain since October 2007, predating the onset of the recession in December of that year, said Curtin, who analyzes data for the Reston, Va.-based trade group.
Rise and Fall
Wholesale deliveries to dealers averaged 355,000 over a six-year period that ended in 2007, then tumbled to 237,000 last year as the recession took hold, according to RVIA data.
Showroom visits and consumer-loan approvals now are rising for the first time in more than a year, said Steve Smith, a Heritage One partner who recently drove 5,000 miles through the Midwest and South as part of a company sales call.
“Customers’ interest is obviously rising, which is making the dealers feel better,” Smith, 47, said from the 30,000-square-foot building in Nappanee, Indiana, where Graber and about a dozen other workers were assembling so-called “stick and tin” trailers of metal sheets over wooden frames.
Three Obama Visits
Elkhart County needs that kind of news. Located along the Michigan border and home to about 200,000 people, the county has a jobless rate of about 17%, the worst in Indiana. President Barack Obama has visited the area three times to talk about economic hardship.
Ron Muhlenkamp, whose Muhlenkamp & Co. in Wexford, Pa., has invested in RV makers coming out of past recessions, said he isn’t yet buying the stocks in this cycle.
“We think the consumer might be slower to return this time,” he said. U.S. joblessness reached a 26-year high of 9.7% in August, the Labor Department said on Sept. 4. The so-called underemployment rate, which includes part-timers who would prefer full-time work and job seekers who have stopped looking, rose to a record 16.8%.
Before coming to Heritage One, Smith worked at Travel Supreme Inc., a maker of $160,000 trailers that shut its plants in January after another company bought out the operations. Nearby sit two vacant buildings owned by motorhome maker Monaco Coach Corp., which went bankrupt in March.
Betting on Recovery
Earthbound, the company advised by Hoefer, is on the site of Pilgrim International Inc., which went out of business in September 2008. Earthbound has been working on $42,000 lightweight trailers since January and is betting on a recovery in time for a sales push in early 2010. Heavier trailers cut fuel economy for their tow vehicles.
“We feel the industry has a strong future,” said Bill Hughes, 58, an Earthbound investor who was a Pilgrim vice president of service and parts. In the past year, 15 new RV makers have begun operations, according to the RVIA.
Another sign of recovery is bookings at the Red Roof Inn in Elkhart, said General Manager Beth Ronzone, a 24-year employee. The motel is filled again on some nights with truck drivers who move RVs, a reminder of the industry heyday two years ago when rooms were sold out five or six times a week.
‘Seeing a Pickup’
“We started seeing a pickup in late April,” Ronzone, 57, said Aug. 24. By that evening, most of the parking lot was occupied.
Hiring is starting to pick up, too, said Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County
Keystone RV Co., a Goshen-based unit of Thor Industries Inc., the largest U.S. RV maker, announced last month it will add 200 workers to expand travel-trailer output, Heiden-Guss said. Jayco, in nearby Middlebury, is also recruiting, she said.
Among the investors betting on the industry is Warren Buffett’s Berkshire Hathaway Inc. Berkshire’s Forest River Inc. RV unit paid about $42 million for the RV business of Elkhart- based Coachmen Industries Inc. American Industrial Partners bought the motorhome unit of bankrupt Fleetwood Enterprises Inc. of Riverside, Calif., in June for $53 million.
Winnebago and Jackson Center, Ohio-based Thor are the only large, publicly traded RV makers still in the business and not in court protection.
Shares of Forest City, Iowa-based Winnebago and Thor have almost doubled this year. Since the recession began, Winnebago has tumbled 45% and Thor has fallen 26%, compared with a 31% decline in the Standard & Poor’s 500 Index. Coachmen still operates its bus and manufactured-home business.
At Sierra Motor Corp., a 22-year-old maker of interiors for horse trailers, 2008’s record-high fuel prices helped spur expansion into human transport.
The Bristol, Ind.-based company added a line of travel trailers weighing less than 1,750 pounds. They include amenities such as toilets, which aren’t common on models that small, President Michael Greene said.
That move also meant that Sierra Motor, which has about 45 workers, could keep about a dozen employees who would have been laid off as orders for equine vehicles flagged, Greene said. The labor force has exceeded 100 in busier times, he said.
“They are like family, you hate to have to let people go,” said Greene, 52, who was one of the company founders.
For Graber, 45, who had to sell his pickup for a cheaper model and take other belt-tightening steps after losing his purchasing job at Travel Supreme, the Elkhart recovery can’t come fast enough.
“People I know personally, a couple of them will get back every week now,” he said. “Three months ago, everyone was just down and they weren’t even taking applications.”