Navistar International Corp. officials said Wednesday (Feb. 14) they are looking into selling the company’s Navistar RV unit based in Wakarusa, Ind.
According to a report by WSBT TV, South Bend, Navistar is in the preliminary stages of its effort to possibly sell the company. In a statement, Navistar representative Steve Schrier said:
“Navistar is conducting a comprehensive review of all of our non-core businesses — including our Navistar RV business — to evaluate their potential to drive long-term profitability and significantly improve our return on invested capital (ROIC).
“As a result of our ROIC analysis, Navistar is listening to offers for the sale of its RV business and the sale of the business is a possibility. However, we are still early on in that process and not accepted any offers at this time.”
Schrier added that Navistar is not in a position where it has to sell the RV portion of the company.
“We have a credible turnaround plan for the RV business under way and sufficient cash to continue funding operations, so we have the option to reject any offers that don’t have value,” Schrier told WSBT, emphasizing the company was not cash-strapped.
The company laid off 29 temporary workers in September. At that time, Schrier said that there were no plans to lay off any of the 500 permanent employees who work at the Wakarusa motorized manufacturing facility.
In 2008, Monaco laid off nearly 1500 people and filed for bankruptcy. Then Navistar bought Monaco Coach in 2009. When Navistar acquired Monaco, there were only 20 employees left.
In August of 2011, Monaco decided to consolidate its Oregon factory with the factory in Wakarusa. That brought about 400 new jobs to Elkhart County. There are currently about 600 workers between the Elkhart and Wakarusa plant.
Editor’s Note: The following is an excerpt from an article authored by freelancer Ty Adams profiling former Monaco RV executive Kay Toolson that ran in the March issue of Family Motor Coaching magazine.
If you ask Kay Toolson, he’ll joke that if he were smarter he would have retired in 2005 before the American economy ruptured. “I would have retired with a lot more money,” he said chuckling. “No, I’m obviously fine. I’ve had a great life and a great career, but I’d be lying if I said the last few years were a breeze.”
Toolson retired on June 30, 2011 after 40 years in the RV industry and 25 years as CEO for Monaco Coach Corp. The company was severely affected by the U.S. banking implosion and hit hard times in 2008, filing for Chapter 11 bankruptcy. Toolson and his leadership team negotiated the sales of certain Monaco Coach assets to Navistar International Corp. and helped give jobs back to some of the people who lost them in the bankruptcy. After the sale, estimated at $47 million, the company became Monaco RV LLC.
“One of my greatest thrills was being able to retire and save the brands and give jobs back to so many wonderful Monaco employees,” he said.
Toolson, a native of Smithfield, Utah, entered into several business ventures – including minority owner and executive vice president of Los Angeles-based high-line motorhome builder Executive Industries – before receiving a proposal to purchase Monaco, then based in Eugene, Ore.
He and his wife, Judy, had talked about leaving Los Angeles, so they flew to Oregon to investigate. Ironically, their initial reaction was not positive.
“I just had this hollow feeling, and we decided we weren’t going to do it,” Toolson said,
However, a bank in Portland promised to provide financing for the purchase and eventually swayed them. Toolson resigned, but during a retirement party he received a call from his attorney.
“He said that the bank wasn’t going to back the deal. And, honest to God, the phone went dead,” he recalled. “Judy and I got in the car and drove up there, and it was the longest drive of my life.”
Obviously, the deal went through in the end but it was a scramble to find financial backers. Toolson eventually brokered a deal with long-time Indiana investor Bill Warrick and they purchased the company from Eugene Mayor Brian Obie. Toolson became president and Warrick was chairman. It was 1987.
Over the next 18 years, the company’s annual sales grew from $17 million to more than $1.4 billion. In 1993, Toolson, the leadership team and a small number of outside investors bought out Warrick and later that year took the company public, which allowed them to pay off the other investors.
When asked to name the highlights of his time at Monaco, Toolson replied, “Just watching people grow, playing a part in helping them achieve their dreams.
These days, Toolson indulges in his favorite hobbies of fly fishing and golf, and most importantly spending more time with Judy.
“We have a house on the Oregon coast, so we spend a lot of time there walking the beach,” Toolson said. “It’s so neat, because when I’m there, I’m just another ‘old man’ in town. It’s kind of fun to be anonymous.”
Kay and Judy also have time to return to an old love – RVing. They have belonged to FMCA since 1986.
“We’ve already been to 48 of the 50 states, but we’ll do more of that,” he said. “We used to have so much fun RVing, but then I got too busy running the company, so it will be great to get back to it.
When he looks back at his career, what’s the main lesson Toolson has taken from the experience? “Every day, you just keep trying and you keep getting up after you get your teeth knocked out. You only fail if you quit.”
The U.S. Department of Labor has announced a nearly $1.3 million National Emergency Grant to help about 1,050 Oregon workers affected by layoffs at Monaco Coach Corp. in Coburg, Ore.
As reported by the Associated Press, federal officials said Monday (June 13) the grant is the second installment for workers laid off by the recreational vehicle manufacturer after nearly $1.7 million was released initially, bringing the total to almost $3 million.
The money will be used to help workers train and compete for new jobs.
The latest grant will be administered through the Oregon Department of Community Colleges and Workforce Development.
President Obama on Wednesday (Aug. 5) said $2.4 billion in federal grants for next-generation, fuel-efficient vehicles will create or retain thousands of jobs in Indiana and lay a foundation for the economy of the future.
In a cavernous Monaco Coach recreational vehicle assembly plant now owned by Navistar International Corp., the president told a crowd of 250 enthusiastic workers that $39 million of the grants would go to build 400 of the vehicles at their company, according to the Northwest Indiana Times.
“We have to harness the innovative and creative spirit that’s waiting to be awakened all across America,” Obama said.
Other Indiana companies winning the competitive grants are Allison Transmission, in Indianapolis; Delphi, in Kokomo; and Magna, in Muncie. In addition, Purdue University, the University of Notre Dame, Ivy Tech Community College and Indiana University will receive grants to develop electric vehicles.
Indiana will receive more of the $2.4 billion than any state but one, Michigan, Obama said.
More than 1,000 people worked at the sprawling Monaco Coach complex before all production was shut down last year. Monaco Coach was bought out of bankruptcy by Navistar International in June.
Unemployment started to soar in Elkhart County early last year as its recreational vehicle industry crumbled in the face of the national recession and high gasoline prices. It hit a high of 18.8% in March.
Navistar CEO Daniel Ustian spoke before Obama, noting his company is more than 150 years old and once had its new technology protected by a lawyer named Abraham Lincoln. The company is now a leader in the production of green diesel trucks and plans to be a leader in production of electric vehicles, Ustian said.
“We have a common goal with the president,” Ustian said. “We want to grow our company and grow jobs and grow our economy.”
The president also appeared to have the goal of answering his critics and breathing new life into some of his initiatives.
“There are those in Washington who focus on the ups and downs of politics,” Obama said. “I’m focused on the ups and downs of the American people.”
In addition to the announcement that the many of the grants for electric vehicles would flow to Wakarusa and other Indiana communities, the president launched into a defense of his stimulus program, education initiatives and most particularly, his drive to reform American health care.
“We will push health reform to the end of this year because the American people need it,” Obama said.
At the end of his talk, the president worked the edges of the seats, shaking hands and exchanging words with workers like Robert Stevens, 34.
“Anything new is good,” Stevens said afterward. “Especially if it’s a new, fuel-efficient vehicle.”
For most of its history, the Federal Reserve has been a high temple of monetary matters, guiding the economy by setting interest rates but remaining aloof from the messy details of day-to-day business.
But the financial crisis has drastically changed the role of the Fed, forcing officials to get their fingernails a bit dirty, according to the New York Times.
Since March, when the Fed stepped in to fill the lending vacuum left by banks and Wall Street firms, officials have been dragged into murky battles over the creditworthiness of narrow-bore industries like recreational vehicles, rental cars, snowmobiles, recreational boats and farm equipment – far removed from the central bank’s expertise.
A growing number of economists worry that the Fed’s new role poses risks to taxpayers and to the Fed itself. If the Fed cannot extract itself quickly, they warn, the crucial task of allocating credit will become more political and less subject to rigorous economic analysis.
That could also undermine the Fed’s political independence and credibility as an institution that operates above the fray – concerns Fed officials acknowledge.
Executives and lobbyists now flock to the Fed, providing elaborate presentations on why their niche industry should be eligible for Fed financing or easier lending terms.
Hertz, the rental car company, enlisted Stuart E. Eizenstat, a top economic policy official under Presidents Bill Clinton and Jimmy Carter, to plead with both Fed and Treasury officials to relax the terms on refinancing rental car fleets.
Lawmakers from Indiana, home to dozens of RV manufacturers, have been pushing for similar help for the makers of campers, trailers and mobile homes.
And when recreational boat dealers and vacation time-share promoters complained that they had been shut out of the credit markets, Sen. Mel Martinez, a Republican from Florida, weighed in on their behalf with the Treasury secretary, Timothy F. Geithner, who promised he would take up the matter with the Fed.
“This is the most straightforward indicator of why we don’t want the government doing this, except in an emergency,” said Douglas J. Elliott, an economist at the Brookings Institution who supports the new lending program but worries about its long-term implications. “There is no clear line about who should be included and who shouldn’t be included. It’s an inherently political decision,” he added.
Big money is at stake. At issue is a joint venture of the Fed and the Treasury aimed at making more credit available. The program, known as the Term Asset-Backed Securities Loan Facility, or TALF, has bought about $27 billion in securities backed by credit card debt, car loans and student loans. In buying the securities, the Fed is providing the money that ultimately reaches businesses or consumers trying to borrow.
Despite a slow start, the program could soon expand broadly. This week, the Fed will add commercial real estate mortgages – a vast market – to the list of loans it will buy. Eventually, officials say, the TALF program could provide as much as $1 trillion in financing.
Fed officials say they, too, are uncomfortable with their new role and hope to end it as soon as credit markets return to normal. When R.V. manufacturers recently sought a meeting, senior Fed staff members refused to see them in person and instead heard their pleas in a conference call.
The central bank is increasingly having to make politically sensitive choices. For example, it is weighing whether loans to people who buy speedboats and snowmobiles are as worthy of help as those to people who buy cars. And it is being besieged by arguments from RV manufacturers and strip-mall developers that they play a crucial role in the economy and also deserve help.
Many of the decisions could have political repercussions. On Feb. 9, President Obama traveled to Elkhart, Ind., a Republican stronghold that Democrats hope to convert to their column. Elkhart is also home to much of the RV industry, which has been battered by the recession.
“When we talk about layoffs at companies like Monaco Coach and Keystone RV and Pilgrim International, we’re not just talking numbers,” Obama said, referring to three prominent RV companies. “We’re talking about people who’ve lost their livelihood and don’t know what will take its place.”
At the time, Fed and Treasury officials suggested that they would finance only car loans, credit card loans, student loans and Small Business Administration-guaranteed loans.
But the Recreation Vehicle Industry Association (RVIA) and Indiana lawmakers – among them, Rep. Joe Donnelly, a Democrat, and Rep. Mark Souder, a Republican – were already lobbying the Fed to include loans for recreational vehicles on its list of eligible collateral that the Fed would accept.
They were not alone. Rental car companies were pushing the Fed to finance their fleets. Hertz, which is owned by two private equity firms – the Carlyle Group and Clayton, Dubilier & Rice – hired Eizenstat to make its case.
In trying to persuade the Fed to relax its loan terms, Eizenstat led delegations of Hertz officials to both the Treasury and the Fed. They reached out to Ron Bloom, the co-chairman of the Treasury Department’s auto task force, as well as to top aides to Mr. Geithner. They also made detailed financial presentations to Fed officials in Washington and New York.
While the Fed so far has denied Hertz’s requests to relax loan terms, some of the lobbying appears to have worked. In March, the Fed announced that it would purchase loans used to buy light trucks and recreational vehicles. It also said that it would finance equipment leasing deals, rental car fleets and “floor plan” loans, which car and RV dealers use to finance showroom vehicles.
On May 17, the Fed refined its rules even more, saying that “recreational vehicles” included not just RVs but also boats, motorcycles and snowmobiles.
Fed officials said they had always intended to include those vehicles because they had long been financed through asset-backed securities of the type the loan facility was created to preserve. And the series of expansions, they said, did not reflect a capitulation to industry pleas. Rather, they simply announced additional details as policy decisions were reached.
Almost inevitably, industry groups are grumbling that the Fed’s terms favor some, like consumer car loans and credit card debt.
Mathew Dunn, a lobbyist for the National Marine Manufacturers Association, said collateral requirements for loans to recreational boat dealers are higher than those for securities backed by car loans.
That may soon change. In late May, the Small Business Administration said that it would open one of its main lending programs to RV dealers. Because the Fed has already agreed to finance SBA loans, it may not be long before it is financing boats, snowmobiles, motorcycles and campers.
A veteran Canadian RV dealer proposes to buy the Fleetwood Enterprises Inc. travel trailer plant in La Grande, Ore., and begin production there of a new product.
Craig Little, owner of Arbutus RV & Marine Sales Ltd., Cobble Hill, British Columbia, told RVBusiness today (April 28) that he hopes to close on the purchase of the 103,000-square-foot plant and adjoining property in May and begin production yet this year.
The proposed purchase price is $1.8 million, Fleetwood revealed in a motion filed with the federal bankruptcy court overseeing its Chapter 11 reorganization.
Little, a 21-year veteran of the RV business, has been a major Fleetwood dealer in the Northwest, carrying the company’s towable and motorized products as well as manufactured housing and recreational park trailers, he said. He owns five dealerships, all located on Vancouver Island. This would be his first entry into manufacturing.
The demise of Fleetwood’s travel trailer business and British Columbia-based BigFoot Industries, two of Little’s leading brands, as well as the uncertainty over the future of the Monaco Coach line, prompted Little to look elsewhere for product, he said
He said the idea of manufacturing his own brand could minimize some of those challenges and provide “a stable source of inventory.”
He hopes “to do a quick turnaround and get product in the field” later this year.
However, at this point, no plans are set in stone and he did not reveal any details as to specifications or even a product name.
The Fleetwood assets he is buying consist of real property, buildings, equipment and other assets used in and associated with the manufacturing of travel trailers.
The hearing to approve the proposed sale of the plant will be conducted before Judge Meredith A. Jury in the United States Bankruptcy Court for the Central District of California, Riverside Division, on May 13.
Indianapolis-based ACC Warranty Services Group has launched a “specialized RV warranty program” to assist the RV owners who are affected by the Chapter 11 filing by Monaco Coach Corp.
According to a press release, the warranty agreement will allow the Monaco RV customers who have lost factory warranty coverage on their Monaco, Beaver, Safari, or Holiday Rambler motorhomes to replace it with like coverage at a “one-time up-front fixed cost to cover any repairs occurring during the contract period with a $50 deductible.”
“Mechanical breakdown protection is even more important for todays’ motorhome owners due to the rising parts and labor costs and the lack of technical and parts support from the manufacturers,” says Steve Burgess of ACC Warranty Services. “ACC Warranty Services Group looks forward to assisting consumers with any difficulties experienced by the Chapter 11 filing by Monaco Coach. We remain committed to the RV industry and to serving our customers.”
To visit the company’s website go to ACC Warranty Services.
A second class action lawsuit has been filed by employees of Coburg, Ore.-based Monaco Coach Corp. alleging that they did not receive proper notice following the layoff of 2,600 workers in Oregon and Indiana.
The lawsuit claims that Monaco violated the Worker Adjustment and Retraining Notification (WARN) Act that provides employers must give 60 days notice to workers prior to a plant closing or mass layoff. The lawsuit seeks 60 days wages and benefits in lieu of the notice.
Monaco had stated earlier that additional “unforeseen business circumstances precluded” its ability to give 60 days notice to workers. Among the reasons cited were the economy, record gasoline prices last year, the credit crunch, the declining stock market and rising unemployment.
The legal action is a followup to Friday’s (March 13) filing by former employees of Fleetwood Enterprise Inc. making the same claims.
Fleetwood stated: “We don’t usually comment on pending litigation, but in this case there is a great deal of misinformation which is being disseminated, so we want to be very clear that we provided WARN notices to the affected associates in full compliance with the law, and further that we properly notified the appropriate federal, state and local authorities.”
As Country Coach LLC and Monaco Coach Corp. developed into major employers and economic powerhouses during the past 25 years in Lane County, Ore., an intertwined web of independent businesses grew up around them, providing the RV makers with paint, steel, upholstery, electronics and other materials and services required to build the luxurious land yachts.
As reported by the Register-Guard, Eugene, many of these local and regional companies came to rely on the money they made from the RV makers.
And, now that the RV manufacturers have fallen on hard times, many of their suppliers have lost a big chunk of business. A number of them are owed a lot of money — money they worry that they may never see with both Country Coach and Monaco in Chapter 11 bankruptcy proceedings.
But the impact of the near collapse of the RV industry in Lane County hasn’t been the same for all of the companies that previously grew along with the RV makers. Some of them say they’ve diversified enough that they’ve not been hurt too badly by the erosion of RV manufacturing. Others say they have had to lay off workers and scramble to find new business.
“They just hung us out to dry,” said Ken Millard, owner and president of Aries Engineering, which makes heated mats that go under tile floors in high-end motorhomes. “It’s devastating.”
His top three customers were Monaco, Country Coach and Fleetwood — all three of which are in Chapter 11 bankruptcy.
Sales at the company are 10% to 20% of what they were a year ago, he said. He’s had to lay off three of his six employees. While not among the top creditors, Millard figures his company is owed a total of $125,000 by Monaco and Country Coach.
“The loss of sales is tough,” he said. “What’s tougher is the loss of cash. They didn’t just stop ordering mats. They stopped paying for mats they ordered and that were shipped.”
Millard said he’s trying to branch out into the residential market for heated floors, but competition is stiff.
“I’m lucky to still have a company,” he said. “We are working furiously to generate a living revenue.”
The Bill Benetreu Co., a metal fabricator in Springfield, has been doing business with Country Coach since the early 1980s, building steel and aluminium parts such as hinges and brackets and storage bay doors, said Dawn Kosinski, the company’s CFO. Country Coach has been one of the company’s biggest customers, she said.
“We were prepared for a substantial downturn with them,” she said. “We did not anticipate a complete and sudden death of an entire industry.”
According to the Register-Guard, the company is among Country Coach’s top 20 unsecured creditors, with outstanding bills of $200,574, according to documents Country Coach filed last week in U.S. Bankruptcy Court in Eugene.
About two years ago, the firm had 50 employees. Today, it’s down to about 30. In recent months, the company has imposed extended furloughs and gone to alternating work weeks, Kosinski said.
“We’re doing what everyone else is doing and just trying to be as prudent as possible and continue to ride out the economic storm,” Kosinski said. “We do have other industries we serve and we continue to serve those and foster those relationships. We’re trying to look for hot spots in the economy.”
When manufacturers spend money with a supplier, it doesn’t just sit there — it ripples through the economy, in what economists call a multiplier effect. The supplier, in turn, buys goods from other businesses. And it pays employees, who in turn buy groceries, pay rent, buy shoes or make a car payment.
But the opposite also is true. If the supplier loses a major customer, as has happened with the RV industry, and has to lay off employees, those workers don’t have the money to spend, and the economy suffers.
“It’s one of those domino things,” University of Oregon economist Tim Duy said. “One domino falls and the other falls after it. That ensures that the impact from this downturn is not limited to just the jobs at Country Coach or Monaco. It magnifies to the suppliers in the industry.”
TNT Speciality Advertising in Eugene is an example of a company on the periphery of the RV industry, but one that’s been hurt by its decline. The business, which produces promotional and marketing materials, sued Country Coach in November alleging the RV maker never paid for $91,734 worth of polo shirts, caps, travel mugs and other items emblazoned with the Country Coach logo.
“We were greatly affected,” company president Kim O’Brien said. “We’re still in business. We’re not going under, because we were able to absorb that hit over time. But we did have to let go of an office person who had been with us for six years.”
TNT had done business with Country Coach for about four years, and the RV maker represented about 35% of TNT’s business, O’Brien said.
O’Brien, who was working part time, has gone back to full time, and the business is out “beating the pavement” trying to drum up new accounts, she said.
On the other end of the spectrum is Guaranty RV, the Junction City dealer that’s been selling Monaco and Country Coach RVs since the 1970s. The dealer is among the biggest creditors of both Monaco and Country Coach.
Guaranty General Manager Shannon Nill said the rapid fade of the two RV makers is “still a shock.”
“Country Coach unraveled slowly, but no one expected Monaco to do this,” he said.
With the two companies in Chapter 11 and unable to pay bills, “It affects us greatly,” he said. “It hurts our financial capacity to do the things we’d like to do.”
Other, smaller vendors say they see a silver lining in the dark clouds around the RV makers. If people aren’t buying new RVs, that means they’re hanging on to their older models and might be willing to spend money to repair and update them.
The Register-Guard reported that the decline of the RV industry has forced Innovative Coach Works in Junction City, formerly Soundsational, to focus more on the after market, retrofitting older RVs with new electronics, said Matt Rossiter, owner of the Junction City business that specializes in RV electronics.
Country Coach often would hire the shop for custom jobs after the sale of a coach. Rossiter wouldn’t say how much his company is owed by Country Coach, other than it’s “enough to buy a new vehicle.”
While 2008 was a record year, Rossiter said he’s recently been forced to lay off four of his five employees, including family members — the first time in 13 years in business he’s had to let anyone go because of the economy.
He said he and other RV vendors are trying to put together a consortium that would market Junction City as the place to come for after-market service and maintenance.
“Regardless of the manufacturers, this is still the place to get your RV worked on,” he said.
“This is new for everybody. No one has ever seen the manufacturing base so low,” he said. “We’re looking forward to the summer months when people are coming back through.”
Steve Skiller, owner of Countryside Interiors in Junction City, said his business hasn’t been hurt too badly by Country Coach and Monaco’s problems because it already has diversified into after-market service. His business specializes in RV interiors, including reupholstering furniture and installing carpet. At its peak, the business had six employees. Today it has three full-time workers.
“The aftermarket is alive and doing well,” he said, although business is slower than it has been. Like Rossiter, he’s hopeful things will pick up this spring and summer.
“We have a bright outlook for the after market,” he said. “People are going to fix up what they have instead of buying new.”
Monaco Coach Corp. is arguing that it did not need to give hundreds of laid-off workers the required 60 days notice of plant closings in northern Indiana because it would have undermined its efforts to obtain financing or sell itself.
The Associated Press reported that Monaco, based in Coburg, Ore., announced last week that it had given termination notices to most of its remaining workers and that it may need to shut down permanently. Most of the recreational vehicle maker’s affected employees have been on furlough since mid-December.
Under the 1989 Worker Adjustment and Retraining Notification Act, companies are required to provide 60 days notice before making mass layoffs or plant closings.
Monaco said additional “unforeseen business circumstances precluded” its ability to give 60 days notice to workers. Among the reasons cited were the economy, record gasoline prices last year, the credit crunch, the declining stock market and rising unemployment.
Monaco said in a notice filed March 3 with the Indiana Department of Workforce Development, that 515 employees would be permanently discharged and more employees had received notice with termination dates. The notice affects nearly 400 workers at its R-Vision Inc. subsidiary in Warsaw, along it Bison and Roadmaster specialty trailer operations in Milford and Wakarusa, respectively.
“If a sale does not occur, or the requisite financing is not obtained, all of Monaco’s operations will be permanently shut down,” said the notice, signed by company Vice President Rich Kangail. “Consequently, all of Monaco’s approximately 2,200 employees would be terminated in several phases with no opportunity to bump into other positions.”
Monaco announced last July it was closing the majority of its Elkhart facilities, idling 1,400 workers. On March 5, it filed for bankruptcy, saying it owes between $100 million and $500 million and has assets in the same range.
Fleetwood Enterprises Inc., the iconic Riverside, Calif.-based maker of recreational vehicles and manufactured housing that has ferried road-trippers and housed owners for 59 years, is continuing day-to-day operations after filing for Chapter 11 bankruptcy Tuesday (March 10).
As reported by the Press Enterprise, Riverside, part of its business will be shuttering its travel trailer division, affecting 667 employees nationwide including 12 at the company’s Rialto, Calif., service center. Other closures include plants in Pendleton and La Grande, Ore., impacting 415 workers, along with a facility in Edgerton, Ohio, that employed 175 employees people.
Fleetwood said that all current orders would be complete at the plants before they were closed down.
In addition, the company laid off another 65 Inland workers in corporate positions Monday. More than 600 workers remain in Riverside.
The company, which will now be concentrating on its motorhome and manufactured housing markets, still has 15 factories and 3,000 employees nationwide. That’s a far cry from its heyday in 1998 when 21,000 people in 62 factories built RVs, trailers and homes.
A Fortune 500 company for 28 years, the company boosted Riverside’s business image and made the Inland region a destination for other RV makers.
Now, bruised and battered by failed attempts to expand, ballooning debt and an economy in tatters, Fleetwood’s stock traded for a penny per share on Tuesday. The company hasn’t made an annual profit since April 2000.
Since then there has been a flurry of management changes, while the company winnowed its losses from $284 million to $1 million by 2008 after shuttering factories and cutting costs. By then, though, Fleetwood was faced with the country’s deep financial slump.
Buyers couldn’t get bank loans to purchase an RV and dealers couldn’t get financing to order new models from manufacturers.
Plus declining property values meant many buyers could no longer draw on their home’s value and use the cash to buy an RV.
“What we are seeing in the RV industry at this time I don’t believe any dealer or manufacturer anticipated,” said Mellanie Ingle, spokeswoman for Giant RV – one of the largest RV dealerships in California with locations in Colton, Corona, Montclair, Murrieta, Westminster and Indio. “Giant RV is confident Fleetwood will emerge from the Chapter 11 filing. Fleetwood is the foundation of the RV industry.”
The Press Enterprise reported that the company was delisted from the New York Stock Exchange in January. It dropped from 7 cents per share to a penny per share in over-the-counter trading on Tuesday.
There will be 609 employees in Riverside – 200 in corporate headquarters, 93 in its manufactured housing operation and 316 building motor homes – down from a peak of a few thousand in the late 1990s.
In 1998, the company was one of the largest makers of motorhomes and travel trailers, with about a 26.1% market share in RVs and 21.6% share of the travel trailer market.
In 2007, it accounted for just 7.6% of the RV market and 5.9% of all travel trailers sold, according to the company’s most recent annual report.
Joe Hixson, a spokesman for Fleetwood, said there are no immediate plans for more layoffs.
The company is seeking bank funding to keep operating, but “we have what we believe to be sufficient cash for the immediate term,” Hixson said.
Monaco Coach Corp. filed for bankruptcy this month. Perris-based National RV sought chapter 11 protection in late 2007. Weekend Warrior Trailers of Perris closed in September last year.
Christian Eddleman, an analyst with Argus Research, said that Fleetwood’s move was just one more in an industry in serious contraction. “It’s just a nightmare scenario for the RV industry that’s not getting better,” he said.
Eddleman has advised stockholders to sell since the last quarter of 2007. “It’s likely that the shareholders are wiped out,” he said.
As for buyers for Fleetwood’s RV and manufactured housing divisions, the marketplace for struggling RV-related companies doesn’t include a lot of suitors.
“It would have to be someone with deep pockets,” Eddleman said.
Thor Industries Inc., Fleetwood’s competitor with more cash on hand and less debt, could be a possible candidate, he said. He also pointed to Warren Buffett’s Berkshire Hathaway Inc., which bought Indiana-based RV company Forest River Inc. in July 2005. Forest River bought Coachmen Industries Inc. in January.
According to the Press Enterprise, Hixson would only say Fleetwood is “moving with a sense of urgency with discussions with our buyers,” without naming those interested.
Several employees at Fleetwood’s Riverside factory where motorhomes are painted say they’re not discouraged by Tuesday’s news.
“You’re never prepared for this kind of stuff, but you see it happening on the street all the time,” said Ralph Montes, a 63-year-old maintenance supervisor who has been with Fleetwood for 21 years. “We might have some bumps and bruises, but we’ll come out of this OK.”
Montes and Andy Villegas, who works with him, said as of noon Tuesday that no employees have been told their jobs are in jeopardy, and they praised Fleetwood’s past employment practices.
“It’s a great company. We’re going to come out of this whole,” said Villegas, 49, who has been with Fleetwood since 1980. “It has good people and good managers. That’s why I’ve been here so long.”
Villegas said he accepts that the company is struggling because people are less likely to buy luxury items during a recession.
But there were weak sales due to the early 1990s recession, and the company survived that, he said.
“The airline companies had their problems, and they came out of it,” he said. “They’re still flying.”