Editor’s Note: Venerable fifth-wheel builder NuWa Industries Inc. has posted the following letter on its website from CEO Michael Mitchell stating that the Chanute, Kan., builder will not be accepting “to build” orders for its HitchHiker series after Sept. 15 as sales are not supporting production costs. Mitchell said that NuWa, founded in 1969, would continue to sell new units and is considering using another company for “limited” manufacturing. In the letter, Mitchell indicated he was not sure whether the production shutdown would be permanent or temporary.
The number of “build” orders being taken by NuWa is not supporting efficiency of the production department. Rather than continue to fund and operate the production department at a loss, I have made the decision to “not” accept “to build” orders after Sept. 15. The intent is to complete orders “in house” by Christmas, as the winter months of January, February and March do not provide enough production activity to justify retaining production staff. Whether this termination of production is temporary or permanent, I do not yet know, but our experience so far is that we cannot generate enough new unit sales to support efficient or break-even production. This decision goes against management’s desire to retain jobs for our dedicated employees and our community, but shareholders cannot continue to fund the production inefficiencies.
NuWa is committed to and will continue to provide retail sales of new and used HitchHIkers and other high-end fifth-wheel brands. We continue to explore having limited HitchHiker models produced to our specifications by another high-end manufacturer. An inventory of 40-plus new HitchHikers is “in stock” at NuWa and affiliated dealers, and we feel our staff better meets the needs of full time and serious fifth-wheel RVers than do most dealers. We will continue to provide warranty and parts and hope to expand the service department, which is known for quality and value. Refurbishment of used HitchHikers will continue to provide exceptional used units to the marketplace and more emphasis will be placed on purchase and/or consignment of high-end fifth-wheels from customers, who wish to sell their trailer. But if you want a new HitchHiker built exactly to your specifications, that order needs to be in place quickly or we will respectfully not accept it. We will accept orders only as long as we feel they can be completed by Christmas or before, and our present lead time is running 12 weeks.
NuWa Industries Inc. will begin to build luxury fifth-wheels again in May after a prospective buyer decided not to implement a business plan that NuWa Chairman and CEO Mike Mitchell helped him develop.
“He declined for personal reasons and another buyer didn’t surface,” Mitchell told RVBusiness. “As I was going through the analysis, I convinced myself that the business plan would work, and I said to myself, `If not him, why not me?”’
The new NuWa will cut the retail prices that will be “non-negotiable” by as much as 25%, sell factory direct and have fewer dealers and employees than before.
NuWa’s return to production was somewhat of a surprise. The company announced in late December that it was making “a graceful exit from the RV industry” and stopped production in January.
At the time, dealers were told that NuWa was not going bankrupt and “intended to meet its financial obligations.”
Mitchell told RVBusiness that NuWa will have between 20 and 25 dealers when 2010 HitchHiker fifth-wheels start rolling off the production line in June — down from more than 60 dealers last year. Also, Mitchell anticipates a production crew of between 50 and 100 people, plus an office staff of about 25. At one time, NuWa employed as many as 450 people in its Chanute, Kan., factory.
“It will be a fairly slow startup,” Mitchell said.
The company’s “hybrid version of direct factory sales,” he said, doesn’t intend to compete with dealers on retail prices that will be about 25% less than before. Factory-direct sales are intended to be available for customers who don’t have a dealership nearby that sells NuWa RVs. “We are not going to compete with our dealers on price, only on service,” he said.
Retail prices at the factory and at the dealerships will be the same, he said.
In a letter posted on NuWa’s website, Mitchell said, “This concept will also help us maintain more control of competitive product pricing.”
“We will eliminate the artificially high MSRP so often used by the industry to manipulate the unsuspecting customer, and too often give a false premium for the trade,” he wrote. “This present process is confusing and often detested by many buyers.
“Discounted cash/wholesale trade selling prices typically will be 25% lower than comparable 2009 model prices, but will be non-negotiable. The low cash price concept will require that trades be taken at wholesale, as the new unit pricing will be much nearer wholesale.”
Mitchell said that 175 unsold 2008 and 2009 HitchHikers remain in factory and dealer inventories that have been “well-priced” to allow dealers to make room for 2010 models.
He said that it’s likely that some floorplans will be trimmed and that some models won’t be available until the fall.