Obama to Speak at Navistar Facility in Wakarusa, Ind.

August 3, 2009 by · 1 Comment 

President Obama has chosen a former Monaco Coach Corp. facility in Wakarusa, ind., now owned by Navistar International Corp., to deliver remarks on the economy on Wednesday, the White House announced today (Aug. 3).

Obama will discuss the immediate steps the federal government has taken to rescue the economy and the long-term investments the government is making to rebuild for the future, according to the White House release.

He will discuss how to build a new economic foundation strong enough to withstand future economic storms and support lasting prosperity, and how the U.S. can recapture the spirit of innovation that has always moved America forward.

The event will be by invititation only but open to the press. The arrival and departure of Air Force One will be open to the press but closed to the public.

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NYU Business Prof Sees Bankruptcy Pace to ‘Quicken’

July 9, 2009 by · Leave a Comment 

Editor’s Note: Robert Salomon, associate professor of management at New York University, filed this blog last week providing updated numbers on the rate of bankruptcy filings in the U.S. The listing of  156 “major” filings includes RV makers Monaco Coach Corp. and Fleetwood Enterprises Inc.

In January I predicted (see Notable Bankruptcies of 2009: Q1) 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 156 “major” filings thus far in 2009. Assuming that bankruptcies are equally distributed throughout the year, this puts us on pace for 312 bankruptcies. That is tracking well shy of my prediction. In fact, bankruptcies were down significantly from Q1 to Q2, as there were 90 bankruptcies in the first quarter but only 66 in the second.

That stylized fact begs the question: Is that a “green shoot” dip in bankruptcy filings, or is this simply a seasonal fluctuation?

Although I cannot be certain, the latter makes more sense for several reasons. First, bankruptcies are a lagging economic indicator. As with employment, bankruptcies typically peak well after the economic trough. For example, although the dotcom bubble burst in March of 2000, bankruptcies did not peak until 2001, and were elevated into 2002. So even if you believe that the economy has bottomed out (which is not entirely clear yet), we should still expect to see bankruptcies rise. Second, according to bankruptcy statistics from the U.S. Courts website, the pace of bankruptcy filings generally increases in the second half of the year.

For these reasons, I expect the filing pace to quicken as the year goes on, and I believe that we will ultimately challenge the 383 mark from 2001.

Go to to see an updated list of what the writer sees as the “noteworthy” bankruptcies of 2009, as reported by

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RVDA of Canada Releases 2008 Dealer Survey Results

June 29, 2009 by · Leave a Comment 

The Recreation Vehicle Dealers Association of Canada (RVDA of Canada) has released the results of its 2008 Warranty and Parts Survey.

The trade group had 97 dealers, nationally, respond to the survey, which examined warranty and labor rates, warranty parts and handling as well as rated manufacturers in terms of their overall support, according to the association’s current newsletter.

In the manufacturer ratings, KZ RV LP, Shipshewana, Ind., got the top score, 82.4, out of 100. Jayco Inc., Middlebury, Ind., was second with a rating of 78.8, while Carriage Inc. of Millersburg, Ind., was third with 76.9.

Rounding out the top 10 were Crossroads RV, Topeka, Ind.; Pleasure-Way Industries Ltd., Saskatoon, Saskatchewan; Monaco Coach Corp., Coburg, Ore.; Cruiser RV LLC, Howe, Ind.;  Coachmen Industries Inc., Middlebury, Ind.; Fleetwood Folding Trailers, Somerset, Pa.;  and General Coach West, Oliver, British Columbia.

KZ, Pleasure-Way and General Coach West were the only three firms to rank among the top 10 in all four recent survey years (2008, 2006, 2005 and 2003).

Among the other findings:

  • The average hourly warranty labor rate varied  from $45 to $135 with the national average at $90.16.
  • The average retail shop rate was $92.50 per hour with a range between $45 and $130.
  • Warranty parts and handling allowances ranged from 0% to 100% with the national average at 17.2%.
  • The average parts margin nationally was 37.4%, with a range of 0% to 75%.
  • The number of technicians varied from one to 16 with the average of five per shop.

Most manufacturers give a handling allowance or mark-up for warranty parts. The majority of manufacturers gave allowances ranging between 10% and 40%.

Dealers also were asked to rate (with 100 tops) the following categories:

  • Ease of completing the claims, 64%.
  • Approval of warranty claims, 67%.
  • Flat rate time allowances, 56%.
  • Parts availability and supply, 64%.
  • Overall support, 69%.
  • Promptness of payment, 65%.

The recent survey had an overall satisfaction of 64.1%, which is higher than the 2006 survey, which received a satisfaction rating of 63.3%.

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Monaco Coach Expiring as Monaco RV LLC Debuts

June 24, 2009 by · Leave a Comment 

Monaco Coach Corp., which not so long ago was a major employer in Junction City, Ore., and in Indiana and a national power in the RV industry, has been reduced to a handful of properties that will be sold or be subject to foreclosure by creditors, according to the Register-Guard, Eugene, Ore.

On Tuesday (June 23), a judge agreed to the company’s request to convert its Chapter 11 bankruptcy filing, which gives it the protection of the court while it deals with financial matters, to a Chapter 7 case so it can liquidate its remaining assets: seven pieces of real estate in Oregon, Indiana and Florida.

The Oregon real estate is all that’s left after Monaco Coach sold its major assets – factories, inventory, brands and intellectual property – to Navistar International Corp. earlier this month for $47 million, and RV resort properties in California, Nevada, Florida and Michigan to assorted buyers for about $16 million.

Navistar intends to revive the brand as Monaco RV LLC and resume production at its Coburg factory, but it has not yet said when that will happen or how many people it will employ.

“It’s a work in progress,” Navistar spokesman Roy Wiley said Tuesday. “It takes time.” And, given current market conditions, he said, “there’s no sense to rush.”

At a brief hearing Tuesday in U.S. Bankruptcy Court in Delaware, Monaco Coach attorney Timothy Cairns said the company was unable to come to terms with its major secured creditors, Bank of America and Ableco Finance, to obtain a continuing line of credit that would enable it to sell off its remaining properties.

The lenders were willing to let Monaco continue in Chapter 11 so it could sell off those properties. But the parties couldn’t agree on how much money would be left over for other creditors, or on a budget that enabled Monaco Coach to take the necessary steps to sell the properties, said Rob Orgel, one of Monaco’s bankruptcy attorneys.

Judge Kevin Carey agreed to sign an order converting the case to Chapter 7, effective June 30.

Once Monaco’s case is converted to Chapter 7, a U.S. trustee will be appointed to oversee selling off the remaining assets and convert them to cash, Orgel said.

If the trustee determines he doesn’t have the cash to properly sell off the properties, they may be abandoned, and the creditors will have to foreclose to get their money, he said.

“The likely result is the trustee will talk to the lenders and work out a deal we couldn’t work out,” he said. “They’ll work out a deal or the trustee will tell them to go to foreclosure and get your money that way.”

Orgel said it’s not clear what the seven properties are worth, but he estimated between $5 and $15 million – nowhere near enough to pay off unsecured creditors, who are owed somewhere between $50 million and $100 million.

A conversion to a Chapter 7 case effectively spells the end of Monaco Coach Corp., said Andrea Coles-Bjerre, an assistant law professor at the University of Oregon and a former bankruptcy lawyer in New York.

Once the remaining assets are liquidated under Chapter 7, “the entity ceases to exist,” she said.

Monaco Coach was founded in 1968 in Junction City as Caribou Coach Co. It changed its name to Monaco in the 1970s and became a publicly traded company in 1993.

Monaco ceased production last December after a brutal 2008. It filed for Chapter 11 bankruptcy protection in March and terminated 2,000 workers who had been idle since December.

About 100 employees remain on the job at the Coburg plant.

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RV Legend OEMs Among 79 M&As So Far in 2009

June 15, 2009 by · Leave a Comment 

It’s been nearly six months since The Deal magazine reported that more and more corporate acquirers were eying the distressed market for potential targets. So, did they arrive? 

If we narrow the definition of distressed deals to transactions involving a bankrupt seller, the answer is yes. According to The Deal Pipeline’s bankruptcy M&A database, 79 corporations have acquired or been approved to buy assets from a bankrupt seller so far this year. That compares to 51 similar transactions in the same period last year, and 102 total in 2008.  

Looking more closely at this year’s numbers, it’s no surprise the automotive industry has seen the most action from corporate buyers of distressed assets. There have been 12 bankruptcy M&A deals involving a strategic buyer since Jan. 1. Highlights include:

  • Hertz Global Holdings Inc.’s acquisition of Advantage Rent A Car Inc. 
  • Seffner, Fla.-based Lazydays RV Center Inc.’s acquisition of 154 Fleetwood Enterprises Inc. trailer units.  
  • Penske Automotive Group Inc.’s acquisition of General Motor Corp.’s Saturn brand. 
  • Navistar International Corp.’s Workhorse International Holding Co.’s acquisition of certain Monaco Coach Corp.’s recreational vehicle assets.

Retail was the next most active industry for corporate buyers, with nine transactions, including:

  • Winter Sky Retail Ltd.’s acquisition of Madhouse Ltd.
  • Aurora Fashions Ltd.’s acquisition of Mosaic Fashion Ltd.
  • Sleepy’s Inc.’s acquisition of Dial-A-Mattress Operating Corp.

Strategic acquirers were also active in the media and energy industries, with six and seven transactions, respectively.

For corporate acquires that have yet to dive into the deepening pool of bankrupt assets, be aware that the learning curve is steep. As Sullivan & Cromwell LLP partner Frank Aquila said, even prenegotiated terms will likely be revisited in a bankruptcy sale. Still, as the data above indicates, the opportunities available may be too good to keep many strategics sidelined for long.

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Navistar Names Interim Principal Financial Officer

June 8, 2009 by · Leave a Comment 

On June 3, the board of Navistar International Corp. appointed A.J. Cederoth to serve as the interim principal financial officer of the company, replacing William A. Caton who previously served in that capacity during the medical leave of absence taken by the company’s then-current CFO, Terry M. Endsley.

On April 15, the company announced that Endsley had passed away after a brief but difficult battle with cancer and that Cederoth would be handling the day-to-day financial and accounting responsibilities. The appointment of Cederoth as interim principal financial officer coordinates the accounting and financial functions under his leadership pending the search for a new CFO, according to a news release.

Cederoth, 44, previously served as vice president and CFO of the Engine Division of Navistar Inc. and vice president and treasurer of Navistar Financial Corp., the company’s captive finance subsidiary.

Navistar acquired certain assets of Monaco Coach Corp. last week for approximately $47 million.

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Navistar Completes Purchase of Monaco Assets

June 4, 2009 by · 2 Comments 

Navistar International Corp. announced today (June 4) that it has completed the purchase of certain assets of Monaco Coach Corp. for approximately $47 million.

The new company, named Monaco RV LLC, will be a wholly owned affiliate of Warrenville, Ill.-based Navistar Inc., Navistar’s principal operating company, and will be headquartered in Coburg, Ore.

“Navistar’s entry into the RV business through the purchase of certain Monaco Coach assets fits into our strategy of leveraging our assets to expand our diesel business, serve the end customer through robust parts and service and will complement our Workhorse chassis business,” said Jack Allen, president of Navistar’s North American Truck Group. “The Monaco brand is a market leader with a strong reputation and Navistar is pleased to add it to our portfolio of leading brands and businesses.”

“Providing the RV market with the right vehicles at the right time will be Monaco RV’s first order of business,” Allen continued. “Our management teams will spend these first few weeks ramping up the business at a pace commensurate with demand.”

Monaco RV LLC will be much leaner than the old Monaco Coach Corp., which was also based in Coburg.  The new company will reportedly hit the ground running by making a number of key moves in the coming days, according to Monaco RV spokesmen:

The new business is under the direction of former Chairman and CEO Kay Toolson, who will report to Allen. Among the other returning Monaco executives is Mike Snell, now senior vice president of sales and product development, Charlie Kimball, now senior vice president of operations, and Richard Bond, senior vice president and general counsel. Pat Carroll, (product development),  John Healey (purchasing), Garth Herring, (parts and service) and April Klein (customer service) are also part of the Monaco RV team, as is Marty Garriott, who will return to run the Oregon operations, and Irv Yoder, who’s back to oversee Indiana operations.

Former Monaco President John Nepute and former CFO Marty Daley will join Navistar in other corporate roles, but will not be a part of Monaco RV.  

“We are going to produce models and brands that are in the most demand by our dealer body, but fewer than before,” Snell said. “Our plan is to begin producing at a low rate at all of our facilities based on a smaller group of dealers and the business model we are adapting to.”

Monaco spokesmen have also confirmed the following:

  •  Snell and his sales staff will begin visiting key dealers in coming weeks.
  • Towable operations will be ramped up more quickly than motorized to take advantage of the key June-to-September buying season.
  • The former towable-building R-Vision plants in Warsaw, Ind., about a half hour south of Wakarusa, will be leased for approximately 90 days or until work-in-process units can be completed there. Then, those operations will be moved up to Wakarusa in Elkhart County.
  • Navistar reports that it has also acquired Monaco’s Bison equine trailer operation in Milford in the purchase.
  • Slated for sale by Monaco Coach Corp. in its Chapter 11 case are idled facilities that were not acquired by Navistar, including a fiberglass plant in Hines, Ore.; a chassis plant in Harrisburg, Ore.; the Nappanee Wood Products plant in Nappanee, Ind.; two buildings at the former Hively Avenue operations in Elkhart; a towable manufacturing plant on Mishawaka Road in Elkhart; the R-Vision complex in Warsaw; and the Roadmaster cargo trailer business in Goshen. The proceeds of those sales go to satisfy creditors of Monaco Coach, although it is presently unknown what percentage of these proceeds will be available to satisfy Monaco Coach Corp.’s general unsecured creditors, including dealers, vendors and customers who submitted unpaid warranty claims. Meanwhile, Monaco’s resorts were auctioned off late last month, and the $16.3 million in proceeds was also applied to the debts owed to creditors.

Kay Toolson, CEO for Monaco RV, said, “The last few months have been very difficult, with many hurdles to overcome to complete the sale to Navistar. This result is the best possible outcome for our communities, employees, dealers, customers, suppliers and the entire RV industry. We are pleased and excited to be a part of Navistar.”

Plans call for Monaco RV LLC to have a significant presence at this winter’s National RV Trade Show in Louisville, Ky. However, again, Monaco’s new business model clearly calls for a leaner operation in terms of physical plant capacity, employment and dealer rosters, Snell maintained. “The challenge we will have is, a lot of dealers and people on the outside will see this as the same Monaco, and it’s not,” said Snell.

Snell said that under Navistar’s plan, Monaco RV is expected to be a self-sustaining and profitable business under Navistar’s ownership. 

Although the new company is not liable for any product sold by Monaco Coach Corp. prior to the purchase by Navistar, Snell indicates that customer service representatives will be available to aid RV owners in obtaining service and support for their vehicles.  Owners with questions should call (877) 4MONACO for assistance.

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Monaco Coach Sale to Navistar Inc. Delayed

June 3, 2009 by · Leave a Comment 

The sale of Monaco Coach Corp. to Navistar International Inc. did not close as scheduled on Tuesday (June 2), a Navistar spokesman said.

The  deal, approved May 22 by a bankruptcy judge in Delaware, was to have closed Tuesday, but Navistar spokesman Roy Wiley said he had no news to report, according to The Register-Guard, Eugene, Ore. There could be news on deal later in the week, he said.

Coburg, Ore.-based Monaco is in Chapter 11 bankruptcy. Navistar, an Illinois-based truck and engine manufacturer, was the sole bidder for Monaco’s main assets, including its factories in Oregon and Indiana.

Navistar hasn’t yet said what its plans are for Monaco plants.

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Canadian Dealer Laments Supply Chain Problems

May 26, 2009 by · Leave a Comment 

Canada’s largest recreational vehicle dealer may have missed out on becoming an RV manufacturer last week, but British Columbia-based Arbutus RV and Marine Sales continues to look at options to gain more control over the supply chain, according to the Times Colonist, Victoria, B.C.

Arbutus lost out on a chance to pick up a La Grande, Ore., travel trailer manufacturing plant being sold by Fleetwood Enterprises Inc., which filed for bankruptcy protection in March.

Arbutus originally bid $1.8 million for the plant, but Northwood Manufacturing, also of La Grande, came up with a competing bid and forced a courtroom auction in California. Northwood won out with a bid of $2.05 million.

“Another manufacturer just down the street didn’t want to see us come in and be a competitor,” said Arbutus owner Craig Little. “I guess somebody else figured they needed it more than we did.”

Northwood, which also makes travel trailers, has said it intends to continue using the plant for that purpose.

According to court documents, Fleetwood will continue to pursue buyers for its major businesses.

Little said his company bid on the plant as a means of maintaining a consistent supply of product and to have some quality control over the products it sells.

That’s becoming more important as the industry feels the pinch of tough economic times in the U.S.

“With the U.S. economy being so challenged it has been a tough time for RV manufacturers with that soft market,” said Little, who was quick to note his company is having a record year.

But that isn’t the case for a number of RV manufacturers that have been forced to take drastic action.

Industry leaders Fleetwood and Monaco Coach Corp. have both filed for bankruptcy protection, while earlier this year, Winnebago Industries reported a loss of $10.4 million in its second quarter — the third quarterly loss in a row.

Little said he would have loved to have some control of the manufacturing side of the business, but he is not concerned about supply. Indeed, he has been meeting with other manufacturers to discuss partnerships.

“We’re in discussions to either get involved on the manufacturing side or be in a position, because of the volume we do, to being hands-on in the product mix to ensure the quality is there for us,” he said, adding there may be a chance for Arbutus to dictate some private labelling of products for its marketplace.

“Whether we partner with manufacturers, it will be a closer-than-ever relationship that we move forward with, and we look forward to added value we can share with our client base,” he said.

Little said his 21-year-old company continues to thrive through tough economic times because of its track record and Vancouver Island’s unique makeup.

“The Island economy has a lot of retired money, so that’s not quite as susceptible to some of the challenges out there, and our banking system has been great,” he said of record low interest rates that make borrowing appealing.

But the big reason RV sales have remained strong, he said, is it remains an inexpensive way to get away.

“It’s still the most cost-effective holidaying you can do,” he said.

“You can pick anywhere you live on Vancouver Island and I’ll bet within five to 15 minutes you can be somewhere RVing.”

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Despite Ruling, Still No Hints on Monaco Future

May 26, 2009 by · Leave a Comment 

Despite a bankruptcy court judge’s ruling late Friday (May 22) approving the sale of Monaco Coach Corp. to a unit of Navistar International Inc.,  it remains unclear whether Navistar will resume production at any of  the plants in Oregon or Indiana or rehire any of the 2,000 employees laid off just before the company filed bankruptcy.

U.S. Bankruptcy Judge Kevin Carey approved the $50 million sale after learning there were no other bidders for the assets of the RV manufacturing company, which has major manufacturing plants in Coburg, Ore., and northern Indiana, according to The Register-Guard, Eugene, Ore.

“We don’t have any answers either – no tangible answers,” said Mike Johnson, a middle manager at Monaco’s Coburg plant until he was laid off in March. “It’s just a big question mark.”

During Friday’s court hearing, Monaco attorney Malhar Pagay told the judge an “ancillary benefit” of the sale could be some rehiring.

“(Monaco’s) former employees may be called upon by Navistar to restart some of the plants that were shuttered,” Pangay said. “I also note that the debtor’s former dealers will enjoy a revitalization of the Monaco brand, and depending upon Navistar’s determination, may have a relationship with Navistar.”

The sale is scheduled to close June 2.

Roy Wiley, spokesman for the $14 billion truck and engine builder, declined comment on the fate of the Coburg plant. Navistar has 17,000 employees at plants in Ohio, Alabama, Arkansas, Oklahoma and Canada.

“It’s not done until it’s done. It’s a step in the process,” Wiley said. “Ask me after June 2, and I’ll probably be able to tell you more.”

Options for Navistar might include restarting some of the factory production now, keeping everything idle until the economy improves substantially, or shifting Monaco production to some of Navistar’s existing facilities.

Navistar’s $52 million purchase price would not be enough to repay Monaco’s secured creditors, including the $38.2 million owed to lender Bank of America and $37.4 million claimed by lender Ableco.

The sale dims the chances that unsecured creditors will recover any of the money Monaco owed to them.

Unsecured creditors – those who have no legal hold on a company’s physical assets – typically are paid only after secured creditors have been satisfied.

The sale might eventually benefit local suppliers, though, if Navistar restarts RV production.

Because Friday’s ruling carried no definitive answers about whether the Coburg plant would reopen, workers and community members reacted to the news with muted optimism.

“We look at all of this as potentially good news. That’s how I view it,” said Coburg Mayor Judy Volta.

Kevin Penn, a former team leader at Monaco, has been working part time in landscaping and has signed up for some summer classes, but he said he’d be ready to go back to the plant.

“It would be really good if they could get the company going again. I’ve seen a lot of people from the company who still don’t have jobs,” he said.

Former Monaco supervisor Sandy Kadash has been looking for work.

“Nothing has come up so far,” she said. “We made a pretty good living there and it’s kind of hard to think about taking a step backwards.”

Kadash said she keeps in contact with Monaco’s human resources department.

“It sounds like they’re getting stuff ready, but I’m not sure anybody knows for sure what that means yet,” she said. “From everything that I’ve been told, it’s a good thing.”

During the bankruptcy proceedings, Monaco has kept an administrative and sales staff at the headquarters.

It would be nice, Kadash said, if the sale meant the end of limbo for Monaco employees, who were put on unpaid leave for months before their official layoff.

Kevin Gallagher, who fabricated doors for the motorhomes, said he doubts Navistar would hire anything close to the whole Monaco crew back.

“I still think the market is terrible for motorcoaches,” he said. The market won’t rebound until the national housing crisis has passed and RV buyers can again tap into their home equity for cash. “I’m not going to get overly whoop-de-do about it,” he said.




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