By Marilyn Odendahl, Truth Staff
modendahl@etruth.com
Thursday's announcement by Monaco Coach Corp. that it will close three plants in Elkhart County and cut its payroll by 1,400 workers is the latest example of downsizing in the RV industry because of the national economic downturn.
Monaco's production will be shifted by mid-September to plants in Goshen, Warsaw and Oregon, where the company is headquartered. Plants being closed are in Wakarusa, Elkhart and Nappanee.
The realignment is in response to the slumping RV market, which is recording a 14 percent drop in motorhome and towable shipments through May 2008. Rising fuel and food prices, along with tightening credit, are curbing consumers' ability to buy discretionary items such as RVs.
Still, two of the larger suppliers to RV manufacturers do not expect the Monaco closures to impact their business much.
Workhorse Custom Chassis, with a plant in Union City, will feel minimal impact because, said Tony Monda, vice president of marketing and product planning, Monaco is adjusting capacity of its operations, not the volume of production.
Dometic USA already is shipping refrigerators to Monaco's plants in Oregon and likely will have to shift more inventory to a different warehouse in the western part of the United States, said Brad Sargent, vice president of marketing. Monaco's 60-day notice is giving Dometic plenty of time to adjust.
To date, the supplier has not had to lay off any workers, primarily because some workers have been shifted around and others have chosen to leave the organization, Sargent said.
Calling the Monaco downsizing a "very difficult situation," Sargent said the manufacturer is aligning operations to meet demand.
However, the impact from Monaco could ripple into the retail, service and social segments of the economies of Elkhart and the surrounding counties. Even those not employed in the RV industry may feel the consequences.
Citing employment statistics, economist Grant Black said the Monaco layoffs are especially significant because those workers represent about 4.5 percent of the 31,300 employed in the transportation segment, which includes RVs, of Elkhart County's economy.
June figures released Friday by the Indiana Department of Workforce Development show Elkhart County's unemployment rate jumped to 7 percent from 5.9 percent in May. Black, director of the Bureau of Business and Economic Research at Indiana University South Bend, predicted the Monaco cutback will bring more than another rise in jobless numbers.
"It's not a pretty picture," he said. "I don't think we have any really good prospects. I think people will become much more cautious, much less certain."
The spillover effect includes less money spent at restaurants and shopping malls as well as for everything from haircuts to lawn services, Black said. The need for government assistance could rise and more houses might be lost to foreclosure. Local residents will become more anxious and less likely to support community projects.
At Rollie Williams Paint Spot in Elkhart, Rich Lutz, vice president and general manager, anticipates fewer customers will come into the store's showroom.
"Obviously the loss of business is very real," he said, "and when people are out of work, they don't have the money to paint their homes."
Retail sales are difficult to control but Lutz expects the company's commercial sales to withstand the Monaco situation because of its diversified client base. Although the Paint Spot supplied stain to Monaco's Nappanee wood shop and will feel the loss, Lutz said, the company is supplying different industries and continuing to look for new businesses to serve.
RV manufacturers also are exploring new product lines to meet consumer demand, specifically for lighter-weight units that can be towed with smaller vehicles.
Carriage Inc., a maker of luxury fifth wheels in Millersburg, has been producing a line of lighter fifth wheels and in May 2007 introduced a lightweight line of travel trailers.
The company is maintaining its niche as a producer of high-end models, said Mark Colglazier, chief operations officer, but is adjusting to consumer demand.
Innovation through smaller, lighter units could be part of the future as the industry continues to work to meet changes in the marketplace.
"All this adversity is opportunity," said Monda of Workhorse Custom Chassis. "Now's the time to do things differently and creatively and do thing to change the industry."