By Joseph Weinhold, Truth Staff
jweinhold@etruth.com
GOSHEN -- Elkhart County's third-largest employer laid off 10 percent of its workforce Thursday morning.
Keystone RV Co. management said it cut 290 employees at its 15 manufacturing plants throughout the county, effective immediately. The announcement comes less than three weeks after Monaco Coach Corp. it will close three facilities in Elkhart, Nappanee and Wakarusa and lay off more than 1,400 workers.
"We're all swimming in the same ocean," said Ron Fenech, Keystone president and chief executive officer. "When the water level goes down, it affects all of the companies."
Fenech said declining sales and inventory reductions by retailers led to Keystone's cuts.
The Goshen-based company, founded in 1996, makes more than 20 brands of travel trailers and fifth-wheel towable RVs.
The county's No. 2 employer, Coachmen Industries, cut 261 workers in the second quarter and the top employer, Forest River, has laid off workers several times in 2008.
While RV manufactures are always forced to brace for slow fall sales, Fenech said his company had avoided job cuts in the past.
This time, he said, the economic warning signs had to be addressed.
"The next six to nine months are going to be very challenging," he said. "We didn't want to ignore what was really taking place."
With 2,600 workers still employed, Fenech said the company is now comfortable at its current labor levels.
"The future looks fairly safe for them," he said. "However, we have to continue to react to the amount of demand that's out there."
Back to the job hunt
Work had been slowing at the Keystone facility but metal shop worker Joel Irvin has never seen the RV industry take a downturn like this one.
Production had been declining at Irvin's plant from employees working five days a week and building 16 units a day to working only four days a week and building eight units a day.
"To be honest, I'm not real shocked," Irvin said of being handed a layoff notice. "I know it's been bad."
For 10 years, the Bristol resident has built RVs, spending the last four at Keystone in Goshen, and aside from shutdowns, he has never been laid off. It was a job that paid him well. Even as the market started to slow, Irvin still was taking home about $60,000 a year for three years prior to 2007 when his annual income declined to $50,000. So far this year, he has made about $25,000.
Irvin was at the Worker Transition Workshop at the Elkhart Area Career Center Thursday, looking at what other options are available.
"I think God's providence will take care of me," Irvin said.
Selling slowly
Locally, RV dealers said in-store foot traffic has decreased considerably the last two months, leaving them no choice but to reduce inventory.
"Those buyers just haven't been coming in," said Rob Reid, owner of Great Lakes RV Center in Elkhart, which sells several RV brands, including Keystone.
Even when customers are interested in buying an RV, they may not be able to, Reid said.
Great Lakes has seen a 30 percent to 40 percent increase in bank loan denials for potential RV buyers, he said. Lenders are demanding higher credit scores before approving major loans, he said.
"It's easier right now to sell to a customer, but its harder to sell the banks on buying the customer," Reid said.
Keystone's Fenech said that slumping sales have hit motorized RVs harder than towable ones, but travel trailers and fifth-wheels are still viable on the market.
"The sales levels that we are seeing are really more solid than I would have expected," Fenech said, "given all the economic bad news we read about every day."
Surviving the downturn
Keystone is a subsidiary of Thor Industries Inc., which on Monday reported a second-quarter RV sales drop of 30 percent from a year ago. The company's preliminary sales in the quarter were $453 million, down from $645 million in 2007.
Thor is the parent company for three other area RV manufacturers -- Dutchmen Manufacturing, Four Winds and Damon Corp.
With a number of its manufacturing companies here, Thor recently opened a small corporate office in Elkhart. The staff of 15 includes information technology, human resources and the corporate financial officer.
Speaking at the RV/MH Hall of Fame induction dinner Monday night, Thor Chairman, President and CEO Wade Thompson said the current market compares to the downturn of the late 1970s and early '80s.
"We will be a major survivor in this business," he said. "We have the strongest financial position of any company in this market by far."