By DOUG LEDUC, Greater Fort Wayne Business Weekly
dougl@fwbusiness.com
Fleetwood Enterprises, which employs more than 1,000 workers in Decatur, has started offering a $7,000 cash rebate on the purchase of a new 2008 or 2009 Icon or Pulse Class C diesel motor home.
That move and the layoffs earlier this month of about 300 production workers at Fleetwood's Class A diesel motor-home factory in Decatur are indicative of conditions facing the industry and of its determination to work through them.
"We have created this program to assist families that may be interested in purchasing a more fuel-efficient motor home to enjoy the RV lifestyle," said Paul Eskritt, president of Fleetwood's RV Group, in a statement.
"Both Icon and Pulse average 15-18 miles per gallon, so they are the perfect RVs to combine with this rebate program."
A spokeswoman for the Riverside, Calif.-based maker of recreational vehicles and manufactured housing, Heather Everett, acknowledged the company hopes the rebate program helps Pulse and Icon grab some of the potential sales that have been missed by the company's Class A diesel motor-home business.
Decatur-based Fleetwood Motor Homes of Indiana builds the American Coach and Fleetwood diesel motor-home brands, which include: American Heritage, American Eagle, American Tradition, Revolution LE, Excursion, Providence, Discovery, Bounder Diesel and Expedition.
A little more than a year ago, Fleetwood Enterprises celebrated a milestone when the Decatur plant produced its 100,000th diesel motor home. But the mood had shifted by the end of the company's 2008 fiscal year that ended April 27, as it looked back at a 13-percent decline in sales, with annual revenue of $1.67 billion.
The company reported February and March motor-home shipments were down 21 percent and 27 percent, respectively, from the prior-year periods. And Class A motor home sales had dropped 36 percent each month.
The Decatur layoffs were part of an overall reduction in force of 486 positions in motor homes, or about 20 percent of the work force, and 166 positions in travel trailers, or about 15 percent of the work force, said Kathy Munson, investor relations director for the company.
In addition to the 300 workers laid off in Decatur, a Fleetwood travel-trailer plant that typically employs 200 in Crawfordsville laid off 43 workers.
The layoffs are not Fleetwood's first staffing adjustment in the wake of the industrywide sales downturn, but they were "the first of this magnitude," she said.
Declining home values, eroding consumer confidence and a slowing economy have combined with higher fuel prices to create a tougher sales environment for the industry.
The layoffs were necessary because "if we build more than we can sell, that gets very expensive very fast," Munson said.
"In 55 years of building recreational vehicles and manufactured housing, that's something you learn: You have to match production with demand," she said.
A drop in demand last year resulted in an industrywide sales decline of 9.5 percent, said Kevin Broom, director of media relations for the Recreation Vehicle Industry Association.
"There have been some layoffs in the RV industry in various locations ... and 2007 was down, but it would still be a strong year by most standards," he said. "It was the fourth best year in the last 25."
Industry sales peaked in 2006 at a record-setting 390,500 units.
When the economy slows, the deceleration of the RV industry tends to lead other manufacturing. And when the economy recovers, the industry typically leads other manufacturing in increasing production, Broom said.
Wes Kuntzman, director of the Decatur Chamber of Commerce, said history has shown the impact of the layoffs will ripple to restaurants and other retail businesses in the area, but the community will recover and the plant can be expected to increase its employment after industry conditions improve.
"At least that's the way it's been in the past, and that's certainly our outlook that the industry is going to rebound and those jobs are going to come back in the longer term," he said.
Fleetwood is the city's largest employer. At the start of the year it employed 1,368 at its Class A diesel motor-home plant, 161 at a parts and service operation and 267 at a Gold Shield plant, which makes fiberglass parts for the RV and auto industry.
The industry's recovery is important to Indiana. Dennis Harney, executive director for the Recreation Vehicle Indiana Council, said a study has shown recreational vehicles and manufactured housing to be among the state's top 10 employment sectors.
"We're always concerned when people are laid off and lose their jobs. We are concerned for the people; that represents a hardship," he said.
But Harney said he was encouraged by the national association's forecast that the industry's sales slowdown "will be over by 2009 and will stabilize," Harney said.
The Recreation Vehicle Industry Association projected the industry will sell 303,100 units in 2009 - nearly identical to the projected total for 2008.
Indiana produces about 65 percent of all recreational vehicles in the country, and demographic trends favor the industry as baby boomers are reaching the prime age for RV purchases, Harney said.
"It's durable-goods manufacturing with virtually no foreign competition," he said. "It's a wonderful industry for the state with well-paying jobs and a bright future."