Demand for big ticket leisure items such as caravans (RVs), sailing boats and leisure motorcycles in the United Kingdom improved in the first quarter of 2011 but growth remained extremely weak for the second successive quarter, according to data released today by GE Capital.
Sales activity grew by just 0.58% in the three months to March, following a 0.13% increase in the fourth quarter of 2010. Across Europe the GE Capital Big Ticket Leisure index rose by 3.41% in the first quarter of 2011 and remained significantly higher than UK growth for the second successive quarter (Q4 2010: 0.13% vs 9.68%).
In Europe, a return to modest growth in Q1 follows a surprisingly strong performance in the fourth quarter of 2010, which had been the second largest increase seen since the index began at the beginning of 2008, but returns the index closer to the quarterly growth rates seen in the second and third quarters of 2010. The sustained recovery that had been seen since August 2009 also looks to be losing steam across Europe as continued macro-economic concerns hit consumer confidence. Prior to August 2009, sales activity showed a sustained decline as the global recession hit hard at European consumer demand for big-ticket items.
Despite recent stagnation, UK sales activity relating to big ticket leisure items has now grown for seven straight quarters, with activity in August 2010 returning to and eclipsing levels last seen in January 2008.
The GE Capital European Big Ticket Leisure Index offers a monthly view of consumer demand for ‘discretionary’ high value leisure goods, such as motorboats and yachts through to caravans and quad bikes – using the length of time it takes for these products to sell. The Index is compiled using data from more than $4 billion of annual sales, financed by GE Capital’s distribution finance unit, from a wide range of manufacturers across the European leisure industry.
Despite slowing growth, the European index climbed to its highest level since September 2008 on the back of a sustained recovery in activity from the August 2009 low point. Activity had shown a strong recovery in the last quarter of 2010, driven by strong activity in the recreational vehicle and motorsports sectors. That growth slowed in the first three month of 2011 in the most part due to a slight overall decline in the motorsports constituent of the index being only partially offset by strong growth in the marine sector.
In the UK specifically, sales activity has struggled to remain positive over the past two quarters following four successive quarters of over 5% growth. The UK index fell in December for the first time since August 2009 and was also negative in January as cold weather and falling consumer confidence hit activity.
“For the UK, it seems that the slump in consumer confidence and GDP in the fourth quarter of 2010 and concerns around the austerity measures limiting future growth acted to subdue sales activity on big ticket leisure items. Growth has been very weak for two consecutive quarters and we are seeing monthly declines for the first time since escaping the full force of the recession in 2009,” said Stephan Caron, Commercial Leader at GE Capital UK. “What’s positive, however, is that activity is still growing and that we are now above levels of activity seen in early 2008.”
GE Capital is uniquely placed to develop this indicative index as the company is a leading provider of asset finance, inventory finance and working capital/cash flow financing to manufacturers and dealers across Europe.
“As a leading European market player in distribution finance, which provides manufacturers with working capital secured against finished goods from the moment they leave the production line through the dealer network until sale to the end customer, we have a unique insight into the activity of both manufacturers and dealers across a wide range of industries,” said Caron, “We have worked hard to develop intelligent process technology that is embedded into our customer systems and gives them a real-time view of which products are selling, in which countries and through which dealers. These systems also give us a fantastic macro view of economic activity and we’ve used these to build the index.
General Electric Co. posted a fourth straight quarter of profit growth, beating analysts’ estimates, as equipment orders increased, and boosted the dividend for the third time since July, Bloomberg BusinessWeek reported.
First-quarter profit from continuing operations rose 58% to $3.58 billion, or 33 cents, excluding pension results, up from $2.26 billion, or 20 cents, a year earlier, GE said. That exceeded the average estimate of 28 cents a share from analysts surveyed by Bloomberg.
GE Capital, the company’s lending business, continued to recover from the financial crisis, with profits more than tripling profits to $1.8 billion in the quarter. GE’s transportation, health care, aviation, and home and business solutions businesses also posted increased earnings.
CEO Jeffrey Immelt plans to speed sales and profit growth this year and in 2012 by focusing on energy, aviation, transportation and health care as well as a slimmer GE Capital. He is spending on research and more than $12 billion of acquisitions since October, mostly in energy, as he builds technology offerings and the oil and gas division.
“GE has emerged from the recession a stronger, more competitive company,” Immelt said in the statement.
GE gained 2.9% to $21 at 6:43 a.m. before regular New York Stock Exchange composite trading.
The dividend will rise 1 cent to 15 cents a share payable July 25 to shareholders of record at the close of business on June 20, Fairfield, Connecticut-based GE said.
The company’s total order backlog, a gauge of future profitability, was $177 billion, exceeding the fourth quarter’s $175 billion. Orders at large-equipment divisions including energy, aviation and health care rose 13 percent to $19 billion.
Sales rose 6.2% to $38.4 billion, helped by more selling days as the quarter ended April 3 rather than March 28 a year earlier. Revenue included proceeds from the disposition of NBC.
“A few extra days will not normally make much of a difference in the big lumpy equipment businesses (unless you luckily catch an extra lump),” Jeffrey Sprague, co-founder of Vertical Research Partners, wrote in a note to clients this week.
The sale of NBC generated 4 cents a share, tempered by 3 cents in restructuring, acquisition and disposition costs, GE said.
The company doesn’t provide profit or sales forecasts, instead giving investors a “framework” on which to compile their own. Analysts estimated first-quarter sales of $34.3 billion, on average, according to a Bloomberg survey.
This is the first quarter the company has broken out pension costs or benefits in its income statement on a per-share basis. Including a pension cost of $163 million, net income attributable to common shareholders was $3.43 billion, or 31 cents a share.
It seems the imbroglio over General Electric Co.’s 2010 tax bill just won’t go away.
The multinational conglomerate said today (April 13) that a press release announcing that it would give $3.2 billion back to the federal government was a “hoax,” Market Watch reported.
The story said GE would return the money to federal coffers in the wake of a New York Times story that said the company received that much in “tax benefits” for 2010, interpreted by many to mean it had gotten a refund. The faux announcement of the return of those funds to the government had been picked up by the Associated Press, which retracted the piece shortly after GE dubbed it a fake.
Stock futures grapple with mixed data as consumer-spending figures for March are positive, while mortgage applications decline. Bellwether J.P. Morgan Chase’s earnings top estimates.
“One, we didn’t get a refund, and, two, (the press release) was a hoax,” GE spokesman Andrew Williams said.
Representatives of the Associated Press could not be reached for immediate comment. But the news service issued a report to affiliates saying it had received a fake press release via email that included a GE logo and a link to a website that looks like the company’s.
“The AP did not follow its own standards in this case for verifying the authenticity of a news release,” AP business editor Hal Ritter was quoted as saying.
“It’s not really in our interest to fool the media. It’s just the means to an end.’
A group calling itself “U.S. Uncut” claimed responsibility for the hoax, saying it had worked in conjunction with the “Yes Men,” a prankster duo purporting to target “leaders and big corporations who put profits ahead of everything else.” U.S. Uncut calls itself a “grassroots movement taking direct action against corporate tax cheats.”
Mike Bonanno, co-founder of Yes Men, said the groups have issued the fake press releases in order to get the media attention they otherwise would not receive.
“We tell small lies, momentary lies that get a lot of media attention,” Bonanno said. “If GE sends a press release, people listen. If we send a press release, they won’t.”
“It’s not really in our interest to fool the media. It’s just the means to an end,” Bonanno went on to say. “This is a last resort. We wish there was another way of doing it.”
On March 25, the Times published a story that indicated GE had reported worldwide profits of $14.2 billion, with $5.1 billion coming from U.S. operations. The story also said GE paid no U.S. taxes and claimed a “tax benefit” of $3.2 billion, which was interpreted as a refund. It goes on to describe aggressive accounting operations designed to keep GE’s tax bill low.
That story created a furor, bringing GE’s accounting practices under fire. But the piece has come under question from the company itself, as well as from other news outlets. The Washington Post later reported that GE will, in fact, owe 2010 federal taxes.
And the company itself issued this statement Wednesday: “We will file our 2010 tax returns by September. We expect to have a small federal income tax liability. In 2010, GE paid significant federal income taxes for prior years. We also paid about $1 billion in 2010 in other state, local and federal taxes in the U.S.”
GE went to say: “The main reason why our tax rate was so low in 2010, was that we lost billions of dollars in GE Capital, our financial arm, as a result of the global financial crisis. Similarly, in 2009, GE Capital’s losses were so large that the total company lost money on its U.S. operations. GE’s tax rate will be much higher in 2011 as GE Capital recovers.”
GE Capital is a main financing resource for the RV industry.
After several years of low tide in the marine industry, 2011 may be the year that finally lifts all boats, Specialty Fabrics Review reported.
“The marine industry is starting to see signs of recovery as we move past the recession,” says Jeff Malehorn, president and CEO of GE Capital’s Commercial Distribution Finance (CDF) at the Miami International Boat Show, held Feb. 17-21.
A survey released by CDF showed that 38% of respondents expected sales to increase in 2011, and 54% said the best time for dealers to increase inventory levels is now. Sales of lower-ticket items, such as aluminum boats and recreation boats, are rebounding faster than luxury yachts.
The biggest obstacles to growth, according to the marine dealers and manufacturers surveyed, were consumer demand (70%) and reduced level of showroom and field inventory (40%).
GE CEO Jeffrey Immelt said the company has paid lower taxes over the past few years than what a company would typically pay mainly because of $32 billion in losses suffered by its GE Capital unit after the U.S. financial crisis of 2008.
He said GE’s taxes are expected to increase in 2011 as the company continues to recover and rebuild its profits, Market Watch reported.
The nation’s sixth-largest company has drawn sharp criticism after a New York Times article on how GE manages to reduce taxes — in 2010, it received a $3.2 billion benefit — often by lobbying Congress for special tax breaks.
The company has disputed many of the claims in the article and said it’s fully in compliance with U.S. law.
“Like any American, we do like our taxes low,” Immelt said.
Immelt offered a defense of his company during a speech at the Economic Club of Washington to outline how the U.S. can improve its economy and raise job growth. Earlier this year Barack Obama appointed Immelt to head the president’s Council on Jobs and Competitiveness, a somewhat controversial decision given the company’s extensive business with the federal government.
One way to achieve higher job growth, Immelt said, is to reform the domestic tax system like many other nations around the world are doing. He said the U.S. code increasingly discourages the creation of new businesses and investment.
“Our system is old, complex and uncompetitive,” said Immelt, reflecting the view of most American CEOs. He said he was willing as a chief executive to support reforms that would lower the corporate tax rate while eliminating unspecified loopholes or business tax breaks.
Immelt also said the federal government has to do a better job of getting rid of old and outdated regulations and not just pile new rules onto an already-creaky system of oversight.
Another goal of the jobs council, Immelt said, is to find ways to help small businesses grow. He said the creation of new small businesses after the 2007-2009 downturn is 23% lower than is typically the case following a recession.
Most of the ideas the council comes up with are unlikely to require any congressional legislation, he stressed. The one exception is trade. Immelt said lawmakers should act quickly to pass three pending free-trade deals with Panama, Colombia and South Korea.
“The rest of the world is signing free-trade agreements today as we speak,” he said.
In somewhat of a surprise, Immelt also declared companies are less likely to focus on countries with the lowest wages when deciding where to put a business.
Advances in technology and other factors have made it easier for companies to reduce costs wherever they go. As one example, Immelt said it only costs GE 10% more to operate a call center in the U.S. compared to India, where wages are much lower.
The company is also moving more manufacturing jobs in its appliance business back to the U.S. and plans to create 16,000 jobs at home over the next few years.
“I think the era of globalization around cheap labor is over,” he said.
What’s likely to become an even bigger factor in the future is the educational level of a nation’s workers. Like many business leaders, Immelt said the U.S. has to improve its education system, especially for math and science.
“We have more degrees in sports therapy than electric engineering,” Immelt said.
The RV Care network of dealers in Canada has grown by 12% since last year, bringing the national network to 54 full service locations.
The following dealers joined RV Care over the winter months, according to a news release:
- Horizon Lussier, Marieville, Québec.
- Moncton RV Center, Moncton, New Brunswick.
- Nor-Burd RV Sales & Service, Terrace, British Columbia.
- Roulottes MLR, Chicoutimi, Québec.
- RV World, Waasis, New Brunswick.
- Travellers Rest RV Center, Kensington, Prince Edward Island.
Every RV Care dealer is committed to ensuring that if a customer from another RV Care dealer anywhere in Canada stops in while traveling in their RV and needs help, they’ll receive the highest possible priority service in order to get them back on their way to safely complete their vacation.
“When you look at the map of where RV Care dealers are located, you can see that our strategy is developing well to have locations along all major RV routes and destinations across Canada” says Earl Manning, vice president of RV Care. “We continue to look for the right dealers in the right locations to grow the RV Care network for our traveling customers.”
As well as the added value that the national service network provides in the selling process, RV Care dealers also enjoy the benefit of strong relationships with a variety of top quality suppliers to the Canadian RV industry. This past year RV Care and GE Capital announced a new partnership program to help strengthen their dealers’ floorplan operations.
Just last month it was announced that RV Care dealers are the featured retailers across Canada for the public launch of the EFOY Fuel Cells that provide reliable off-grip power while producing no emissions and no noise.
The early retail shows are giving every indication that the RV Care dealers across Canada should be gearing up for a busy and profitable year in 2011.
For more information visit www.rvcare.ca.
National wholesale and retail lender Ally Financial Inc. made its presence known at the 48th Annual National RV Trade Show, Nov. 30-Dec. 2 in Louisville, Ky., with stand-alone booths and desks within the displays of Thor Industries Inc. with whom Ally established a “preferred lender” relationship earlier this year.
“We wanted to be in Louisville to support the industry. If you are going to be a major participant in it, there are obligations to support the industry event,” stated Tim Russi, Ally’s executive vice president for North American Operations, who was joined at the show by more than 20 associates from the Detroit-based lender.
“With the announcement that we are getting into wholesale financing — and knowing the season that we are about ready to get involved in from an RV perspective — we want to make sure the dealers have us on their minds,” said Russi.
Indeed, Ally has its sights set on becoming a major factor – a national-scale RV industry lender – along with GE Capital and Bank of America. And that’s pretty big news, considering Ally Financial extended $22.3 billion in U.S. auto consumer financing for the first nine months of 2010, making it likely the No. 1 ranked provider of new car financing in the U.S. in 2010.
“We want to be part of the upswing of this industry,” Russi, a former Bank of America executive who oversees Ally’s automotive and RV lending services in the U.S. and Canada, told RVBUSINESS.com. “Some lenders have left the market while others in it are potentially retracting, and there are not many providers in the industry. So, we think the time is right to enter the market.”
In a way, Russi points out, Ally has been in automotive financing as GMAC for a long time. Formerly the captive finance company of 90-year-old General Motors Corp., Ally became an independent financial services company in 2006 and a bank holding company in 2008, launching Ally Bank in May of 2009. Ally’s parent company changed from GMAC Inc. to Ally Financial Inc. in May, followed by the rebranding of its automotive finance business in July.
In 2009, meanwhile, President Obama named Ally Financial as preferred financial provider for Chrysler Group LLC. “We have preferred provider relationships with GM, Chrysler, Saab, Fiat, Suzuki and Thor,” said Russi. “And we’re looking to expand our relationship with other OEMS as well, which is an important concept as we diversify our book of business from what was historically almost 100% GM. As a bank, what you’d like to see is a diversified business.”
Ally Financial offers a variety of auto-financing products, indirect retail financing for new and used vehicles and RVs, auto leasing as well as wholesale financing and remarketing services.
Leading the RV industry lending team are some familiar faces, including the bulk of the former Thor Credit staff. Industry veteran Ed Arienti runs the retail sales force for the RV sector as director of recreational finance sales and teams with Rich Morrin, commercial operators leader, for RV dealer wholesale financing.
Also key is Mark Manzo, who, as vice president of alliance sales, manages OEM relationships, including that between Ally and Thor.
Ally’s RV industry entry started with an April announcement by then-GMAC Financial Services that it would provide RV consumer financing, working with Thor Industries Inc. as a preferred retail lending provider.
Then, on Nov. 23, right before the Louisville Show, Ally announced that it would diversify into wholesale financing, focusing from the outset on Thor’s dealer network.
“We benchmarked current options and needs in the industry and will offer a very competitive wholesale financing product for RV dealers,” Russi stated. “Our program is tailored to the recreation vehicle business with attractive terms and flexible credit lines that will accommodate the seasonal fluctuations in RV inventory. We view our retail and wholesale financing, along with remarketing tools, as a full-service offering for dealers.”
Qualified dealers may obtain wholesale financing from Ally Financial for all or a portion of their inventory, reported Ally, which currently extends retail financing through dealers in about 40 states and plans to expand its RV retail financing nationwide by the end of the year.
“The way we like to create a relationship is a full spectrum relationship credit offering through the dealer,” Russi emphasizes. “Everything centers around the dealer. The more we do with them, the better our value proposition is.”
So, is the Thor relationship exclusive to Thor dealers?
“We are not exclusively Thor,” said Russi, “but because of our relationship with them we obviously are going to focus on their dealer network needs first. That’s our entry point into the industry. Keep in mind that Thor dealers — and I think they number 1,200 — represent about 75% of the RV space. We think by focusing there, we are going to build relationships with the majority of the industry.”
When a Thor dealer has multiple brands and sells non-Thor brands, he noted, Ally will still provide retail or wholesale financing for the products of those other branded companies.
Is Ally in it for the long haul?
“We wouldn’t have entered it to exit it,” added Russi. “We’ve got plenty of auto business. We are not going to run out of capacity. We’d like it (the RV segment) to be substantial. We’d like to systematically grow our book.”
The fact that Ally has a dedicated RV sales staff based in Orange County, Calif., is also a testament to Ally’s commitment, adds Russi. “But we also intend to leverage our entire structure into the space,” adds Russi. “If we don’t have someone conveniently located from an RV sales perspective, we will leverage the existing sales force, which is a national sales force of about 200.”
GE Capital, Commercial Distribution Finance (CDF) today (Nov. 30) announced the launch of a new program with Spader Business Management.
Under the program, GE Capital is subsidizing a one-year subscription to Spader True, an online system that allows qualified recreational vehicle dealers in the U.S. to compare their business performance against industry benchmarks on a wide variety of financial metrics, according to a news release.
Spader True is an interactive system that provides a summary of more than 1,500 individual data points in a series of graphic displays, known as dashboards. It allows dealers to compare their performance on a wide variety of detailed metrics related to expenses, sales mix, and profit margins, by department, against industry averages.
“GE Capital wants dealers to have the best financial reporting and forecasting tools to grow their businesses,” said Pete Lannon, managing director-RV for GE Capital’s CDF business. “We are pleased to help make the new Spader True product available to dealers.”
Under the program, GE will pay 50% of the cost of a one-year subscription.
“Spader True contains live data that dealers can start using immediately,” said John Spader, president of Spader Business Management, in Sioux Falls, S.D. “Spader True provides a true measure of businesses performance to show where they are now, where they’re headed and where they need to be for a healthy organization. It was designed to be used by dealers and their management team so that, with one quick look, they can discover what’s working and what needs improvement.”
Dealers can learn more about the system by visiting the GE Capital booth (North Wing Lobby #24E) or the Spader booth (#94 or #308) Nov. 30-Dec. 2 at the 48th Annual National RV Trade show in Louisville, Ky.
About Spader Business Management
Spader Business Management offers a full range of programs, tools and applications to help revitalize businesses, restore optimism and create clarity and confidence for success. John Spader founded the company more than 30 years ago.
About GE Capital, Commercial Distribution Finance
GE Capital, Commercial Distribution Finance is a leading financing provider to manufacturers and their distributors. Programs include inventory financing, asset-based lending, private label financing, collateral management, e-commerce services and related financial products. Additional information can be found online at www.gecdf.com, or by following company news via Twitter (@GEInventoryFin).
About GE Capital
GE Capital offers consumers and businesses around the globe an array of financial products and services. For more information, visit www.gecapital.com or follow company news via Twitter (@GECapital).
The aggressive new finance program that GE Capital Commercial Distribution Finance has put together with Fleetwood RV Inc. is likely to cause quite a buzz as the industry turns toward the fall and RVIA’s 48th Annual National RV Trade Show, Nov. 30 to Dec. 2 in Louisville, Ky.
The new program, which involves all Fleetwood RV products invoiced on or after last Monday (Aug. 23), provides a competitive interest rate on financed inventory for 120 days and allows dealers to be reimbursed by Fleetwood for 100% of interest charges on new inventory financed through GE Capital and sold within 60 days. A second tier provides 50% interest reimbursement for inventory sold between 61 and 90 days.
Peter Lannon, managing director–RV, for GE Capital’s CDF Business, paused long enough earlier this week to answer a few questions about all of this during Fleetwood’s 2010 National Dealer Meeting in Fort Wayne, Ind.
RVBUSINESS.com: This is about as aggressive as it gets in the finance business these days, is it not?
It’s an innovative program. It’s aggressive, only because it combines two elements which have not been brought together before. There is the reduced interest rate for the first 120 days, which is kind of a standard offering. It’s been seen in the industry before.
But by combining it with the high-turnover option, which allows the dealers to recoup all of their interest expense if they sell through to retail in the first 60 days – or recoup 50% of it if they sell through in 90 days – that’s the unique feature, putting both of those together.
We’ve not done it before. It took somebody like Fleetwood to partner with us to see the value of it, and we’re very happy to innovate with Fleetwood to bring this to the market.
RVBUSINESS.com: It’s apparently based on the premise that fast turns benefit everyone, right?
It is. As we’ve said, we think one of the key lessons from the downturn is that there needs to be a renewed focus on turn at the dealer level – that the dealer has to get the product to the consumer and, frankly, hold margin for the dealers. It’s very important to keep fresh product at the floor, not to allow a lot of aged inventory to stack up, which then leads to discounting pressures.
So, with fast turn and rapid replenishment, which is probably a key thing that most manufacturers now are willing to talk about and encourage, that’s what makes it happen.
In the past, it was pretty much large orders at (the National RV Trade Show in Lousiville, Ky.), or maybe twice-a-year large orders were the norm because manufacturers wanted to level out their production. Now in the current environment, manufacturers see the value in taking more frequent orders, even though each order might be smaller, and responding with lean production.
Just like Fleetwood was talking about here at their dealer meeting, they can fill those orders much more quickly and be much more market-attuned and shorten down the inventory carry cycle for dealers, which is where dealers are probably at the most risk.
RVBUSINESS.com: The end result of all of this for GE is healthier clients, right?
Obviously, faster turn and the promotion of margin retention makes for healthier dealers, which reduces our risk and it also reduces risk for the manufacturers because they can develop stable, long-term dealer relationships without as much exposure to the market swings.
RVBUSINESS.com: Are you going to do this anywhere else? I mean, are we going to see any more aggressive programs out of GE?
At GE, what we are interested in seeing is improved turn overall from dealers, and we are open to working with other manufacturers that share that philosophy about promoting the turn from dealers to retail customers. So, yes, we are open to working with other manufacturers with programs that are designed to promote the turn.
Fleetwood RV Inc., a new company launched last year as the successor to the Fleetwood brand, kicked off its 2010 National Dealer Meeting Tuesday night (Aug. 24) with a rousing address by Fleetwood President and CEO John Draheim at the Grand Wayne Center in downtown Fort Wayne, Ind.
Fort Wayne is located less than a half hour north of Fleetwood’s new Decatur, Ind., headquarters and is a fitting site for a more low-key event that Fleetwood RV prefers versus the kind of glitzy annual dealer meeting that Fleetwood’s predecessor, Riverside, Calif.-based Fleetwood Enterprises Inc., used to hold in Las Vegas prior to the Great Recession.
Make no mistake about it, this is a “new Fleetwood,” Draheim reiterated in his address to a room full of attendees, including 30 vendors (24 of them with displays), three banks and about 100 dealer personnel from 45 dealerships. Draheim said Fleetwood’s focus today is on “creating partnerships” with dealers to whom he extended “a heartfelt thank you for helping us restart our company and be profitable.”
“We really do appreciate all the support that you’ve given us over the past year,” said Draheim, standing on a stage amid a display of 2011 product.
One of the company’s main missions in the near term is to explore new market opportunities, he reported, whether that involves extending existing brands or launching altogether new ones.
“We’re going to do that by looking for new market spaces that we’re not in that we can go into and both make money,” said Draheim, a veteran of Thor Industries Inc. and Monaco Coach Corp. before assuming the reins at Fleetwood RV. “We do that through providing exceptional product value that allows you to make money. We do that by trying to align ourselves with all the bankers in the room and promoting quicker retail turns because, after all, that’s what they’re looking for — quicker turns.”
Toward that end, GE Capital, Commercial Distribution Finance announced yesterday that it will be the exclusive wholesale lender for an aggressive new Fleetwood inventory stocking program designed to promote high turnover of new inventory. The program provides a competitive interest rate on financed inventory for 120 days and allows dealers to be reimbursed by Fleetwood for 100% of interest charges on new inventory financed through GE Capital and sold in 60 days or less.
Another key mission in rebuilding the Fleetwood brand, which soon will be part of a new consolidated Allied Speciality Vehicles Inc. (ASV) unit under the continued ownership of American Industrial Partners Capital Fund IV LP (AIP), is projecting an “extended family” atmosphere through which the company’s management, retailers and 1,200 employees can work amicably through any issues that inevitably surface in building a new company from scratch.
Lean production practices, warranties and Fleetwood’s new management team were all part of Draheim’s Power Point presentation. In addition to Draheim, that new team currently includes CFO Debra Pak, Vice President of Operations Luis Ortiz and new Vice President of Engineering, Development & Design Colin Roberts.
Draheim, by the same token, talked about how Fleetwood has gone about answering dealer requests to consolidate its product offerings. The result is that the company’s brands have been reduced from 27 in 2010 to 14 in the 2011 model year.
Fleetwood’s new approach to developing a dealer body was also on Draheim’s mind. Rather than assembling a big dealer body — Fleetwood currently has about 80 dealer locations, a tiny number vs. the 1,800 Fleetwood Enterprises once had — the company is more focused on establishing links with a smaller group of retailers that holds like-minded “core values.”
Draheim says that’s been a consistent theme with AIP and a real key to launching a new enterprise in these strange economic times. Keep in mind, he noted, that AIP and Fleetwood launched Fleetwood RV in 2009 in the middle of a daunting recession. “Now imagine in that environment, with the economy, fuel prices, the lending environment, the oversupply of product in the marketplace, the inability of most retailers and OEMs to hold margins, who in their right mind would start a new company?” he asked, rhetorically.
“Well, we did,” Draheim continued. “And we’re here to talk about it, and we’re profitable. That is a heck of a statement. We have no debt. We’re generating positive cash and have been for some time. We have engaged some of the industry’s best suppliers. We’ve developed relationships with the industry’s key lenders — both wholesale and retail. We’ve grown a dealer network, some of which we’ve had prior, some that we didn’t do business with prior.
“And if you gave that dealer list today to somebody who was familiar with the motorhome business today, they would tell you ‘this is a who’s who of motorhome dealers across the country,’” said Draheim. “We feel extremely humbled and confident in the quality of our dealer chain. And at the end of the day, it’s all about the quality of the dealer who creates the experience for the retail customer. So we’re honored that you’re here and that we’re in business with you.”
Fleetwood’s meeting agenda included a tour of the company’s Decatur facilities and an afternoon of meetings. The meeting ended Thursday with an awards luncheon.