By Marilyn Odendahl, Truth Staff
modendahl@etruth.com
As paychecks shrink and savings accounts dwindle, few have the ability, much less the will, to splurge on large discretionary items like motorhomes and pontoons.
That this recession has crippled the recreational vehicle makers and boat manufacturers in Elkhart County is not surprising. But coupled with the ongoing decline of the manufactured housing companies, the pain has been made even worse.
The monthly unemployment numbers tell the story of local workers while the product shipment and sales figures show how far these three industries have fallen and how far they have to go to return to the levels they reached just a few years ago.
Recreational vehicles
The economic downturn was an unwelcome visitor arriving at RV showrooms just as the spring and summer selling seasons began.
Overall the RV industry had been contracting since 2006, when the Federal Emergency Management Agency bought units to serve as temporary housing for hurricane survivors and boosted the wholesale shipment totals to a record 390,500 units.
Although 2008 was anticipated to be a down year for RV sales, shipments had reached 139,000 through May. This was better than the 131,600 shipped during the same five-month period in 2003, the same year that ended with 320,800 RVs being sent from manufacturers to dealers' lots.
However, the national economy's trials began eating at consumers' appetite to buy. From July 2008 through the end of the year, the RV industry posted shipment numbers lower than those recorded in the early 1990s.
"I certainly believe there wouldn't have been any one coming into 2008 that would have been able to forecast this rapid decline in the second half of 2008," said Mac Bryan, vice president of administration at the Recreation Vehicle Industry Association. "There's really nothing the industry could have done to prepare for the rapid decline."
As the industry waits for the banks to lend and consumers to return, RV companies are wondering where their employees will be.
Many who have lost their jobs have enrolled in college courses and job training programs so they can earn a living in a more stable field.
Building an motorhome or towable is a labor-intensive process that relies on people rather than robotic machines in an automated production line, Bryan said. The work force in Elkhart County has honed the skills needed to make RVs. Consequently the manufacturers are committed to keeping their operations in this area.
"It is the human element that makes RVs so unique," Bryan said. "It is the skill sets that people bring to the RV industry that make it so successful."
Boats
The marine industry has carried some lessons learned from the recession in the early 1990s into the current downturn.
During that earlier period, boat manufacturers and dealers coped not only with the economic slump but also with a luxury tax tacked onto their vessels that slowed sales even more, said Thom Dammrich, president of the National Marine Manufacturers Association. Consequently, the industry learned how to better control its inventory.
Still, with wholesale sales dropping more than 36 percent from 2005 through 2008, the boating industry has had to follow its RV colleagues and do significant downsizing.
Over the past 18 months, the employment in the boat building companies in Elkhart County has fallen an estimated 50 percent, Dammrich said. And, the longer this recession goes on, the more stressed manufacturers will become.
Looking ahead to the spring and summer, which are the prime boat buying seasons, Dammrich does not expect to see much improvement.
"Until consumers start to feel better about the economic outlook, they're hesitant to make major purchases," Dammrich said. "The industry can't control consumer sentiment and it can't turn around the economy."
Manufactured housing
While other industries are suffering because of the fallout from the burst of the housing bubble, manufactured housing was losing during the time the bubble was growing.
Factory-built housing has been steadily declining since its own bubble exploded in the late 1990s. Then between 2003 and 2006, the fall was exacerbated by the financing products that made site-built housing more attractive, said Tom Beers, vice president of the Manufactured Housing Institute.
Wholesale shipments of single and multisection homes tumbled 58 percent from 2001 through 2008. As demand has waned, so has the industry's footprint. In 2000, a total of 70 companies built manufactured homes in 280 plants in the United States, Beers said. By December 2008, that number had dropped to 61 manufacturers building homes in 170 plants.
In the short term, the fortunes of manufactured housing will probably not be swinging upward. Still, when the site-built inventory declines, manufactured homes will be poised to claim a bigger share of the market, Beers said.
"When we emerge from this period of credit crunch and mortgage crisis, we're going to have a level playing field," Beers said. "We're going to go back to a period where the home's price matters again."