Signs of Life in RV Industry; Is Boating Next?

January 18, 2010 by · Leave a Comment 

tradeonlytodayEditor’s Note: This thorough story about the RV and boat industries was written by Reagan Haynes and is taken from Soundings Trade Only Today.

There’s a long-standing belief that the RV market leads the boating industry by about six months. Feedback from those in the RV and marine trades indicates that formula is holding true in this recession, even though the numbers show both industries are tracking similarly.

Still, there are leading indicators on the RV side that are hard to ignore. Fleetwood Enterprises Inc. and Monaco Coach Corp., two of the RV world’s largest manufacturers, filed for and emerged from Chapter 11 restructurings. While some components of the brands were lopped off or modified (or sold off entirely), both remain in business, giving the industry a much welcomed sense of stability.

Meanwhile, the marine industry’s second-largest manufacturer, Genmar, remains embroiled in a difficult bankruptcy process, with no clear sense of what the final outcome will be. That not only is a concern to dealers and industry insiders, but some believe it’s one reason lenders are more hesitant to loan money to marine businesses than their RV counterparts.

The marine and RV industries share some of the same impediments to recovery, including financing and the fact that they sell “luxury” items.

Manufacturers seem to be approaching the recovery differently, too. Some boatbuilders are keen to offer more modest and affordable options to consumers, while many say RV manufacturers are looking for the next big “wow” factor to spur consumers to trade up before they’re quite ready.

Both industries have had to deal with credit crunches that have stunted their rebounds, and most forecast a long, drawn-out recovery. Suppliers and vendors to both marine and RV manufacturers have faltered precariously. Weakness in consumer confidence is keeping sales difficult to come by.

Those customers who are buying are tending toward smaller boats and RVs. They’re the “bottom-feeders,” as one insider says – looking for, and often finding, a steal. But if the RV industry is a leading economic indicator, there are some reasons to be hopeful.

Credit seems to be easing slightly, as RV dealers find both wholesale and retail financing options through local lenders who are looking to replace lost car dealership clientele. Shipments are increasing, meaning at best that improved sales are ahead and, at worst, that dealers are clearing and replacing their aged inventory with new models.

And whether the numbers support it or not, the prevailing perception is that the RV industry is doing better overall – a definite boost at a time when everything hinges on consumer confidence.

More fragmented

Both the RV and marine industries have lost dealers and manufacturers. The RV industry has counted 170 dealerships that have gone out of business since 2007, out of a total of 3,000, according to Phil Ingrassia of the national Recreation Vehicle Dealers Association (RVDA). It’s a small percentage, but it’s much higher than the typical 15 to 20 closings the RVDA tracks in a typical year.

The Recreation Vehicle Industry Association (RVIA) estimates that about 50% of its work force has been laid off, according to spokesman Kevin Broom. The RV industry has about 80 manufacturers – down from about 100 – whereas the marine industry has about 1,500 boatbuilders, according to Scott Stropkai, an RV industry analyst with Statistical Surveys Inc. (SSI) in Michigan.

Some think the marine industry must contract more to shrink capacity to demand, but experts say it won’t become as small as the RV industry. “This is an industry with lots of small niches, more so than the RV industry,” so it needs more manufacturers and dealers, says Thom Dammrich, president of the National Marine Manufacturers Association (NMMA).

The NMMA estimates that around 20% of boat dealers have failed – some 1,500 of approximately 6,000. The marine industry is losing dealers more quickly than the RV industry because so many are undercapitalized and overstocked, says Phil Keeter, president of the Marine Retailers Association of America (MRAA). RV dealers tend to have one or two brands, while it’s common for boat dealers to carry five or more, making the RV dealer more stable.

“The (boat) dealer shouldn’t buy so much stuff; he shouldn’t try to be everything to everyone,” says Keeter. “He ought to be more focused.”

Inching ahead

Just as unemployment numbers tend to be a lagging economic indicator, the RV industry seems to be a leading indicator, says Mac Bryan, vice president of the RVIA. Though sales dipped similarly through 2008 and the first two quarters of 2009, according to SSI data, the perception is that the RV side is rebounding ahead of the boating industry.

“We’re definitely seeing the RV side recover quicker than we’re seeing the boat side recover, although there are still some similarities where maybe larger motorhomes and larger boats are softer, and smaller boats and smaller trailer sales are improving,” says Chris Hoover of Ron Hoover RV and Marine Center, which has five locations in south Texas.

The RV industry definitely leads into recessions but not necessarily out, according to Mark Bretz, of Bretz RV and Marine in Missoula, Mont. This time Bretz saw the same early decline on the marine side. “I think that these industries were probably aware something was going on that wasn’t good for close to a year before a lot of other industries felt that,” Bretz says.

A shorter boating season makes the industries tough to compare in terms of who is first in or out of a recession, says Earl Stoltzfus, who has owned Stoltzfus RV and Marine in West Chester, Pa., for 42 years.

In 2006, the RV industry shipped 390,000 units. The 2009 projection was at 146,000, but a 27% increase is forecast for 2010 over “admittedly weak numbers,” Bryan says.

Bretz isn’t comforted by the new projection. “I just think that manufacturers are out of sync with retail,” he says. When dealers saw their business plummet, they quit buying. Now inventory is so low that they are buying to restock.

“But on the sell-through rate, it’s still not very good,” says Bretz.


Like many, Stoltzfus thinks the RV industry is healthier because major manufacturers have already worked through Chapter 11 restructurings. Though the largest boatbuilder, Brunswick Corp., responded quickly to the downturn by downsizing, the future of No. 2 Genmar has been up in the air since its Chapter 11 filing last June, leaving dealers, suppliers and consumers fearful of the future, he says.

Stoltzfus worries that Genmar is repeating the pattern of an RV manufacturer that hurt its dealers and customers in the Chapter 11 filing process. Though the assets were sold to a solid builder with a good reputation, they were sold on a net-net basis with no liabilities. That means approved warranties will not be paid and dealers are not able to sue for damages, he says.

“You don’t do that and get away with it,” Stoltzfus says. “They are currently trying to mend their ways, but it’s going to take a long time. They’re going to get a much smaller portion of the industry. The portion that is taking care of consumers and dealers during this time, they are the ones that will get more market share.”

The major RV bankruptcies came early in 2009 and were resolved during the summer, giving more weight to the idea that the RV industry leads marine. Bretz predicts that RV manufacturers will have a tougher recovery because, in the past, RV builders who filed for Chapter 11 typically didn’t emerge from bankruptcy, yielding their market share to survivors. This time, the same number of major builders is competing for a smaller market.

“Maybe these industries will end up like the airline industry – to be a survivor you have to go through every few years and do a bankruptcy again,” says Bretz. “I think part of it will make businesses, unfortunately, less afraid of debt, because it appears that if you take on a bunch of debt and don’t manage it very well, you get a get-out-of-jail-free card.”

However, the prolonged uncertainty caused by Genmar’s unsettled Chapter 11 is scaring off potential lenders, Hoover says. A banker that RV and Marine Center deals with told Hoover that, from a lending perspective, RV manufacturers are more stable than marine manufacturers. That makes banks hesitant to issue marine dealers floorplan money.

“Two of the three biggest RV manufacturers … both filed and both emerged, [so] it seems like just a hiccup,” Hoover says. “There’s still some question on where the marine manufacturers are.”

Easier credit

The marine industry is operating with only one national wholesale lender – GE – and the RV industry with three – GE, Bank of the West and Bank of America. Still, Stoltzfus says the two industries have suffered equally but that the RV industry has moved further beyond its low point. He believes he is paying more than he should for GE’s wholesale dollars but says he has no shortage of credit.

Bretz says there’s a mixed message being sent. “Legislators are saying they want to grow business, but meanwhile the banking regulators are being incredibly onerous on banks in many cases, and until that changes, I don’t think you’re going to see significant expansion” into RV and marine wholesale finance, Bretz says. “Regulators that had capital ratios that they thought were acceptable two years ago are now saying those ratios need to be twice as high, and the only way you can get there logically is to reduce outstanding loans. Until banks are positioned to where regulators stop getting them to beef up capital liquidity, you’re not going to see significant change.”

However, RV dealers have been resourceful with local lenders, and credit unions and have been helping them understand floorplan finance, says Ingrassia. RV dealers say they have had some relief across the board, since local banks are loaning wholesale credit lines.

One reason credit unions have been more open to providing credit is because they have undergone such a change in the auto market, Bryan says.

Marine and RV associations have joined forces to secure Small Business Administration loans that were to be spread between marine, RV and auto dealers. That program has performed below expectations, Ingrassia says, and though everyone expected the new program to take time, it’s taking longer than anyone thought.

Bryan speculates that the credit crunch on the retail side has caused a slowdown in the turnover of vehicles, perhaps similar to that of the marine industry. “Typically, people trade in RVs every four years, and my guess is that time frame has been lengthened,” says Bryan.

Factories ramping up

RV manufacturers are gearing back up to build more product, but Keeter says that won’t necessarily be reflected in the retail market.

After both industries focused on clearing out aging inventory, combined with a credit shortage, there is little product in the pipeline, Bretz says. “I believe RV manufacturers will have a relatively good 2010 just bringing inventories back to normal,” says Bretz. “That’s one of the problems with both industries – we don’t have good information about retail. There’s much better information about shipments, but in times like these [shipment numbers] tend to either understate or overstate the problem and are not a very accurate indicator of what’s really going on.”

The RV industry is also moving to a system that allows consumers to dictate production.

That is especially true for dealers who sell higher-end motorhomes, since those already were declining in popularity before the recession’s onset, Bryan says. In 2006, that segment accounted for about 15% of the 390,000 units sold. Now it’s less than 10%, says Bryan.

“Because dealer inventory is being watched very closely and because the cost of that inventory has … gone up in several different ways, dealers are reluctant to take on inventory they don’t think they can move very quickly,” says Bryan.

If the RV industry does, in fact, lead marine, that could be a cue for dealers who sell larger vessels to pay close attention to their inventories, because Bryan says no one anticipated such an extreme decline in that RV segment.

Retail credit could also be a factor. Bretz says he has problems securing financing for buyers of the expensive RVs he sells.

Ingrassia says dealer inventories have thinned, as has the competition with the liquidation market. Maybe it’s fortunate that few expect a swift upswing in either market, because many worry that decimated supplier ranks would be hard-pressed to keep up.

Dealers will have smaller inventories moving forward, Bretz predicts, and will understand the importance of turning them more than in the past. And it will take time before the manufacturers have the clout they had a few years ago.

“We’re in the process of opening a new store in Portland [Ore.], and we’re amazed at how many good product lines are available in what would be a pretty major market,” says Bretz.

New models

The RV industry is unveiling new products for the upcoming model year at a pace likely to exceed marine, where some manufacturers are offering scaled-down versions of models, or resurrecting smaller, previously discontinued boats.

“I would say that is a pretty significant opposite,” says Hoover. “(RV manufacturers) are bringing out bigger TVs and fancier things and trying to give people a reason to buy.”

Some marine manufacturers say that after such a long trend of adding technology and gadgets to boats, there might be a consumer trend toward simplicity. But in the RV market, Broom predicts, that predilection will not just disappear.

There will be a trend to provide better value in the future, Bryan says. The marine industry seems to be catching up in terms of offering fewer options or more specific packages. Bryan says the RV industry has already made that shift. And even when people buy less-equipped vehicles, they buy add-ons after the fact, he says.

“That’s been a strongpoint in the industry – the aftermarket sales,” Bryan says. That being said, RVs are increasingly coming fully loaded with home conveniences like televisions and microwave ovens.

And though nobody expects a rapid rebound in either industry, Hoover says the family dynamic of both is giving him leverage in this uncertain economy. People are making choices about their limited disposable income, and in the end, family activities win. That gives him hope for both the marine and RV industries.

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Fleetwood Enterprises Selling Towable RV Brands

December 21, 2009 by · 1 Comment 

Fleetwood Enterprises Inc., which first filed for Chapter 11 bankruptcy on March 10 and previously sold off other assets, is inviting bids on its trademarks and remaining personal property assets exclusively related to its travel trailer business.

The trademarks/travel trailer brands are being marketed on an “as-is/where-is” with no express or implied warranties, with the items’ sale subject to final approval of the bankruptcy court.

“We’ve had inquiries” from potentially interested buyers, said Todd Uhlick, Fleetwood associate general counsel and director real estate. Written bids can be e-mailed to him at with a copy required sent to, senior vice president and general counsel. Bids can also be faxed to (951) 977-2073. They must be received no later than Jan. 15, 2010, at 5 p.m. PST (and not postmarked).

Bidders are required to include a $25,000 deposit via a cashier’s check, made payable to Fleetwood Enterprises Inc., at 3125 Myers St. Riverside, Calif. Any bid must identify the proposed purchaser or any sponsor of the purchasing entity yet to be formed and also include adequate proof of the bidder’s ability to complete the purchase of the assets on terms substantially similar to those set forth in Asset Purchase Agreement.

Fleetwood has sole discretion in determining the highest/best bidder. Deposits will be returned to unsuccessful bidders. The successful bidder’s deposit will be credited against the purchase price, if the bankruptcy court approves sale of the travel trailer assets to that bidder.

Fleetwood is marketing Canadian, as well as U.S., trademarks/travel trailer brands. They include AX6, Backpack, Caravan, Compass, Formula, Gearbox, Gearbox Nitrous, Mallard, Millard Bird Design, Mallard Sport, Nitrous, Nitrous Hyperlite, Northern Pride, Orbit, Pegasus, Pioneer, Pioneer Spirit, Prowler, Prowler Design, Prowler Classic, Luxury-Lite, Prowler Regal, Quantum, Redline, Redline Hyperlite, Regal, Sun Valley, Terry, Terry Design, Terry LX, Terry Premier, Terry Quantum, Terry Resort, Triumph, Wilderness, Wilderness Advantage and Wilderness Scout.

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FEMA Trailer Trial Postponed; Settlement Near?

December 3, 2009 by · 1 Comment 

The second FEMA trailer product-liability trial has been postponed due to talk of a settlement for thousands of claims from bankrupt defendant Fleetwood Enterprises Inc.

The Riverside, Calif.-based trailer manufacturer and its insurers are said to be negotiating a settlement even though a jury in September rejected a New Orleans’ family’s claim that a FEMA-supplied trailer built by Gulf Stream Coach Inc. exposed them to dangerous levels of carcinogenic formaldehyde, according to the Courthouse News Service.

Just days after the catastrophe of Hurricane Katrina in 2005, FEMA awarded $170 million in contracts to Fleetwood to provide 7,500 travel trailers and 3,000 manufactured homes to refugees from the storm.

Fleetwood was one of several manufacturers to receive FEMA contracts, and was awarded the second-highest dollar amount; Gulf Stream Coach received the largest order. 

FEMA is not a party to either lawsuit – neither the one that Gulf Stream fended off in September, nor the second one, against Fleetwood.

The second bellwether trial was slated to start next Monday.

Plaintiff Elisha Dubuclet claims that formaldehyde leaking from the FEMA trailer where her family lived for 18 months aggravated her daughter’s eczema and increased her risk of cancer.

The complaint was taken from a batch of consolidated complaints. Class-action status was denied last year by presiding U.S. District Judge Kurt D. Engelhardt.

The Wall Street Journal reported in December 2008 that plaintiffs’ lawyers were disappointed, though “not surprised” by Engelhardt’s rejection of class certification, considering the number and variety of cases alleging formaldehyde-related ailments.

Several thousand lawsuits have been filed and more are expected.

“We’re looking forward to putting before a jury some good, instructive bellwether cases,” attorney Gerald Meunier told the Journal. “We’ll see what they do with those, and we’ll know more about how to conclude all of the other litigation.”

Fleetwood Enterprises filed for bankruptcy in March this year and sold its motorhome division to a private equity group.

A September article posted on paraphrased plaintiffs’ attorney Tony Buzbee as saying that the court allowed the formaldehyde lawsuit against Fleetwood Enterprises to proceed despite its bankruptcy because insurance money is available to pay any potential settlement.

Fleetwood Enterprises is the lone defendant in the Dubuclet complaint.

The Washington Post reported in 2007 that a man in Slidell, La., “was found dead in his trailer on June 27, 2006, after complaining about the formaldehyde fumes. In a conference call about the death, 28 officials from six agencies recommended that the circumstances be investigated and trailer air quality be subjected to independent testing. But FEMA lawyers rejected the suggestions, with one… cautioning that further investigation not approved by lawyers ‘could seriously undermine the Agency’s position’ in litigation.”

Later, House Oversight and Government Reform Committee Chairman, Henry A. Waxman, D-Calif., blasted FEMA’s indifference to storm victims and said the situation was “sickening.” He said the documents “expose an official policy of premeditated ignorance” and added that “senior officials in Washington didn’t want to know what they already knew, because they didn’t want the legal and moral responsibility to do what they knew had to be done,” according to the Post.

FEMA blames trailer manufacturers for the formaldehyde in the trailers. Cheaper, substandard wood products used in trailers assembled in a rush to meet production targets increased emissions of the carcinogen, industry officials and analysts said.

Trailer manufacturers say that because federal guidelines were inconsistent, they relied on suppliers, who are responsible for any shoddy materials they provided.

Gulf Stream was cleared in September in the first bellwether trial; three other bellwether cases are set for trial, involving Keystone RV Co., Forest River Inc. and Recreation by Design Inc. The bellwether trials are meant to indicate likely outcomes for all plaintiffs, in turn fostering settlement talks between parties.

Many attorneys were not immediately available for comment.

Judge Engelhardt has not yet set a new trial date.

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Fractured Economy in Northeast Indiana on the Mend

October 13, 2009 by · Leave a Comment 

The health of the northeast Indiana job market is on the mend after months of suffering more acutely than the rest of the country.

In the three months ended Sept. 30, employers in northeast Indiana and northwest Ohio announced plans to add 1,080 more workers than they planned to cut, according to a quarterly analysis by the Journal Gazette, Fort Wayne, Ind.

It’s the third such analysis this year and the first to suggest a net gain of jobs in the 15-county region.

As in the previous two quarters, manufacturing was the dominant sector in the most recent economic scorecard. Big announcements at two of the region’s manufacturing powerhouses accounted for 1,000 of the 1,670 jobs that employers promised to create.

General Motors Co. announced last month that with the closure of a truck plant in Pontiac, Mich., it would add a third shift at its Allen County assembly plant, bringing 700 jobs to the region by April.

And after a private-equity firm brought Fleetwood RV Inc. to decatur, Ind.,  it announced in August that it would add 300 jobs to its workforce of 630 by mid-November.

The analysis is based on announcements of which  the newspaper was already aware, but it does provide a snapshot of the area economy. And John Stafford, director of the Community Research Center at Indiana University-Purdue University Fort Wayne, said the numbers jibe with statistics his agency is compiling.

“We’re just measuring audible sound,” he said, explaining that many smaller job decisions probably aren’t publicly announced.

Even so, the numbers reflect a tentative recovery in a regional manufacturing economy that fell further and faster than other sectors did.

In the first three months of 2009, companies announced 2,500 layoffs or cuts and 850 hires. In the second quarter, 4,560 layoffs and cuts were announced, compared with just 512 hires.

The region and the entire Midwest lost manufacturing jobs this year as companies cut production more quickly than sales plummeted, cutting deeply into inventories, said William A. Strauss, a senior economist at the Federal Reserve Bank of Chicago who compiles the Midwest Manufacturing Index.

“I think the financial crisis hit manufacturing more heavily than it did other parts of the economy,” Strauss said.

Car and truck sales, for example, fell 27 % in the first eight months of 2009 compared with the same period of 2008. But production was slashed by 46%, Strauss said.

The recession and tighter credit markets made it difficult for consumers and small manufacturers to get loans and do business. And it helped tip some huge companies – such as General Motors Corp. and Fleetwood Enterprises Inc. – into bankruptcy.

Auto sector’s shifts

The 2,600 workers at the Allen County truck plant were idled for 10 weeks starting in May as bankrupt GM struggled to reduce inventories. But after the new General Motors Co. emerged from bankruptcy court in July, inventories fell further than expected, thanks in part to the federal ”Cash for Clunkers” program.

In July, GM announced it would spend $46 million retooling the Allen County plant so it could make heavy-duty pickups. In August, GM said it was cranking up production in Allen County and at its Defiance, Ohio, foundry. Then in September, GM said it was adding a 700-employee third shift in Allen County.

Many of the new workers at the plant will come from the roughly 1,000 who lost jobs this month when GM closed its truck plant in Pontiac, but it still will be a boon to the regional economy.

Even though the biggest news in the regional job market for the quarter is the new auto industry jobs, the sector also accounted for the biggest losses.

GM announced in August that 175 workers – 115 in Allen County and 60 in Defiance – took advantage of a second round of buyouts offered this year to employees.

And in July, parts maker Meridian Automotive Systems Inc. closed its Grabill plant, putting 120 out of work.

For Fleetwood, orders have steadily grown since summer, said John Draheim, president of the new Fleetwood RV. The problem has been in getting parts.

“The supply chain has been fractured,” he said.

While most firms that directly supply Fleetwood made it through the downturn, some suppliers didn’t, causing disruptions.

“Occasionally we have to take some down days to let them catch up,” Draheim said.

Even so, Fleetwood’s staffing was “a little bit north of 850” last week and growing, Draheim said.

The third-quarter’s third-largest job addition also was in the RV industry. Sweden-based Dometic LLC announced it would move 116 jobs from Mexico to LaGrange, Ind., by 2012 to make retractable RV awnings.

Confidence grows

Overall, the net additions to the regional workforce in the third quarter were modest compared with the losses announced earlier in the year. Fleetwood, for example, likely will finish 2009 with about 400 fewer workers in Decatur than it had in 2007.

And some huge losses might loom. Navistar Inc. is considering buying an office complex in Lisle, Ill. Navistar won’t say whether it’s thinking about moving more than 1,000 well-paying jobs there from Fort Wayne, but the company has told Lisle officials more than half the 3,500 office employees would come from out of state.

Other than Fort Wayne, the only city where Navistar has a sizable white-collar operation is Knoxville, Tenn., where it employs 89, according to the company website.

But as the Federal Reserve’s Strauss meets with business leaders throughout the Midwest, he said things are slowly getting better.

“There has been a very significant change in terms of business confidence,” he said.

Jeff Rohyans of New Haven also is more confident. In January, he was laid off from the Parker Hannifin plant in New Haven. He drew unemployment for six weeks before going back to Parker Hannifin on temporary status in April and then moving to a temporary job at steel fabricator Almet Inc. in June.

He took more than a $3 hourly pay cut from the $14 an hour he made at Parker Hannifin. But after commercial construction starts to recover, Rohyans, 35, expects to be made permanent at Almet and to get the insurance and other benefits that come with it.

Judging from the train traffic he’s seen through New Haven, Rohyans said he feels the economy is on the mend.

“I like to use the phrase ‘cautiously optimistic,’” he said.

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Biz Prof Says Corporate Bankruptcies to Hit 300 in ’09

October 5, 2009 by · 1 Comment 

Editor’s Note: Fleetwood Enterprises Inc. and Monaco Coach Corp. remain on Robert Salomon’s list of what he calls “noteworthy” bankruptcies of 2009. The associate professor of management at the Stern School of Business, New York University, filed the following story on his blog at 

In January I predicted that “major” bankruptcies in 2009 would challenge the 383 mark set in 2001 (the high-water mark after the dotcom bubble). I even suggested that it was possible that we could exceed 400 “major” bankruptcies in 2009.

According to, there have been 208 “major” filings thus far in 2009. Assuming that bankruptcies are equally distributed throughout the year, this puts us on pace for 277 bankruptcies. That is tracking well shy of my prediction. In fact, bankruptcies were down significantly from Q2 to Q3, and have been trending downward throughout the year.

That stylized fact begs the question: Is that a “green shoot” dip in bankruptcy filings, or might the Fed/Treasury liquidity programs be keeping weaker firms on artificial life support?

Although I cannot be sure why bankruptcies have tracked lower than forecast — whether due to a better-than-expected economy or government intervention (or some combination of the two) — I am certain that my prediction was way off. At this point then, if the bankruptcy pace quickens in the 4th quarter (as is typical), the final number will likely come in around 300. With 300 major bankruptcies, we would exceed last year’s number by 30%.

But looking forward, the question now becomes: What should we expect for 2010? I will wait for the final 2009 numbers to make a definitive prediction, but right now, my informed guess would be 350, … and that’s even if the economy rebounds in 2010, barring a double-dip recession scenario.

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Class Action Suits: It’s No Slam Dunk for Plaintiffs

September 14, 2009 by · Leave a Comment 

At least four class action suits have been prepared against former executives of Riverside, Calif.-based Fleetwood Enterprises Inc. alleging violations of the Securities Exchange Act by issuing false and misleading statements about the company’s financial condition between Dec. 6, 2007 and March 10, 2009.

Each firm is seeking shareholders who bought shares of Fleetwood Enterprises during that time. Fleetwood, an RV and manufactured home maker, filed for bankruptcy protection on March 10, according to the Riverside Press-Enterprise.

The only suit that’s been filed with the U.S. Central District Court of California so far comes from New York-based Coughlin Stoia Geller Rudman & Robbins LLP, which names Fleetwood’s president and CEO Elden Smith and former CFO Boyd Plowman as defendants.

Before the suits can move forward though, the court will need to decide whether to certify them or not.

“The fact that you file a class-action doesn’t automatically make it so,” said Piero Dallarda, a partner with Best Best & Krieger in Riverside specializing in business litigation, who has argued class-action cases before.

Best Best & Krieger has not filed a class-action suit on behalf of Fleetwood shareholders.

Dallarda said the court considers a few standards before deciding whether to certify a class-action suit, namely whether the number of shareholders suing the company’s executives is large enough, if there are common characteristics among the shareholders based on law and fact, and if the lead plaintiff adequately represents the rest of the shareholders.

In its 38 page filing made Sept. 1, Coughlin Stoia Geller Rudman & Robbins LLP pointed to statements made in press releases by Elden Smith since Dec. 6 that it alleges painted a rosier picture of Fleetwood’s condition.

An e-mail to Smith seeking comment was not returned. Smith has said in a prior interview that the company’s financial condition, steeped in debt and losses for several years after pricey acquisitions in the late 1990s, was improving but high gas prices followed by a “once in a lifetime” recession stymied the company’s attempts to recover.

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Lawyers File 2nd Suit for Ex-Fleetwood Shareholders

September 8, 2009 by · Leave a Comment 

Another class action suit has been filed on behalf of former shareholders of Fleetwood Enterprises Inc.

The latest suit was filed Friday (Sept. 4) by Dyer & Berens LLP in the United States District Court for the Central District of California on behalf of investors who purchased Fleetwood Enterprises Inc. common stock between Dec. 6, 2007, and March 10, inclusive, referred to as the “class period.” The complaint charges certain of Fleetwood’s former officers and directors with violations of the Federal Securities Exchange Act of 1934.

The complaint alleges that during the class period defendants misrepresented the following adverse facts, among others: (a) that demand for Fleetwood’s manufactured houses and the big homes-on-wheels was rapidly declining; (b) that the company’s RV Group sales, especially in its travel trailer division, were declining because of softening consumer demand due to high gasoline prices and the credit crisis; (c) that the company’s financial condition was declining precipitously such that the company was nearing insolvency; and (d) based on the foregoing, defendants had no reasonable basis for their positive statements regarding the company’s ability to control its deteriorating financial condition.

On March 10, Fleetwood announced that it had filed for Chapter 11 bankruptcy for itself and certain operating subsidiaries, and that it was closing its travel trailer division. As a result of the announcement, the price of Fleetwood common stock fell to $0.01 per share.

Plaintiff seeks to recover damages on behalf of Fleetwood investors.

For more information about the firm, please go to

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Suit Filed on Behalf of Former Fleetwood Shareholders

September 2, 2009 by · Leave a Comment 

Coughlin Stoia Geller Rudman & Robbins LLP announced Tuesday (Sept. 1) that a class action suit has been filed in the United States District Court for the Central District of California on behalf of purchasers of the common stock of Fleetwood Enterprises Inc. between Dec. 6, 2007, and March 10, 2009.

The suit seeks to pursue remedies under the Securities Exchange Act of 1934, according to a news release.

Fleetwood is not named in this action as a defendant because it and its core operating subsidiaries filed for bankruptcy protection in March.

Fleetwood shareholders who wish to join the suit must notify the court no later than 60 days from Tuesday. They may do so through plaintiff’s counsel Samuel H. Rudman or David A. Rosenfeld of Coughlin Stoia at (800) 449-4900 or (619) 231-1058, or via e-mail at

A copy of the complaint as filed is available online at

The complaint charges certain Fleetwood’s executives, CEO Elden Smith and former CFO Boyd Plowman, now a consultant to the company, with violations of the Exchange Act. Fleetwood, together with its subsidiaries, produced and distributed manufactured housing primarily in the United States and Canada.

The complaint alleges that from December 2007 until the bankruptcy filing, Fleetwood executives made numerous positive statements regarding the company’s financial condition, business and prospects. The complaint further alleges that these statements were materially false and misleading because defendants failed to disclose the following adverse facts, among others:

  • Demand for Fleetwood’s manufactured houses and the big homes-on-wheels was rapidly declining, and was adversely affecting the company’s liquidity.
  • The company’s RV Group sales, especially in its travel trailer division, were declining because of softening consumer demand due to high gasoline prices and the credit crisis.
  • The company’s financial condition was declining precipitously such that the company was nearing insolvency and would have to file for bankruptcy protection.
  • Based on the foregoing, defendants had no reasonable basis for their positive statements regarding the Company’s ability to control its deteriorating financial condition.

On March 10, Fleetwood issued a press release announcing that it had “filed voluntary Chapter 11 petitions for itself and certain operating subsidiaries in the U.S. Bankruptcy Court for the Central District of California.” The company also announced that it was closing its travel trailer division. As a direct result of information disclosed, the price of Fleetwood common stock fell precipitously, falling to 1 cent per share on March 10.

Plaintiff seeks to recover damages on behalf of all purchasers of Fleetwood common stock during the period in question. The plaintiff is represented by Coughlin Stoia, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.

Coughlin Stoia, a 190-lawyer firm with offices in San Diego, San Francisco, Los Angeles, New York, Boca Raton, Fla., Washington, D.C., Philadelphia and Atlanta, is active in major litigations pending in federal and state courts throughout the United States and has taken a leading role in many important actions on behalf of defrauded investors, consumers, and companies, as well as victims of human rights violations.

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Private Equity Firms Play Key Role in U.S. Business

August 25, 2009 by · Leave a Comment 

New companies are stepping in to buy up the area plants owned by bankrupt auto parts and RV makers. And it seems in every case, the new owners are privately held and often new to the sector into which they’re buying.

Private-equity firms have a bad name in some circles. The private investors often disclose little about themselves and seldom plan to operate a company for more than five years. They’re suspected by critics of facilitating the flow of U.S. manufacturing jobs overseas, according to the Fort Wayne, Ind., Journal-Gazette.

But they can also identify the most valued parts of a troubled company and preserve jobs, said Kenneth Carow, a professor of finance at Indiana University-Purdue University Indianapolis.

“They’ve been called ‘vulture capital,’ ” Carow said. “They pick over the carcasses of bankrupt companies.”

And just as vultures play an important role in nature, business experts say private-equity firms play an important – and growing – role in the U.S. economy.

“Clearly, you have a shift in the ownership structure of the U.S. industrial base,” said Gary Moore, chairman of the University of Toledo’s finance department.

The shift has been away from companies with shares traded on stock exchanges, Moore said.

Many of the private firms doing the buying these days are 10-year funds at the end of which wealthy investors expect a healthy return on their money.

An example is American Industrial Partners Capital Fund IV LP. The fund raised $400 million late in 2008. It plans to make industrial investments, spend about six years improving their value and then spend the next four selling them at a profit, said Paul Bamatter, a partner in the fund.

In July, AIP bought the Decatur motorhome assets of bankrupt Fleetwood Enterprises Inc. The operation now employs about half the 1,300 who worked for Fleetwood in Decatur in 2007. But, Carow points out, Adams County kept 650 jobs because AIP stepped in.

“They didn’t go to zero,” he said.

But a Fleetwood plant in Edgerton, Ohio, has gone to zero, and one in Garrett, Ind., almost did when AIP didn’t include them in its purchase. The Edgerton travel trailer plant shut down in March, when Fleetwood declared bankruptcy. Unless a buyer is found, its 175 employees will remain on the street.

Eighty workers at the Fleetwood manufactured-housing plant in Garrett might have faced a similar fate if a group of local investors hadn’t stepped up and bought it this month.

Different take

Wally Comer, one of the local investors, said his group has a strategy different from private-equity funds.

He and two partners bought the Garrett plant for $1.75 million, plan to make it profitable and operate it long term. AIP, however, bought the motorhome operation for $53 million and plans to sell it within the decade.

“To them, they don’t want to tie up $2 million to make $1 million in profit,” Comer said. “They’d rather tie up $50 million to make $50 million in profit.”

The difference in philosophies also is illustrated in how employees in Decatur and Garrett were treated, Comer said.

The motorhome workers lost their vacation time and took a 10% pay cut. The manufactured housing workers, now working for Adventure Homes LLC, kept their pay and vacation and got increased bonuses.

That’s because Comer said he and his partners put a premium on maintaining the loyalty of their workforce.

Driving force

Private-equity owners act only after considering what’s in the company’s best interest, said Lawrence J. Lawson III, managing director of co-founder of Lincoln International LLC, a Chicago-based investment-banking firm.

“What’s in the best interest of the company and what’s in the best interest of the employees aren’t always the same thing,” said Lawson, whose firm advises companies on acquisitions and provides other services.

It’s hard to find numbers showing private-equity’s increasing control of American manufacturing, but there’s broad agreement that’s the case.

“Private equity raised a tremendous amount of capital between 2005 and 2007,” Lawson said.

Not going back

He estimates that private-equity firms worldwide now have $1.5 trillion at their disposal. That means they’re going to buy more businesses — including Midwestern manufacturers, Lawson said.

“There’s more in private hands, and it’s not going to go back down to where it was 20 years ago,” Lawson said.

The slew of industrial bankruptcies in the past year also have created an opportunity for private-equity firms to buy manufacturers.

Investors in private-equity firms are more tolerant of risk than investors in publicly traded companies, said Carow, the IUPUI finance professor. Expecting greater returns, private-equity investors are much more likely to go along with the purchase of parts of a bankrupt company than those who are buying stocks, Carow said.

In fact, some private-equity firms such as AIP specialize in buying and turning around troubled companies. Some buyers specialize in other areas, such as adding market share or making a domestic company an international one, Lawson said.

And because most funds last only 10 years, firms look to buy, make changes and sell companies within five years, Lawson said. That frees private-equity firms from the obsession with quarterly profits faced by publicly traded firms but maintains pressure to produce results.

“There’s a sense of urgency to private equity,” Lawson said.

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Fleetwood RV Inc.: ‘We’re Starting from Scratch’

August 21, 2009 by · Leave a Comment 


Paul Bamatter, AIP executive

Paul Bamatter, AIP executive

So you buy Fleetwood Enterprises Inc.’s name and its Decatur, Ind., motorhome operations and rehire the work force. All you have to do now is start making RVs, right?

It’s a lot more complicated than that, Paul Bamatter told the Fort Wayne Journal-Gazette.

Bamatter is a partner in American Industrial Partners (AIP), a private equity group whose Capital Fund IV bought the motorhome assets in bankruptcy court in July.

Bamatter was in Decatur on Wednesday (Aug. 19) to celebrate the creation of the new company, Fleetwood RV Inc.

But he said he has already made several journeys from AIP’s New York offices and will make many more.

“I’ll be here a week out of every month, or somebody else will be,” Bamatter said.

When the private equity firm bought the assets, it did so only after it became convinced it could work with the management of the motorhome operation, Bamatter said.

Chuck Wilkinson and John Draheim, former executives at Fleetwood Enterprises, are CEO and president, respectively, of the new company.

Fleetwood RV has 630 employees and plans to hire 300 more in the next three months, but AIP still has to build a business around them, Bamatter said.

“We’re starting from scratch,” he said.

The new operation’s headquarters will be in Decatur without benefit of any resources of Fleetwood Enterprises’ home office in Riverside, Calif.

“We didn’t buy any of that,” Bamatter said.

That means AIP has to assemble an information technology department, a human resources department, a legal department and all the other functions that go into supporting a big industrial company.

“Everybody’s working really hard,” Bamatter said, explaining he frequently meets with Fleetwood RV managers well into the evening.

It’s too soon to say when all of that work will be complete, but it’s going faster than expected, Bamatter said.

Decatur is a long way from AIP’s Fifth Avenue offices, but that has led to some pleasant surprises, too.

Bamatter described how he was having dinner and a beer alone one night in a Decatur restaurant when Mayor John Schultz and his family happened in and joined him.

That sort of thing doesn’t happen in New York, Bamatter said.

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