The Recreation Vehicle Industry Leadership prayer breakfast guest speaker Don Teague shared a story with attendees about listening to God and how it affects people’s lives. Teague, an Emmy award-winning CBS News correspondent, spoke to an audience of about 200 at the Crowne Plaza Hotel this morning (Dec. 1) during the 48th Annual RV Trade Show in Louisville, Ky.
According to a news release, though he started his remarks with wit and laughter, Teague’s retelling of his ordeal in Iraq while reporting for NBC on the war was also compelling to the audience, and at times Teague himself was brought to tears when he spoke of intense experiences such as a bombing at a newly rebuilt school in Baghdad and witnessing the spiritual rebirth of Rafraf Barrak, a young woman who served as a translator for the news crew on site and whom Teague befriended. He said was so moved by her courage and her plight – she received routine beatings at home for even the most casual contact with males and was told from the age of 5 she was “bad” – he decided to try and bring her to America with him and make her part of his family.
Teague relayed he went to Iraq after much prayer from his wife and himself, believing it was what he was called to do.
“I felt something really important would happen there,” he said. Even though he was afraid for his safety, he said he knew he would be protected, thinking, “It’s time to press into God. He’s faithful and He’ll be there with me.”
Teague said his faith was upheld when two bombs were planted at the school but miraculously, no one was hurt. Additionally, he said Barrak herself was kidnapped by a group of extremists with the intent to kill her, but she managed to dive from the fast-moving car and escape in the car of another motorist. After completing the “insurmountable task” of bringing a Shiite Muslim Iraqi to America, Barrak now lives with his family in Texas, where she has become a Christian and is an active member of their church.
“God always finds a way,” Teague declared. “Rafraf thought she was just lucky until she realized God was pursuing her. He does that to all of us. Listen to God; he’s pursuing you.”
This is the first year the prayer breakfast returned after a hiatus last year due to the economic downturn.
“It was wonderful to be able to hold the breakfast again,” said Carl Pletcher, coordinator of the event for RVI Leadership. “Don was a fantastic speaker and we enjoyed his story immensely.”
The master of ceremonies for the event was Steve Plemmons, CEO of Bill Plemmons RV World. The invocation was said by BJ Thompson, president of BJ Thompson Associates, while Jim Huebner, president of Huebner Petersen, read scriptures and Jack Enfield, sales and marketing manager at MOR/ryde, conducted the prayer.
Gold sponsors were Wilbur Bontrager, Jayco chairman of the board and CEO; Matthew Miller, Newmar Corp. president; John Wuori, Fabric Services president and CEO; Thetford/Norcold; BJ Thompson; Marzahn & King Consulting Inc.; John Regan, Fabric Services chairman of the board; and Jim Huebner.
Silver sponsors were Jack Enfield; Steve Plemmons; John Spader, Spader Business Management Inc. president; Carl Pletcher; and Mike Keller, Keller Marine and RV president.
Bronze sponsors were Chris Craft and Chad Stoltzfus, Lake City Bank, senior vice presidents of commercial banking; Gary Shuder, Newmar Corp. vice president of finance; and Statistical Surveys Inc.
“We are so grateful to our sponsors who supported the event this year. We would not have been able to bring it back without their generosity,” Pletcher stated. To be included on the mailing list or become a sponsor for next year’s event, contact him at (574) 215-7173 or firstname.lastname@example.org.
DRV LLC (formerly Doubletree) and Cruiser RV LLC today (Nov. 24) announced agreement with Lake City Bank of Warsaw, Ind., on a new, five-year credit facility.
“This new credit facility will help us to continue our profitable growth and continue to capture market share,” Dave Fought, president of Howe, Ind.-based DRV, said in a news release. “We are delighted to be working with Lake City.”
The companies manufacture travel trailers, fifth-wheels and toy haulers.
All questions should be directed to Dan Van Liew, CFO of DRV, at (260) 562-1075.
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.”
Editor’s Note: MSNBC.com is conducting a year-long study of Elkhart, Ind. This 2,300-word story, which appeared in The Elkhart Truth, is the latest installment in a series of stories from that project.
In the same way that people might speculate about a couple that could be heading for divorce, business leaders in Elkhart, Ind., sometimes talked about what could happen if the recreational vehicle industry took a serious turn for the worse.
They’d seen it happen before in the early 1970s with the energy crisis and in other recessions since. But this was back a few years ago, when business was booming, and such talk seemed more theoretical than practical, as you might discuss the need to get a new roof, eventually.
“Yeah, there may be a desire to implement change, or diversify,” said Brian Gildea, economic development director for the city of Elkhart. “But when it’s not broken, the impetus to change is not there.”
Now the so-called “RV Capital of the World” is seeing a scenario that even the most pessimistic didn’t think would come to pass.
A season of high gas prices, a deep and lasting recession, a drop in home and investment values and a severe shortage of credit have conspired to decimate the RV industry, which officials say once accounted for as many as one in four jobs here.
The unemployment rate in Elkhart County hit 18.8% as of March, up from just 5.8% a year earlier. That was the largest jobless rate increase of any metropolitan area in the country.
Many local companies, including RV makers and their vast network of small, independent suppliers, have either cut back or gone out of business entirely, leaving the community with millions of square feet worth of vacant manufacturing buildings and thousands of unemployed workers.
‘Diversification is easy to talk about …’
The hard fall for Elkhart’s economy shows the dangers of depending too heavily on one industry for economic health, but also the difficulties of diversifying away from the main engine of a community’s economic activity. As Elkhart struggles to recover, residents are seeing firsthand the monumental task of clawing back from such a massive economic hit at a time when virtually every city in the nation is also suffering from the recession.
“Diversification is easy to talk about, but it’s not easy to bring about,” said Bill Johnson, who several years ago led an effort called the Horizon Project that aimed, in part, to draw a more diverse group of businesses to Elkhart County.
Experts point to success stories such as Akron, Ohio, which was able to create a niche in the polymer industry when the rubber industry began to decline. But they also offer up cautionary tales such as Gary, Ind., which has struggled for decades since the heyday of the steel mills.
The hard truth, many say, is that making an economy less reliant on one major industry can take a decade or more. Ned Hill, dean of the Levin College of Urban Affairs at Cleveland State University, said success often depends on politicians and business leaders who can help a community grow while not fighting too hard against market forces.
“The No. 1 rule is: Don’t allow yourselves to be a victim. You don’t want to do what Youngstown did and what Philadelphia did and say, ‘It’s always come back, it’s going to come back one more time,'” Hill said.
Youngstown, Ohio, has taken years to recover from the decline in steel, while Hill faults Philadelphia-area politicians for spending too much time and money battling cutbacks at its Naval Shipyard, which once employed thousands.
‘They will come back’
Many in Elkhart insist that the RV industry will revive, citing the allure of the open road and desire to be in the outdoors that stokes long-term demand. But even the most optimistic concede this recession has been deeper and more troubling than past downturns. If the RV industry emerges, it may look different than it did during the boom times just a few years ago.
“We don’t have an industry that’s no longer viable,” said Gildea, the Elkhart economic development director. “They will come back. It’s just a question of at what level.”
That leaves Elkhart, along with countless other communities across the Midwest, struggling with the question of what other businesses they can attract to the area. The additional conundrum for Elkhart – and many other communities in Indiana, Michigan and Ohio – is that they have continued to rely mainly on manufacturing for their economic well-being rather than transitioning to more service-oriented work.
Manufacturing accounted for about half of the Elkhart area’s jobs during the boom times. With the recession, that figure has dropped to around 43%, according to state statistics, still well above the national average.
“There’s a lot of diversity in this county in the sense of manufacturing. But that’s the issue: manufacturing,” said Richard Lavers, CEO of Coachmen Industries Inc., an Elkhart company that recently shed its RV business to concentrate mainly on modular homes.
“Is that a good or a bad thing? You play to your strengths,” Lavers said. “Unfortunately, manufacturing is becoming rarer and rarer and rarer.”
Even those who have long touted the importance of technology to the region concede that it would be hard to attract high-tech, white-collar jobs. Many manufacturing workers here have been able to make a very good living without a college education or advanced training. The area’s location, on a major interstate near the middle of the country, combined with its vast landscape of low-slung manufacturing facilities, make it ideal for such work.
“I see Elkhart remaining a primary manufacturing economy for the foreseeable future,” said Jim Walsh, vice president of the North Central Indiana Business Assistance Center. “I think the kind of manufacturing is going to change, (but) we’ve always prided ourselves: We make stuff.”
Walsh – who regularly runs workshops helping manufacturing operations become more efficient – still hopes technology will play a role in the area’s recovery.
“We’re still building things like we were 50 years ago, and we’re not going to last,” he said.
Elkhart’s woes may be more extreme than others around the country, but they are not unique. John Stafford, director of the Community Research Institute at Indiana University-Purdue Fort Wayne, said he’s watching many communities struggle with whether they can leave their manufacturing roots to evolve into more of a service economy.
“Every one of us is looking to answer that question,” he said.
Other Midwestern cities including East Peoria, Ill., a manufacturing hub for struggling Caterpillar, and Flint, Mich., once a mecca for auto manufacturing, are wrestling with a similar plight.
Diversity faded over the years
While it’s easy to judge such cities in hindsight, it can be almost irrestible to hitch the civic wagon to a single industrial star in good times.
“The reality is that if you’ve got an industry that’s paying good wages and good returns, the best bet is to go start working for them,” said Hill, the Cleveland State professor.
It also hadn’t always been this way in Elkhart. When Angie Recchio was growing up here, she figured she’d have her choice of three industries for a career: pharmaceuticals, band instruments and the RV business.
But by the time Recchio had grown up, earned a college degree and returned to her hometown, her choices had narrowed. The pharmaceutical and band instrument companies that were once such a major presence had mostly been sold to larger companies, who in turn sent thousands of those white-collar and factory jobs elsewhere.
For her and her peers, it seemed like the options were to go into the RV industry or get a service job, perhaps at a car dealership or restaurant.
Recchio, 33, chose the RV industry. Now she works as a sales representative for Valley Screen Process Co., which makes decals, mostly for RVs. She believes the RV industry will revive but says the downturn has prompted her company to look more aggressively for other customers.
“Maybe it’s a wake-up call,” she said.
‘Way too deep in one industry’
Some in the community have been working for years to recruit new industries.
“There were a lot of people who lived here who said, ‘Hey, we’re getting way too deep in our one industry,'” said Tom Stark, a vice president at Lake City Bank in nearby Goshen.
In part to address that concern, county leaders formed an Economic Development Corp. in 2000. A few years later, the community began work on the Horizon Project, an ambitious effort to expand educational opportunities in the county, deal with infrastructure problems and grow the county’s economic base.
But they hit roadblocks.
Stark, a member of the EDC board, said many businesses were reluctant to come to Elkhart County because the bustling RV industry kept the unemployment rate extremely low, making it hard to find workers.
For the same reason, some in the RV industry were unhappy with diversification efforts, said John Letherman, president of the Elkhart County Council.
“You bring in more companies, that just makes the labor pool that much smaller,” Letherman said.
Johnson, who headed the Horizon Project after selling his own rubber business, also said some companies were looking for a more highly skilled workforce than Elkhart had to offer. But over the years, many of the other companies that had once employed engineers, chemists and other highly skilled workers had left town, and the RV industry does not generally require those types of advanced skills.
Some workers are heading back to the classroom now. About 600 former RV workers have enrolled in retraining programs through the area’s Ivy Tech Community College, where overall enrollment is up. But efforts to educate a workforce can take years.
“Retraining’s a wonderful thing, but it’s not going to happen overnight,” Johnson said.
Reasons for optimism?
Despite the difficulties, community leaders see reasons to be optimistic. People at the EDC and the city of Elkhart say they are fielding hundreds of calls from people inquiring about doing business in the county. That’s thanks in part to President Barack Obama, who drew national attention to Elkhart’s plight in his three appearances there.
Still, with the rest of the nation also in recession, it’s tough to say when, or if, that attention will translate into new business and jobs. The county also is facing stiff competition from other communities hungry for new industry.
Boosters say Elkhart has several competitive edges. Where once potential businesses fretted about not finding enough workers in Elkhart, now the county can point to a willing workforce that is accustomed to hard, physical labor in the RV factories, which often pay according to production.
And they say Elkhart has a long history of entrepreneurship, pointing to the many businesses that have sprung up in recent years to supply the RV business. The community, they say, is a resilient one.
“We’ve been in a hole, but we’re trying to look up and see out of it,” said Dorinda Heiden-Guss, head of the county’s EDC.
Elkhart officials say their community could be a hub for other business, such as storage and distribution facilities. And many are hoping that a recent decision to locate a major nanotechnology research facility in nearby South Bend eventually will bring work to Elkhart.
Robert Dunn, managing director of that facility, the Midwest Institute for Nanoelectronics Discovery, said there is potential for work there to lead to manufacturing in Elkhart, but not for three to seven years.
Meanwhile, many small businesses that have supplied the RV industry also are seeking to diversify.
Promens’ Elkhart facility once did the bulk of its plastics processing for the RV industry. Now, the bulk of the work is for other industries. But Jack Welter, vice president of Roto North America, a division of Promens, said that is largely because the company closed two other factories elsewhere and shifted that work to the Elkhart facility.
“I don’t want to take too much credit on diversification,” he said.
When Kirk Veer started seeing business slip at American Stonecast Products, which supplies sinks to the RV industry, he tried to get retailers interested in his products. But Veer, who is president of the small company, said he quickly found he didn’t have enough of a product line to interest big stores.
Now, instead of pursuing business outside the RV industry, he’s hoping to stay afloat in part by adding lightweight countertops and tabletops to the roster of things he supplies to RV makers.
Many businesses interconnected
Another issue for communities tied primarily to one industry is that even other companies in town are often linked to the primary industry. Goshen Coach, a division of Thor Industries Inc. that makes small buses, is by some measures one of the bright spots in Elkhart’s struggling economy.
So far, the manufacturing facility has lost employees only through attrition, said Troy Snyder, Goshen Coach’s president. Executives hope federal stimulus money will help business, because local governments will have more money to buy vehicles.
But Goshen Coach relies on about 300 suppliers, including many in Elkhart County that also supply the RV industry. About a dozen of those suppliers have gone out of business because of the RV industry’s troubles, leaving the bus company to find new suppliers.
The company gets its chassis primarily from troubled U.S. carmakers GM and Ford. Because both of those companies are periodically shutting down their manufacturing lines to save money, Snyder said the company has been forced to keep more chassis on hand than it would like so it doesn’t get caught without the much-needed base for its buses.
On the plus side, many in the RV business say they are starting to feel hopeful that things won’t get worse. They talk of a good week here or there, and say the RV industry typically picks up in the spring and summer months.
“We think we’re at a point where we can ride it – we’ve hit bottom,” said Derald Bontrager, president and chief operating officer of the RV company Jayco Inc.
Former RV manufacturer Coachmen Industries Inc. reported a loss from continuing operations for the first quarter ending March 31 but a profit when discontinued operations were factored in.
Net sales from continuing operations for the first quarter were $11.3 million compared to $30.8 million reported for the same period in 2008. Gross profit for the quarter decreased to a loss of $2.1 million, from a profit of $5.5 million for the first quarter of 2008. The company reported a net loss from continuing operations of $6.1 million versus a net profit from continuing operations of $1.3 million in the first quarter of 2008.
Net income, including discontinued operations, was $8.3 million in the first quarter of 2009, versus a net profit of $1.3 million in the first quarter of 2008.
Rick Lavers, president and CEO of the Elkhart, Ind.-based manufacturer of systems-built housing and specialty vehicles, explained that the company was able to post a first-quarter profit “due to the booking of our settlement of the Kemlite RV sidewall matter with Crane Composites.”
The company also established a new financing partnership with Lake City Bank based in Warsaw, Ind. The settlement and new credit facility “are significant steps toward resolving the severe liquidity problems which have plagued the company since last winter, when Coachmen’s then-principal lender terminated our credit facility,” Lavers said. “Nonetheless, we cannot be overly sanguine, as we have immediate cash requirements while the funds from the settlement will not be available until later next month.”
Coachmen sold its RV operations to Forest River Inc. at the end of 2008.