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Riverside Press: RV Sector Showing Recovery

April 19, 2010 by · Leave a Comment 

When Gary and Dottie Williams ordered their MVP RV Inc. trailer in April 2009, complete with nameplates attached to the bunk beds for their grandsons, they expected to get it a month later.

They planned a cross-country road trip, but stayed in hotels instead.

When they took a vacation to the lake, they rented a trailer.

In between April 2009 and April 2010, the Moreno Valley company that was building their trailer shut down its factory like several other RV makers had done, according to The Press-Enterprise, Riverside, Calif.

While the company looked for investors and tried diversifying its business by going into the electric vehicle industry, salespeople at Giant RV showed Gary Williams other trailers. He said he couldn’t find anything comparable.

He didn’t need to. Gary and Dottie Williams picked up their finished MVP RV trailer at the Giant RV dealership in Montclair this month.

MVP RV, the Moreno Valley maker of their trailer, didn’t get the funds they needed to build electric vehicles but they found an overseas investor willing to back their RV factory.

“It’s such a great feeling to come back,” said Brad Williams recently in his Moreno Valley office. “We survived.”

Manufacturers and RV dealers are beginning to climb out of the wreckage wrought by the recession much like the industry has done early on during past business cycles when the worst appears at an end.

Would-be campers are hardly stampeding to RV dealers to purchase high-end Class A diesel motorhomes, Class C RVs or even pop-up tent trailers but they are looking, and some are even buying.

“We’re first to get hurt, and the first to recover,” said Tom Powell, CEO of Riverside-based travel trailer maker Pacific Coachworks.

Recession history

In 1979, preceding the 1980 recession that lasted from January to July, RV shipments fell a staggering 48.9% to 199,200 vehicles sent to dealers.

Wholesale shipments fell another 46.2% in 1980 to 107,200 RVs. By 1981, the number picked up 24.6% to 133,600 units. Despite a recession that stretched from July 1981 into November 1982, shipments increased another 5.2% to 140,600.

With the exception of a dip in shipments in 1985, RV production increased nearly eight straight years until 1989. The recession started July 1990 lasting until March 1991. RV shipments picked up 24.6% by 1992.

With the exception of another dip in 1995, RV production grew again year over year for nearly eight straight years until 2000 when it dropped 6.6%. A recession began in March 2001, ending November. That year RV shipments dropped another 14.4%. But by 2002, it was up 21.1%

The most recent recession started December 2007.

Two popular Inland recreational vehicle makers, Weekend Warrior Inc. and National RV Inc., bowed out early on before the economy started to exhibit true signs of stress.

Fleetwood Enterprises Inc., a longtime RV industry icon based in Riverside since 1963, had managed to navigate recessions before usually emerging a stronger company after other competitors blew a tire. This time though, saddled with too much debt, the company filed for Chapter 11 bankruptcy in March 2009 selling off the motorhome division to an equity group out of New York that moved all of the company’s operations to Indiana.

Before, Southern California dealers could pick up the RVs they ordered in Riverside. Now some say they pay extra for shipping.

Elsewhere, Monaco Coach Corp. filed for bankruptcy in March 2009. Country Coach Holding Inc. was liquidated late last year.

In 2007, RV makers shipped 9.5% fewer vehicles. The number dropped another 32.9% in 2008, and continued to cascade another 30.1% in 2009 until there were just 165,000 shipped to dealers, the lowest level since 1991.

First to recover

The Recreation Vehicle Industry Association (RVIA) is expecting shipments to jump 30% this year to 215,900 vehicles.

“When things go down, the RV industry takes it in the gut,” said Joe Laing, director of marketing for El Monte RV which rents ands sells trailers. But it also seems to be one of the first to recover, he said.

Laing said El Monte RV staff noticed year-over-year sales growth since January.

“We don’t know that it means anything,” he said, hesitant to herald economic recovery based on their business. “We’re pretty optimistic that it looks like we’ve come through the worst of it.”

Frank DeGelas, owner of Mike Thompson’s RV Super Stores including locations in Colton and Cathedral City, said he dumped older inventory at a loss to clear out his dealerships for new models being released by the manufacturers who remained.

Usually the recovery after a recession is strong and fast. This one, though, is taking its time.

He sold 11 Coleman folding camping trailers in three weeks, a sign that family buyers are looking for an affordable alternative, as well as Class B motorhomes and the larger Class A diesel RVs.

“I think I’ve been helped by my competitors failing,” he said. The pie may not be any bigger, he said of the RV selling market, but he gets a bigger slice now, he said.

New features

DeGelas credits manufacturers who spent their downtime during the downturn designing new features.

“I’ve been doing this for a long time, over 30 years, and I have never seen the amount of innovation,” he said of new models from manufacturers like Fleetwood RV Inc., now under new ownership. The Encounter, Fleetwood’s latest model, features a bunk bed that converts into a dinette.

“It’s almost like a ‘Transformer’ motorhome,” he said.

Pacific Coachworks Inc., which survived the lean times after having shut down production in the first half of 2009, developed a trailer with a slide-out outdoor kitchen and in another trailer, a slide-out queen bed.

“When things are going extraordinarily well, there’s not as much impetus to be innovative,” said Tom Powell, CEO of Pacific Coachworks.

The company has 100 employees, about half of the staff compared to its height in 2007.

Powell described new orders as solid, “but it’s not sensational” especially compared to stratospherically successful years in 2005 and 2006.

Powell said he wished more Inland RV manufacturers had survived the recession, that way suppliers would take root in the area too. As companies closed, though, so did suppliers and the cost of doing business for those who remained rose.

His company and others are now building based on orders rather than making RVs with the hope someone will eventually order it.

“I think we all learned to be a little more cautious,” he said.

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Fleetwood Enterprises Leaves Trail of Prosperous Times

August 18, 2009 by · 2 Comments 

Editor’s Note: This story appeared in the Riverside, Calif., Press-Enterprise and recounts the history of Fleetwood Enterprises Inc.  The newspaper prepared a special Fleetwood interactive package consisting of slideshows, archived stories and a video as well as an opportunity for readers to submit their own images. To view that package. go to  http://www.pe.com/reports/2009/fleetwood/ <http://www.pe.com/reports/2009/fleetwood/>.

 

John Crean

John Crean

When Fleetwood Enterprises Inc. needed room to expand its Anaheim factory 46 years ago, its founder looked east, where there was ample land and labor.

John Crean, a pioneer in the recreational vehicle industry, didn’t want a fancy headquarters, “so Riverside suited them fine,” his son, Andrew, said. “It was strictly business.”

That business thrived, spending more than two decades on the Fortune 500 list of largest U.S. businesses.

Fleetwood’s presence in Riverside spawned a West Coast hub for other RV and manufactured housing suppliers and builders.

But a failed expansion starting in the 1990s buried the company in debt that it couldn’t overcome.

Today, a few executives remain to sell off the last vestiges of the RV and housing empire and finalize the company’s bankruptcy by October. Factories scattered around the country have been shuttered or sold. The RV and housing divisions have been split and have new owners in different parts of the country.

Fleetwood Enterprises, the Riverside-based company founded by John Crean and already all but gone, is about to dissolve completely when its bankruptcy becomes final in the next few months.

The company may not have been the first RV manufacturer in Southern California, “but they overshadowed all that came before,” said Allen R. Hesselbart, historian at the RV and Manufactured Housing Hall of Fame in Elkhart, Ind.

The milestones were many — selling $1 billion worth of RVs in 1989 and $1 billion of manufactured homes in 1994. The company broke into the Fortune 500 in 1973 — 230th at its height — and stayed on the list for nearly three decades.

“They filled the shoes as the largest manufacturer for both industries,” carrying the RV and manufactured housing businesses for at least 25 years into the 1980s, Hesselbart said.

For at least one kid growing up in Riverside, the company was a capitalist inspiration. Jeremy Burkhardt, CEO of Riverside-based Speakercraft, said his company’s success is owed in large part to a business deal with the RV maker.

A Fleetwood executive walked into the Speakercraft retail store in the early 1980s to buy box speakers, and Speakercraft got a contract to install its hidden in-wall speakers inside Fleetwood’s motorhomes.

“That was our first million-dollar customer,” Burkhardt said. “If it wasn’t for Fleetwood wanting to put our in-wall speakers in their motorhome, it wouldn’t have led to the Speakercraft brand.”

Fleetwood earned a reputation as an innovator. Crean designed the first motorhome with storage underneath, now an industry standard. Fleetwood also built a vehicle big enough to stand up to dinosaurs, the digital and animatronic stars in “The Lost World: Jurassic Park,” and comfortable enough for Pope John Paul II to use before his Mass at Dodger Stadium in 1987.

Not so Atypical

It was a place where someone could start as an assistant and end up on the company’s board of directors.

It also had the same challenges most businesses encounter — an economy outside its control, decisions about growth, power struggles and lawsuits.

Southern California economist John Husing said Fleetwood’s closure is a “big deal” and another hit at a time when the region’s economy and unemployment rate can’t take much more.

“It couldn’t happen at a worse time,” he said.

Every dollar Fleetwood spent on payroll or contracts or supplies was spent at least one other time by the recipients.

“When you cut off the gold mine, you end up with a ghost town,” he said.

As for Fleetwood’s legacy in Riverside, its current CEO likes to think it was just like any other company that called the city home.

“We were just another significant employer,” said CEO Elden Smith, who started in 1968 as a trainee and eventually led Fleetwood’s RV division before retiring. The board of directors tapped him to return in 2005.

It employed 21,000 people nationwide at one time, with a few thousand workers at the company’s Riverside headquarters and several Inland plants. When it filed for bankruptcy in March, it had 609 Inland workers.

Smith experienced the industry’s wild growth in the 1970s and ’80s, but also the severe challenges from the oil embargoes of that era that almost brought the RV business to a halt.

“It was a real roller coaster ride,” Smith said recently.

A new Fleetwood RV has emerged in Decatur, Ind., after a New York equity firm bought it in a bankruptcy bid. The manufactured housing division was sold to Phoenix-based Cavco Industries. Those companies have a stake in two Riverside factories; whether they will ever use them is unclear.

Now, dealers will get a Fleetwood that’s on solid financial footing again, “which they haven’t had for quite some time,” Smith said.

Mike Thompson’s RV has been one of Fleetwood’s largest dealers, with four Southern California locations, including one in Colton.

Frank DeGelas, the dealerships’ owner, said he’s glad a new Fleetwood emerged, even though it’s based several states away instead of just around the corner.

“If that’s what it requires for them to be successful, that’s a pill I have to swallow,” he said.

DeGelas has two photos hanging in his office — one of his wife and the other a black-and-white picture of John Crean handing him the keys to the very first Bounder that rolled off Fleetwood’s Riverside assembly line.

Success story

The Bounder became one of Fleetwood’s most popular RV models.

“I knew it was something special, but it was stone ugly,” DeGelas said of the Bounder.

“Fleetwood was a huge part of our success in our earlier years,” he said. “A lot of what we did was ride their coattails.”

Suppliers moved into the neighborhood to surround the RV maker in its heyday, and with more suppliers, other RV companies arrived to wrestle market-share from the industry’s giant.

“It was Fleetwood and the rest of us,” said Tom Powell, founder of Thor California and now owner of Pacific Coachworks in Riverside.

There had been Fleetwood — “they were the 500-pound ape all over the country,” Powell said — and Thor California, Weekend Warrior, National RV, Forest River  Inc.and Cobra.

All of those manufacturers, among others, have since been sold, moved or gone out business.

For the RV makers who remain — Powell included — the cost of supplies has gone up as more vendors have been driven out of business.

When Smith came out of retirement, the company already was steeped in debt amassed in the late 1990s. Executives had spent hundreds of millions buying up shops to sell its manufactured homes directly to the public to fend off competitors.

As soon as he returned, Smith started consolidating factories and selling off the housing retail outlets that proved unprofitable, spending the next few years whittling Fleetwood’s losses.

But the price of fuel was rising, and by the time it stabilized, global financial unrest took hold last year when Wall Street powerhouse Lehman Brothers failed. The ensuing credit crunch and banks’ reluctance to lend made it difficult for consumers to buy RVs, and for dealers to stock their showrooms with new models.

Fleetwood got the cash it needed to survive the winter, but the stock started to free-fall, losing its place on the New York Stock Exchange.

“We were doing all the right things, but we were caught in that once-in-a-lifetime recession,” he said.

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