Large gatherings of RVs are fairly common in northern Indiana, long considered the hub of the recreational vehicle industry in the United States – but even by those standards, the group sequestered this week at the Elkhart County 4-H Fairgrounds in Goshen was cause for double-takes by travelers along County Road 34.
All 116 of the units that began pulling into the fairgrounds Tuesday were fifth-wheel trailers.
The 142-acre fairground on Goshen’s east side is hosting the national rally of the Suites Owners International Travel Club (SIOTC), an association limited to owners of DRV Suites fifth-wheels, formerly known as Double Tree RV.
More than a third of the club’s 306 registered members are attending the event, which runs through Sunday (June 7). According to Wayne Rothwell, club president, members have traveled from as far as California, New York and Texas for the program.
“We have 25 states and three Canadian provinces represented,” he added.
The rally, as Rothwell noted, is primarily a social affair, and events such as the welcome dinner are attended by “just about everyone at the fairgrounds.”
The farewell dinner is likewise well-attended, while attendees tend to form up various smaller groups during the week-long rally.
The opportunity to mingle among friends is just one facet of the event, however. As Rothwell pointed out, the rally also features a number of educational seminars ranging from insurance classes to technical dissertations on towing, braking and overall safety.
The 2009 rally’s location, about 30 miles from DRV’s Howe, Ind., headquarters and manufacturing facility, also allows the parent company to maximize its involvement. “We will have a ‘DRV Day’ where they host us at the factory, solicit our ideas and present seminars,” Rothwell said. “Classes are scheduled this year on such topics as hydraulics, electrical interfacing and leveling systems.”
The company enlists the aid of a local dealer in the vicinity of each rally to set up displays. In Goshen, International RV World, Elkhart, brought one each of the three series of fifth-wheels DRV manufactures – Elite, Mobile and Select – to the fairgrounds, allowing walk-throughs by rally attendees while dealer staff was on hand to answer questions.
The 2010 SOITC national rally will be held in June in Colorado Springs, Colo.
Nationally recognized “green” RVer Brian Brawdy will be in Ann Arbor, Mich., June 12 to tour Thetford Corp.’s world headquarters and manufacturing facilities. He will then join Thetford officials at the Outdoor Writers Association of America (OWAA) convention in Grand Rapids, June 13-16, to promote both the state of Michigan and a green RV lifestyle to hunters and fisherman.
Brawdy is known as an outdoor adventure expert and environmental pioneer. He has appeared on countless media outlets across North America.
Thetford Corp. has teamed up with Brawdy for a new product introduction initiative. Committed to developing high-quality green products, Thetford recently introduced a new line of Design for the Environment (DfE)-recognized RV care products. This eco-friendly line meets the Environmental Protection Agency (EPA) DfE program’s rigorous criteria without sacrificing performance.
Safe for humans and the environment, the five-product line includes UltraFoam Black Streak Remover, UltraFoam Awning Cleaner, Wash & Wax, Mildew Stain Remover and Hard Water Spot Remover. Non-toxic and biodegradable, they are packaged in bottles made out of recyclable plastic, including 25% post-consumer recycled content.
“Since RV cleaners are used outdoors, they must meet even stricter requirements than household products,” said Mary Burrows, Thetford’s manager of chemical development. “We will continue working with the EPA to produce more environmentally-responsible products in the future.”
Thetford will host two press panels at the Outdoor Writers event. The first panel features representatives from the Michigan Association of RV Parks and Campgrounds and focuses on the RV industry, with an emphasis on RVing in Michigan. The second panel, featuring Brawdy and Burrows, centers on going green for RV sport vacations.
Thetford is the world’s leading supplier of sanitation and refrigeration products for the recreational vehicle, marine and heavy-duty truck industries. It is a privately held company with eight manufacturing facilities in four nations.
It was the motorhome that couldn’t be sold, brand new back in 2007, last on the lot, a rolling 31-foot beauty with a sofa, dinette and queen-size bed.
Month after month, the vehicle sat at DeHaan RV Center in Elkhorn, Wis., , sat through $4-a-gallon gasoline and the coming of the economic recession, sat through one winter and most of another until early March, when a customer plunked down about $90,000 and drove it off the lot.
“The general public assumes we just have these things sitting out here on consignment, free of charge, and when we sell one it’s all pure profit,” says David DeHaan.
This vehicle was sold at a loss.
David and Kim DeHaan, owner-operators of DeHaan RV Center, have been in the recreational vehicle business for decades and have never seen a recession like this one, manufacturers shutting, dealers struggling and consumers sitting on the sidelines, according to the Milwaukee Journal Sentinel.
America’s love affair with the RV hasn’t ended – it has just adapted to the economic times. The yearning to hit the open road and see the country remains an American passion. When tough times hit, the tough go camping, even if that camping comes with all the comforts of home.
David and Kim DeHaan know all this from experience. They’re RV lifers.
He’s in the garage, running the service department. She’s out front, handling the business.
He’s a gregarious man with a shaved head and goatee. She’s a friendly woman, good with numbers and computers. She got the business on the Internet years before a lot of the competition and ended up selling product to customers as far away as New Zealand.
A DeHaan has been selling vehicles in this part of Walworth County for more than 50 years. David’s dad, Richard, started a car dealership in 1956 and got into RVs in the 1980s. David and Kim are carrying on a family tradition. Their two children also work at the dealership.
This time of year, there’s plenty to do. Customers are coming in to service their motorhomes and towable campers, a blown tire here, a leak there.
The DeHaans are running the business as lean as they can. For four months, they didn’t take a paycheck. For the first time ever, they closed for the month of January. And, for the time being, they’re no longer selling new motorhomes.
They’re concentrating on service, rentals and travel trailers, some that are so luxurious they include flat-screen TVs, fireplaces and king-size beds.
“We’re just selling big toys,” David DeHaan says.
Nationwide, the RV business boomed in the 1990s and flourished again after the Sept. 11, 2001, attacks as Americans craved control of travel. The industry was gearing up to serve the next generation of RV enthusiasts, retiring Baby Boomers eager to hit the road, when the price of gas spiked and the stock market collapsed.
Suddenly, fewer people want big toys.
But the DeHaans are confident that their business, and the industry itself, will endure.
“All indicators are it’s going to come back bigger and stronger,” Kim DeHaan says. “The recession is weeding out manufacturers and dealers. When things clean up, the strong are going to be stronger.”
The DeHaans stick to a vision that smaller is better.
When superstores became the rage in the car business, they got out of selling cars in the late 1990s. When fancy RV dealerships with huge inventories and multiple service bays began to spring up around the state, they didn’t budge from their vision.
Eighteen months ago, they saw the handwriting on the wall for motorhomes, figured Americans wouldn’t want to pony up for gas-guzzlers. They sold their motorhome inventory, right down to that last 31-footer.
But there’s no time to dwell on the last few months. The weather is growing warmer, the end of school beckons and business is picking up.
“Dealers aren’t making the money they should be making but it is still turning,” Kim DeHaan says. “That’s what makes me say, ‘It’s not bad.’ You might be at a break-even point, but this too shall pass.”
President Obama’s car czar came to Kokomo, Ind., Thursday (May 28) to announce much needed aid for the state’s auto dealers. But the help is not just for auto dealers. It’s also for hard hit areas that manufacture RVs.
The Small Business Administration (SBA) and President Obama’s car czar announced a nationwide stimulus plan in the heart of Indiana’s auto industry, planting what they hope is a seed in the industry’s recovery, according to WTHR-TV, Indianapolis.
“We’re not giving up on manufacturing and I’m sure the president hasn’t given up on the auto industry,” said Ed Montgomery, director of recovery for auto communities and workers.
The SBA announced that it will back billions in government guaranteed loans to finance inventory for auto, RV, boat and other dealerships. The so-called floor plan financing starting July 1 gives dealers up to $2 million in much needed credit allowing business owners to borrow against inventory.
“These programs all will give dealers the breathing room that they need, the financing that they need to survive these times when sales are a bit down,” said Karen Mills, SBA administrator.
The federal and congressional delegation chose to announce the nationwide pilot program in Kokomo, where Chrysler’s biggest single work force is now coping with the automaker in bankruptcy. The government hopes the dealer financing will create a ripple effect in an industry that employs thousands of Indiana workers.
“Today’s announcement will help to preserve jobs in the auto dealers, auto manufacturers, the supply chain, small businessmen and women who supply the auto industry and in the recreational industry,” said Sen. Evan Bayh, D-Ind.
The new SBA program includes northern Indiana’s Elkhart County’s struggling recreational vehicle industry, accounting for a nearly 20% unemployment rate there.
“This is going to help dealerships be able to buy the products that the customers want to buy,” said Nathan Hart of the Recreation Vehicle Dealers Association (RVDA).
The National Automobile Dealers Association (NADA) and their members call the new stimulus plan a step in the right direction.
With automakers down-sizing dealers and with GM on the brink of bankruptcy, floorplan financing will likely do little to comfort thousands of Indiana auto workers wondering how long they’ll have a job.
One auto dealer said this week that access to credit is a major problem. The SBA said that the loans will allow dealership to keep their inventory and cash flow intact and save jobs.
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.”
The tiny town of Bevington, Iowa, now has a full-service used recreational vehicle dealership.
Diamond Trails RV, a dealership owned by Douglas and Jodi Molone of Indianola, opened its doors March 2. The 6,100-square-foot tan building with bright red trim sits on 26 acres of land at the intersection of Interstate Highway 35 and Iowa Highway 92 in Bevington, population about 52, according to The Des Moines Register.
The Molone family celebrated the dealership’s grand opening with a crowd of more than 200 visitors earlier this month.
Douglas Molone, 47, and his son Lyndon, 20, are the shop’s two full-time employees. They sell used recreational vehicles, stock a wide range of parts and perform almost any kind of repair.
“There are very few things we won’t do,” Lyndon Molone said. “And we have one of the biggest parts inventories around here.”
The Molones sold seven RVs in their first week of business and sales have remained strong, Douglas Molone said.
Douglas Molone was pastor for churches in Texas, Minnesota, North Dakota, Montana and Iowa before leaving the ministry in 2001 to pursue management and sales jobs. Between 2004 and 2008, he worked in sales and repair for recreational vehicle dealerships in Iowa.
Lyndon Molone graduated from Indianola High School in 2007 and studied for a year in college before he decided to work full-time with his father.
“We get along pretty good,” Lyndon Molone said. “Good enough to where we can stand each other for a day.”
Diamond Trails is named after a Western Stagecoach line that once ran across Iowa. The decor inside the dealership includes carved wooden stagecoaches and other memorabilia, black leather couches and hardwood countertops
Marilyn Elliott, 68, of Prole has stopped into Diamond Trails RV several times for parts since the business opened.
“I’ve got kids who can never keep track of how much propane that’s in their tanks,” Elliott told the Malones as she entered the business May 12. “I hear you have something for that.”
The shop carried just what Elliott needed – a pair of pressure gauges, each priced at just over $2. Elliott and her children have been camping together for more than 45 years. She was glad to have a local outlet for supplies.
“I’m a firm believer in buying local,” Elliott said. “Within a few trips, you’re going to know who I am.”
As Indiana Gov. Mitch Daniels joined executives from Electric Motors Corp. and Gulf Stream Coach Inc. at the podium today (May 14) to announce what amounts to sensational news for beleaguered Elkhart County – the possible creation of thousands of new jobs from a new hybrid electric engine initiative – some in the crowd wondered what all this means for the future of the RV industry.
Is Gulf Stream, in an understandable need to diversify, preparing to exit the RV sector altogether? Is the sun setting on the recreational vehicle business just as it appears that a rebound for RV manufacturers and suppliers is on the horizon?
The answer, in a word, is “no,” according to those in attendance at this morning’s press conference in a vacant Wakarusa, Ind., RV dealership – just down the street from an expansive closed Monaco Coach Corp. plant that some suspect may be about to reopen under Monaco’s new Navistar owners.
Indeed, those involved see nothing but good news for everyone involved with the new initiative, including several partner companies currently seeking funding through the U.S. Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program, which should appreciably expedite job creation in Elkhart County.
However, they caution, the direct industry impact — other than diversification and insulation from the next economic downturn — won’t be as immediate as the jobs it might create. Officials expect to add as many as 1,100 to 1,500 jobs throughout the area’s whole supply chain by 2011-12. Long haul estimates range from 3,900 to 6,000 new hires.
“With all of the affiliated industry in the supply chain, we see that by 2012, if everything goes according to plan, (the addition of) up to 6,000 jobs (in the area),” says Mark Smith, vice president and chief information officer for Gulf Stream and project manager for the electric hybridization vehicle project for the Nappanee-based manufacturer.
Smith and others see the move toward electrification as a boon to the RV business in general over the next few years.
“Electrification in the recreational vehicle business would make a big difference because you’re increasing fuel efficiency and there will be emissions legislation coming down over the next decade that will encumber the industry if they don’t make changes,” says EMC President Brad Rinehart. “And this entire effort will definitely help out the industry in existing business and create new markets of opportunity within the RV business.”
And as technology develops, Rinehart explained, heavier-duty vehicles will be involved beyond the light-duty trucks into which Gulf Stream plans to begin installing parallel hybrid electric engines by 2010. “The first program we have is a light duty truck,” he noted. “Our plans are to produce about 40,000 vehicles over the next 48 months here in Elkhart County in partnership with Gulf Stream. We have several other projects that I’m not at liberty to talk about with other partners at this point, but our plans are to become a facilitator, an integrator of electrification products into the RV industry and into the light, medium-duty and heavy truck business.”
Of course, 40,000 vehicles is a stunning number for an area that has seen so much idle manufacturing capacity of late. “But,” adds, Rinehart, (EMC CEO) “Wil Cashen is a pretty stunning guy. He’s been able to bring together a collective group of people, some world class engineering companies and the resources needed to make something like this a reality.”
So don’t look to today’s announcement as a signal that Gulf Stream is looking to get out of the RV business by serving as a lead partner in what amounts to an unprecedented partnership in these parts. On the contrary, Gulf Stream is looking to get farther into the towable and motorized RV arena, according to Smith and Gulf Stream Motorized Division President Brian Shea.
“Absolutely,” said Smith. “Our vision, actually, is to bring back the RV industry in a way that may have taken many more years of this economic recovery.”
“What it means is job growth here again,” added Shea. “We’re (Gulf Stream) getting into a new technology, which we’re excited about. You know, we’ve always felt like we’ve been on the cutting edge in recreational vehicles. Now, this puts us on the cutting edge in technology as applied to vehicles.”
A part-time construction job sturdied Orva Fry’s financial foundation after he was laid off from an Indiana RV factory. It also kept the 41-year-old Amish father of two on steady spiritual ground.
Another way to make ends meet that Fry briefly considered – unemployment checks – went against his faith, which shuns all forms of government assistance, according to the Associated Press.
That Fry even pondered signing up for jobless benefits illustrates a marked shift in the nation’s third-largest Amish settlement, which is suffering steep unemployment following a decades-long shift from farming to factory work. Church and economic leaders say a growing number of the area’s 23,000 Amish are breaking with centuries of tradition and taking government help to stay afloat.
Fry chose not to take jobless benefits and was called back to work at the RV factory in March after working alongside his brother for three months repairing a fire-damaged home. But the community pressure to adhere to this tradition is easing amid the worst recession in decades.
Bishops who once might have censured those who sought public assistance are reluctantly looking the other way.
“We prefer to supply ourselves, but I told people that if they have no other option and no other way to make ends meet then they can take it,” said Paul Hochstetler, bishop of an Amish district east of Goshen.
The unemployment rate in the Elkhart-Goshen metropolitan area approached 19% in March – the most recent month for which data are available – in large part due to the misfortune of recreational vehicle factories that have laid off thousands of workers. It is the country’s fourth-highest unemployment rate and is up 13 points from March 2008, the largest increase in the U.S.
The Amish’s refusal to take assistance such as unemployment and welfare is shared by like-minded Anabaptist traditions that grew out of 16th century German sects that sought to separate themselves from the world, said John Farina, an associate professor of religious studies at George Mason University in Fairfax, Va. That would include Hutterians, the Church of the Brethren and the Church of the United Brethren.
It’s part of a simpler way of life for the Amish, a Christian denomination with about 227,000 members nationwide that uses bicycles or horse-drawn buggies instead of owning cars and avoids hooking up to the electrical grid because of a belief that doing so will lead to a dependence on the outside world.
“We want to be producers, to be an overall good to the community and to the nation and not be dependent upon the nation for our livelihood or for the federal or state governments to give us our livelihood,” said David Kline, an Amish minister from Mount Hope, Ohio, whose county hosts the nation’s largest Amish population.
For centuries, that has meant taking care of their own, supplying food, shelter and other necessities in times of need. Those who seek outside help can risk being forced to make public confessions in church or told to refrain from taking communion for six months, said Steven Nolt, a Goshen College history professor who has written several books on the Amish.
But tradition has had to bend as northern Indiana’s Amish continue to move away from their roots, becoming heavily reliant on a single industry.
A survey of 3,358 Amish heads of households living in Indiana’s Elkhart-LaGrange settlement in 2007 found that 53.3% earned their livings working in factories. In contrast, the economies of the nation’s largest Amish centers – the Holmes County area of Ohio and around Lancaster, Pa. – focus primarily on small shops, construction trades and, to a lesser extent, farming.
“When the RV industry shut down here as well as the mobile home industry, it hit them really hard,” said LeRoy Mast, director of Menno-Hof, a nonprofit information center in nearby Shipshewana that teaches visitors about the Amish and Mennonite.
“They can’t handle the 19% unemployment rate on their own because the needs are just so great.”
Hochstetler said it is impossible for his church district, where about half the 31 families had people employed in the RV industry, to make up the lost wages. The Amish who work in factories pay into the state unemployment system and are eligible to receive jobless benefits of $50 to $390 a week.
Even so, those benefits remain an uncomfortable subject.
Of more than two dozen Amish approached recently in Topeka, a town of 1,100 about 20 miles southeast of Goshen, only six would talk, and all were reluctant to be identified.
But each spoke of tough times. A dairy farmer is struggling with declining milk prices and the rising cost of hay. A father of three who lost his RV factory job in December said he had accepted jobless benefits to provide for his children but hadn’t told anyone outside his family.
“This is a situation that’s very difficult for everyone involved,” Nolt said. “In a society that’s relied so much on tradition, there isn’t a precedent.”
Lester Chupp, 62, an Amish deacon in Nappanee, says those who need unemployment should take it. He did so several times while working in an RV factory for 24 years. He now owns a furniture and crafts shop, where business is down 40%.
“Most people say they’re tightening their belts. Well, we don’t use belts, so I guess we can say we’re tightening up our suspenders and rolling up our sleeves and going to work,” Chupp said.
Hochstetler and other Amish leaders hope the area’s joblessness ultimately leads more Amish to return to their roots, opening woodworking shops or raising chickens or livestock to make extra money.
“I think it’s helped that we have slowed down and are not spending so much time at work,” Hochstetler said.
Overnight parking of recreational vehicles in all public parking lots of Maine will be illegal if pending legislation passes the Maine Legislature.
LD114/HP98 would make it a civil offense to park an RV overnight on any public parking lot in the state, according to the rvnewsservice.com
The text of the bill reads, in part:
“A person may not park or occupy a recreational vehicle, as defined in Title 10, section 1432, subsection 18, in a commercial parking facility overnight. For purposes of this section, ‘commercial parking facility’ means a parking structure or area open to members of the public for the purposes of parking their vehicles while patronizing one or more commercial establishments, but does not include a mobile home park or recreational vehicle park allowed by a municipality or a camping area licensed by the department. A person who violates the provisions of this section commits a civil violation subject to a fine of no more than $100, which must be suspended for the first violation and may be suspended for subsequent violations.”
Due to the way this is worded, these restrictions will apply to any publicly accessible parking lot including those at casinos, truck stops, Wal-Marts (popular overnight stops for many RVers) and even dirt or gravel areas commonly used by truckers and RVers.
This is not the first time that RVers have been faced with such a challenge. Several years ago, similar legislation was introduced in Montana and Nevada. Due to the protests from RVers all over the country, the attempts to ban RV parking failed.
Typically, RVers make significant contributions financially to places that welcome them and, many times, will return to an area for an extended stay if they have been received in a friendly manner. Signs banning RVs from parking areas do not appear very friendly to an RVer who may simply be looking for a quiet place to sleep and have no need for a full-service RV park.
“In most cases there is a huge uproar from the RV community any time this type of legislation is proposed,” said Chuck Woodbury, editor of RVtravel.com. “I suspect that Maine lawmakers will back off this time. RVers value their freedom to stay where they want, as long as they are welcomed. Maine will be perceived as RV-unfriendly if this should pass, and it will likely cost the state significant tourism dollars.”
Protonex Technology Corp. is backtracking on plans to make its hydrogen fuel cell systems available to the recreational vehicle market, according to the Worchester (Mass.) Business Journal.
The company had intended to introduce the M250-B fuel cell to RVs this year, but said it needs time to make the technology “more economically attractive” to that market. In the meantime, the Southborough, Mass.-based company will focus more of its business development resources on the military version of the product.
The company said it is seeing a substantial increase in funding opportunities from the U.S. military, its core customer.
Also, the weak economy has severely impacted the RV market and the company’s current development schedule would’ve resulted in a mid-summer launch of the M250-B. Mid-summer is traditionally a slow time for RV sales.
The RV market and the economy as a whole have more potential to improve in 2010 than this year, the company said. By then, the M250-B will cost less to produce, the company said.
Recreation vehicle and bus maker Thor Industries Inc. today (May 4) said fiscal third-quarter sales fell 41% on steep declines in RV volumes.
Overall sales for the quarter ended April 30 fell to $415 million from $708 million last year. RV sales fell by nearly half to $311 million from $601 million, while bus sales slipped to $104 million from $107 million.
For the first nine months of its fiscal year, sales fell 48% to $1.08 billion from $2.07 billion. RV sales plunged 56% to $766 million from $1.77 billion during the period, but bus sales inched higher to $305 million from $300 million.
RV makers like Thor have been hit hard as consumers have put off sales of the discretionary vehicles amid shrinking home values and rising unemployment.
Shares of Thor fell 50 cents to $20.90 in midday trading
A new federal government contract recently awarded to Frontier RV could mean big increases in production and employment levels for the Longview-based company, according to News-Journal.com, Longview, Texas.
“We have about 75 employees now, and that could easily double with this contract,” said Johnny Hernandez, president of the 7-year-old Longview RV manufacturing firm. Frontier topped a field of 16 companies vying for part of the federal contract and was one of four firms awarded portions of the bid, he said.
Hernandez said the initial phase of the contract is worth $2.165 million in revenues to Frontier with the potential during the five-year life of the contract being as much as $176.67 million.
“This contract comes at a time when our industry is in distress,” Hernandez said. “Discretionary spending has really slowed, and our sales have slowed.”
Hernandez said orders for traditional recreational vehicle dealer sales have resulted in production levels at Frontier of about two or three units a day since November. That is about half the normal five to six units a day the plant would expect to produce that time of year, he said.
“Financing is still really tight,” for retailers and consumers to borrow money for products, he said. According to the Recreation Vehicle Industry Association (RVIA), shipments of towable RV trailers were down 71.9% in December compared with December 2007.
Meanwhile, towable retail sales totaled 5,465 compared to 9,095, a 39.9% decrease” in December, said Thomas Walworth, president of Statitsical Surveys Inc., Grand Rapids, Mich.
“Beginning in May (2008), dealers began aggressively lowering new unit inventories,” Walworth said. That trend continued through the end of the year as the national economic recession hit the industry hard, prompting manufacturers to scale back, he said.
The contract awarded to Frontier is one of four national contracts by the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA). It is for the production of as many as 1,500 travel trailers a year for five years. Those units could provide temporary housing in emergency situations.
Hernandez said the contract, for a minimum of 100 units and a maximum of 1,500, could significantly increase production and Frontier’s payroll.
To win the contract, the company had to meet a number of recently implemented standards for temporary housing intended for emergency use, Hernandez said.
“We had to eliminate the use of formaldehyde-emitting materials, maintain continuous air exchange and have air-conditioning systems that meet HUD (Department of Housing and Urban Development) standards,” he said. Each unit also must meet handicapped accessibility standards, he said.
Hernandez traveled to Washington, D.C., in October to meet with federal officials about the new standards.
In March, officials from the Department of Homeland Security, the Department of Defense and FEMA toured the Longview plant.
“On April 7, they announced the five-year contract for up to 6,000 units a year divided among the four makers,” Hernandez said. Frontier has already received a firm contract to make the initial 125 trailers, he said.
This past week, Frontier shipped its prototype model to Washington for viewing by congressional officials, and Hernandez was to appear at a hearing on the quality standards of the new units.
“The units we’re providing are ones that we designed and came up with the materials to meet their requirements,” Hernandez said. “They’re a little nicer than what FEMA has used in the past.”
Each of the 34-foot units would have a retail price of about $28,000 if sold on the open market, he said, because of the special features federal officials are requiring, he said.
Those features include having a 5-foot turning radius for wheelchairs, cabinet and sink fronts that can be removed to make them handicapped accessible and shelving and appliances that are handicapped accessible, he said.
The first of those units are scheduled to come off the assembly line about June 10.
Once completed, each unit has to be tested by an outside independent testing firm, Hernandez said. Toxicology tests for volatile organic compounds, particulate matter and formaldehyde will help ensure the air inside the units meet federal guidelines, he said.
The units produced in Longview will be shipped to a staging area in Selma, Ala., where they will await the next hurricane, tornado, flood or other disaster responsible for destroying homes and sparking a need for temporary housing. Hernandez said he hopes FEMA will establish a similar staging, or storage area for the temporary housing, much closer to East Texas.
“We’re making a pitch for them to do a staging area here in Longview,” he said. With disasters such as Hurricane Ike that destroyed hundreds of homes in the Galveston area, having units available closer to the Texas Gulf Coast makes sense, he said.
The three other firms awarded FEMA contracts under the contract are in Indiana and Georgia.
They are TL Industries, Harbor Homes and D&D Disaster Services, according to a statement released by FEMA.
(Editor’s Note: Joe Donnelly represents Indiana’s 2nd Congressional district. The following is a Letter to the Editor he wrote to the South Bend Tribune. The letter was published on Sunday, April 26).
I am writing in response to Brent Bardo’s letter to the Voice of the People on March 16. I appreciate Bardo’s interest and support of the manufactured housing industry. I share his belief that this is a vitally important industry to our district and I share his concern that more needs to be done to help during this economic crisis.
During my tenure as representative of the 2nd Congressional District, I have had the privilege to represent the recreational vehicle and manufactured housing capital of the world. As our nation has fallen upon tough economic times, the RV and manufactured housing industries have been hit especially hard.
Manufactured homes house almost 20 million Americans, which translates to many jobs for hardworking Hoosiers back home.
An issue that plagues most businesses – particularly small businesses – is the lack of available credit in the system. Both RV and manufactured housing manufacturers have suffered from the lack of credit to purchase inventory for their floorplans. This has had a ripple effect on manufacturers and suppliers. At the same time, the lack of consumer financing has hindered the ability of families to purchase these products.
One of the ways that I have tried to alleviate some of the pain in both industries is by ensuring that RV and manufactured housing loans are eligible for Term Asset-Backed Lending Facility – TALF – loans. This is a new program designed to revitalize secondary loan markets and intended to jump-start primary lending markets. Originally, this program only included student, credit card, small business and auto loans as eligible forms of collateral. After working with several of my colleagues and the Federal Reserve, the scope of the program was changed to include RVs as part of the definition of an automobile and opened this form of financing up to all floorplan loans. Manufactured housing and RV manufacturer floorplan loans will be able to be securitized and purchased with TALF funds, which will hopefully loosen up credit.
Another way that I have advocated for the manufactured housing industry is the area of consumer lending. Typically, loans that are offered to families hoping to purchase a manufactured home on leased land have been significantly higher than other home loans. One way to obtain a lower loan rate is to purchase loan insurance. The Federal Housing Administration Title I loan program guarantees loans for manufactured homes that are placed on leased land, which enables lenders to provide a more affordable loan to consumers. Unfortunately, these loan guarantee limits have not been raised since 1992 and not kept pace with rising housing costs. That is why I introduced legislation to raise home-only loan limits from the current $48,600 to $69,678, enabling more families to purchase a home that fits their needs. I was pleased that this was signed into law last July.
It has been my privilege as a member of Congress to work on ways to help these important industries to thrive and get them back on track to regain their competitive edge.