The following is an obituary for Michigan RV dealer Jim Harvey that ran in the Midland Daily News. Click here to view an article authored by Al Hesselbart published in the October 2002 edition of RV News.
“Big Jim” Harvey, 74, of Bay City, Mich., passed away early Thursday (Dec. 15) morning at Mid-Michigan Medical Center in Midland. The son of the late Elmer and Nila (Woolan) Harvey, he was born Sept, 14, 1937, in Grand Island, Neb.
In 1957, Jim founded what began as a trailer sales company and is now International RV World with Michigan locations in Bay City, Mount Pleasant and Gaylord. He is very well known across the country in the RV industry. Jim loved to buy and sell anything and also enjoyed his Harley-Davidson motorcycles and boating.
Jim is survived by his wife, Bobbie J. Harvey; his children, Vicki (William) Brown, Cindy Chapman, Shelley Harvey, Sonya (John) Rodgers, Angela (Timmy) Gibson and Kelley (Trevor) Harvey-Martin; grandchildren, Tracy, Jeff, Tara, Shannon, Lynne, Brian, Nicole, Makenzie, Cameron, Elizabeth, James, Dawson, Timothy, Cody, Jackie and Morgan; seven great-grandchildren; four sisters, Lois Hardiman, Dessie (Don) Sample, Betty VanConant and Roberta (Richard) Baker; and several nieces and nephews. Besides his parents, Jim was also preceded in death by a son, Alan Harvey; his brother, Elmer “Jigs” Harvey; and a sister, Barbara VanConant.
The funeral service will take place at 1 p.m. on Dec. 20 at the Gephart Funeral Home. Interment will follow in Fremont Cemetery. Friends may call at the funeral home on Monday from 2-8 p.m., and on Tuesday from noon until time of service.
Memorial contributions may be made to the wishes of the family, which will be donated to a local charity to assist needy people in the area. For information visit gephartfuneralhome.com.
It’s the busy season for the RV transport industry.
Along C.R. 38 in Elkhart County, Ind., colorful banners tied to fences and staked up in lawns, shout at passersby, “Drivers Wanted.” Yes they are, The Goshen News reported.
“We are just shy of 600 and we are looking for a few hundred more,” said Scott Liester, operations manager for Star Fleet Trucking, a Goshen company that transports recreational vehicles.
Liester said drivers who own 1-ton pickups are in the greatest demand.
“We are hiring more every day. Five and 10 a day,” Liester said.
Spring is the busy season for RV manufacturers, thus RV transport companies. The RV industry holds its annual trade show in early December and a lot of orders are taken there. Then the building begins for the spring and summer RV shows.
RV drop lots on Goshen’s south side are filled with units waiting to be transported.
Jay Hochstelter of Goshen was busy doing his part Thursday (April 7) to whittle down the inventory. Hochstetler was at the FLJ Transport lot on Caragana Court hooking up a 29-foot Keystone Springdale to his Dodge Ram 3500 pickup.
After two years of being unemployed, he was happy to be working, even if his job keeps him on the road.
“I am just happy the industry is doing well. The last time the prices (fuel) went up this way, RVs didn’t sell,” he said.
Hochstetler and other transport drivers keep a close eye on the price of diesel nationwide. And one of the odd things about the rise in fuel costs is that drivers say Goshen has some of the lowest diesel prices in the United States.
Hochstetler said the only other area of the country that has such low diesel prices is southern Texas.
A short distance from the FLJ lot is the Speedway gas station on U.S. 33 South. Thursday, transporters kept the diesel fuel islands busy because they were getting fuel for $3.83 a gallon. Other stations in the area were selling it for $4.10 a gallon. That price is similar to what is found in New England, according to Liester.
He said the national average price for diesel Tuesday was $3.97 per gallon, according to the Department of Energy report he received. The average in the West was $4.20, $3.93 in the Midwest, $4.10 in New England and $4.30 in California.
Liester said Star Fleet, like other RV transport companies, adjusts its fuel surcharge for manufacturers based on the current price. Then drivers are given a fuel payment adjustment.
“It is bothersome to us because we have to monitor it constantly. Because of the diesel we burn daily, it doesn’t take a lot of time to burn up a lot of money,” Liester said of the surcharge process.
The cost of fuel is passed on. “That reflects a higher freight bill going back to the dealer,” he said.
At Classic Transport, Jodie Schieber, general manager, is also dealing with the spike in the cost of diesel.
“It is rapidly going up, and it keeps going up every day. So it does impact our drivers,” she said.
But, her company is also recruiting drivers.
“We try to target retired people who want to get paid to see the world,” she said.
The company is also looking for younger drivers. She said the fleet is split about 50-50 between retirees and full-time drivers.
And those drivers are given pay adjustments based on the cost of fuel. Schieber said the manufacturers her company services have a “matrix” that they use to adjust the fuel surcharge.
“As demand for shipments get higher and fuel costs get higher, they adjust,” she said. “So we pass that (additional pay) along to the drivers.”
Schieber said drivers track fuel costs using their laptop computers or by chatting with other drivers on their CB radios.
“And when there is a low price, trucks are lined up,” she said.
Matt Halicek of Clare, Mich. was standing beside his haul and tow RV transporter truck outside the gate at Horizon Transport Thursday. He was pondering the constant question for drivers, whether to put more money into his current truck or purchase another. The rising cost of fuel is part of his consideration.
“It’s rough. It’s a constant struggle, especially when you get out to New York and its $4.25,” Halicek said.
And the driver took an expansive view of the fuel price problem.
“With the fuel going up, it’s going to hurt the whole community,” he said as he waved his arm across the horizon of south Goshen, where dozens of RV companies churn out their products.
Halicek gets around because of his job. He rattled off that diesel was $4.14 in Maine and nearly $5 in Canada. On his next trip he will be headed west, to Irvine, Calif.
The 3 1/2- day trip will require his Freightliner to consume a lot of fuel. He said when he has to pay higher prices for fuel, “It takes it right out of the profit.”
He said the prices of other things drivers and their families need are also going up. He cited rising prices for food, entertainment, heating fuel and on.
“All you can do is hope you are able to keep on moving until you can’t do it anymore,” Halicek said.
Halicek, Hochstetler, Liester and Schieber all agreed the RV industry is doing much better this spring and there is a lot of work for transporters.
“This is our busiest time of year,” Halicek said.
Schieber also said this spring is busy for the RV industry. “This year we definitely are seeing an increase. Everybody’s lap is pretty full. Dealers are definitely buying and want a lot of product,” she said.
The dealer end
Local dealers agree.
“What happens when the fuel prices go up? The permanent site campers go up. It doesn’t change the buying public, but it does affect their mind set,” said Dave Titus, general manager at International RV World in Elkhart.
The only thing he has noticed from customers is that some of them say they will cut back the length of their trips due to the fuel prices.
“In the towable RVs, it doesn’t really hurt it,” he said.
Titus said the auto industry is also adjusting to the fuel issue. He said Ford has a new F150 V6 ½ ton pickup that is capable of towing 11,300 pounds. That truck gets 24 miles per gallon.
Sales have been strong at International RV World’s Elkhart and Florida stores, according to Titus.
“It has been a constant gain for the past 16 months… In 2010 we passed 2009 for the entire year June 3. This year we passed 2009 numbers in the first week in March,” he said.
In Middlebury, Dennis Johnson, sales manager at Outpost RV Sales, agreed with Titus’ assessment.
“I would say at this point, it (fuel cost) has not affected us,” Johnson said.
“We are experiencing the best year we have had in 12 years. It has been very good for us,” Johnson said.
Editor’s Note: Here is the latest installment by MSNBC.com on its look at Elkhart County, Ind., and the RV industry.
If you want to see what a credit crunch looks like, head south on Indiana State Road 19 out of Elkhart, Ind., – past the strip malls, bank branches and restaurants to the still-beating heart of “the RV Capital of the World.” There, scattered along a 2-mile stretch of Nappanee Street, you’ll find a ragtag assortment of RV dealerships that are in many ways symbolic of the nation’s crazy-quilt lending landscape.
One has lost the battle for survival after its credit lifeline was pulled, as its vacant showroom attests. Others are hanging by a thread, trying to outlast an RV industry downturn that has been exacerbated by a lack of credit for manufacturers, dealers and customers. Still others contend that their credit problems have largely disappeared and that business has picked up substantially in the last few months.
The availability of credit, it seems, depends largely on perspective.
For the owner of Elkhart County RV, the situation remains “brutal,” following the sudden withdrawal of big national banks from what’s known as the floorplan financing market.
“I cannot buy any new product unless I use my own money,” said Tony Gaideski, who is down to seven units and can’t secure financing to purchase more RVs. “None of the banks in this town will lend me money, and I don’t know anywhere in the country where anybody is doing any financing for RVs. ”
Just up the road, however, Rob Reid, president of Great Lakes RV Center, said he still has the same $3 million floorplan credit line he had before the recession. He said his biggest problem is getting would-be buyers qualified for loans.
“The biggest thing is retail credit,” he said. “They have to start giving the customers money to buy. That’s what’s going to get the whole thing going again.”
A block to the south, International RV World General Manager Dave Titus said business at the company’s three lots in Elkhart, northern Michigan and Florida is up 15-20% this year. That’s in part due to decreased competition, he said, but also because his company never relied on lenders to buy inventory.
“We planned ahead for a slow time,” he said. “A lot of businesses didn’t .”
Some in the industry see opportunity in the chaotic credit situation.
RV manufacturer Thor Industries Inc. this week launched its own credit service to provide retail financing for purchasers of its units, much as GMAC does for autos.
“So many lenders exited or dramatically scaled back their RV lending that Thor saw it as a need and a benefit to its dealers,” said Ed Arienti, president and CEO of Thor CC Inc., which is initially licensed to operate in eight states.
In Elkhart County, however, bankers willing to talk on the record about the credit situation insist they have money to lend.
‘Still making loans’
“We’re still making loans to qualified buyers, but that’s been part of our philosophy all along,” said Jim Hyatt, president of the First State Bank of Middlebury, which extended credit to Reid’s dealership after his previous bank, Goshen Community Bank, called in his line of credit. “We’re also seeing opportunities with some very good, very solid companies, where they have banked at other banks and are now saying, ‘We want to do business with someone who’s going to be around to take care of us.'”
His comments were echoed by Tom Stark, a commercial loan specialist with Lake City Bank.
“To be honest, we’ve been very busy with (businesses) who have been asked to leave other institutions,” he said. “They’ve had a couple tough years, but they’re going to come back and we’re going to help them as much as we can.”
Dallas Bergl, president and CEO of INOVA Federal Credit Union, a 67-year-old institution that was founded by employees of Miles Laboratories, the manufacturer of Alka-Seltzer, said his organization is limited in its ability to provide big commercial loans but is actively courting would-be RV buyers.
“We’ve done a whole marketing campaign around, ‘We do have money to loan if you’re looking to purchase a home or a car,'” he said. “The mortgage side has been fairly robust, but we haven’t seen much in autos or RVs.”
But another local banker, who spoke to msnbc.com on the condition of anonymity, said his bank won’t be making new RV loans until there is solid evidence the local economy is reviving.
“Because of the uncertainty in our area, I almost have to project future losses over the next nine to 24 months,” the banker said. “If I’m not going to see profits, my capital will go down. If I fear I’m going to be undercapitalized, either I have to go get more capital or shrink my balance sheet. So, no, the situation hasn’t gotten easier yet. If anything, it’s getting more difficult. Until the economy picks up, until my commercial customers are making money again, I can’t really free up the credit.”
Strange as it seems, all of these representations may be true, given the uneven ways the credit squeeze has affected homeowners, would-be homeowners, prospective purchasers of big-ticket items, credit card users, retailers, investors, banks and just about anyone else with a stake in the economy.
‘It’s hard to make sweeping statements’
“It’s hard to get our arms around it because you’ve got different situations in different parts of the country,” said Phil Ingrassia, a spokesman for the Recreation Vehicle Dealers Association (RVDA). “Just like with the overall economy, it’s hard to make sweeping statements that it’s getting better.”
That is borne out by conflicting signals being sent by federal agencies and senior officials in recent weeks.
Treasury Secretary Timothy Geithner told a banking group on May 13 that the national lending picture is improving. Two weeks later, the Federal Deposit Insurance Corp. warned that “the credit picture remains grim,” The Wall Street Journal reported. And on Wednesday, Federal Reserve Chairman Ben Bernanke warned that credit could tighten again if the U.S. does not begin to get its fiscal house in order. (Click here to watch a CNBC video on a new Standard and Poor’s report on the state of credit in the U.S.)
Most experts and government officials say the credit freeze has slowly been thawing nationwide as a result of massive infusions of federal money into the banking sector.
That meshes with the experience of many small business owners in Elkhart.
Thad Naquin, owner of Naquin Chevrolet-Cadillac-Nissan, said that his problems qualifying buyers for auto loans, which began in the fourth quarter of 2008, largely vanished in March, when $5 billion was released to GMAC for lending.
And Carl Higley, owner of Higley TV & Appliances, said his difficulties ended in early April when he changed buying groups and gained access to a new preferred lender. Independent retailers like Higley often join together in such groups to better compete with the big chains. “We had three (loans) approved in one day last week,” he said. “That’s huge.”
But the RV industry has proven to be a tougher nut to crack.
“Most dealers are OK with retail lending right now, but there still seems to be a big problem on the wholesale side,” said Mark Bowersox, director of the Recreation Vehicle Indiana Council. ” It’s one thing to make a loan to a consumer; it’s another thing to open a $5 million credit line to an RV dealer.”
Tom Walworth, general manager of Statistical Surveys Inc. (SSI), which tracks RV industry sales, said the inability to get product to the showrooms has played a large part in the demise of nine RV manufacturers in the last year and a half.
He said that as of March, wholesale sales of towables – fifth-wheels and trailers – were down 60.9% from a year earlier, while motorized RVs were off by 78.2%. But at the retail level, the declines were far lower, at 43% and 55%, respectively.
“You can lay the lack of wholesale activity at the feet of the lack of wholesale flooring,” he said.
An exodus from the market
Walworth said the absence of wholesale financing was created by near total pullout from the market late last year by the big banks that controlled most of the market, including Textron Financial, GE Capital, Bank of America, KeyBank, U.S. Bank and Bank of the West. That’s a big problem for an industry in which 79% of motorhomes and 72% of towables were purchased with financing in 2005, according to statistics from the Go RVing Coalition.
And floorplan lending is not a niche that local and regional banks or credit unions can easily fill, because it is a labor-intensive practice that requires the lender to carefully evaluate the quality of the collateral, which means it typically takes a high volume to make it profitable.
The Small Business Administration has moved to address the situation, expanding an existing loan program and initiating a pilot inventory lending program, which will take effect on July 1.
But Gaideski, the owner of Elkhart County RV, said neither of those programs will solve his liquidity woes.
“From what I understand they’re only offering a 75% (loan guarantee), which means I’d have to go even deeper in debt to come up with the rest,” he said.
Gaideski also feels that he got a bad shake from his former floorplan financier, Textron Financial, saying that the company suddenly sent him a letter on Dec. 30 withdrawing his line of credit.
“It said, ‘Here’s how we’re going to help you out, we’re going to pull our line … and we’re going to allow you to sell the inventory that you have on hand.'”
(A Textron spokeswoman did not return a call from msnbc.com seeking comment.)
Credit extended to some dealers
But several other dealerships contacted by msnbc.com said they were able to continue pre-existing credit lines with GE Capital and KeyBank, even as the companies were pulling back in the floor financing market and turning away new customers.
Dan Davis, owner of RAD Transport, an Elkhart company that delivers RVs to dealers around the nation, said GE Capital has simultaneously been weeding out other dealers. “GE Capital has foreclosed on a lot of dealers … taking their inventory and shutting them down,” he said. “Some of the factories are actually having to buy back the inventory.”
Ned Reynolds, a spokesman for GE Capital, acknowledged that the company made some “adjustments in the first quarter in terms of its credit program,” but said it intends to remain active in providing floor financing for the RV industry.
“We think this is a viable business for us,” he said. “We’re just making the best of a tough environment and working through this cycle.”
(Msnbc.com is a joint venture of Microsoft Corp. and NBC Universal, which is 80% owned by GE Capital’s parent, General Electric.)
Big national lenders weren’t the only ones yanking credit lines when the freeze was at its worst last winter.
Steve Riegsecker said Goshen Community Bank pulled the plug on his business, rescinding his $350,000 line of credit and thereby forcing him to default on a $1 million floor plan loan from Textron that he had used to purchase inventory for his 20,000-square-foot showroom in nearby Middlebury.
“I was struggling at the time, but I was making my payments,” Riegsecker said. “But they always wanted to know, ‘How are you going to make it?’ Then they came in on a Tuesday night about 5 o’clock and handed me a letter (rescinding the credit line), and that was it.”
Reigsecker didn’t declare bankruptcy and is instead working to pay off the outstanding debt, though he’s not sure if he’ll ever be able to.
“I’m starting completely over, selling cargo trailers and mini-pontoons (small boats),” he said. “That’s how I started my business, and that’s how I grew it.”
Goshen Community Bank President Doug Johnston cited privacy laws in declining to comment on matters involving individual customers and said he had no comment as to whether the bank had rescinded credit lines extended to local RV businesses.
Survivors have a different view
Survivors of the RV retail downsizing see it in a different light.
“My opinion is that they simply culled the ones that weren’t operating good businesses,” said Todd Cornell, president of Tiara RV of Elkhart.
And Titus, the general manager of International RV World, said, “The (dealers) who are hollering about floor plans, sad to say, they shouldn’t have had them to begin with. There were guys out there with $10 million floorplans who couldn’t buy you lunch.”
While RV industry players are divided on financial strategies, they stand united in taking a bullish view of long-term prospects.
“Manufacturers are burning through inventory, and the dealers have developed new local credit sources like credit unions and regional and community banks,” said Walworth of SSI. “That’s going to pay dividends in the future.
“I’ve seen this industry go down in the early ’80s, in the late ’80s, in the early ’90s and after 9/11, and each time it’s come back stronger than it was,” he continued. “There’s been so many times when people have shoveled dirt on this industry, but it comes back every time.”
Keith Leggett, a senior economist with the American Bankers Association, said that even if demand for RVs picks up, it will take a while for the credit market to catch up.
“As the economy weakens, banks see a deterioration of their balance sheets,” he said. “But those sheets tend to lag the economy, so while most economists are looking for some recovery in the second half of the year, it’s going to be at least a year before you start seeing an increase in credit quality.”
That may be too late for Gaideski, owner of Elkhart County RV. He said he’s not sure how much longer he can last without being able to buy new inventory.
“My dream is to stay in business – I love what I do,” he said. “But the reality is a different story.”