By Marilyn Odendahl, Truth Staff
modendahl@etruth.com
Debbie Brunoforte, owner of the recreational vehicle dealership Little Dealer Little Prices, always remembers what her father told her: "Honey, you don't know how bad it can get."
Recalling what the past 18 months have meant to the RV industry, she observed, "He can no longer say that."
As the 47th Annual National RV Trade Show opens in Louisville this week, manufacturers, suppliers and dealers will notice a much smaller event than in years past and, like Brunoforte, they will probably be saying they have seen the worst. Optimism is creeping back into the industry with many believing the improvement in wholesale shipments, retail sales and lending will continue.
Economists echo that sentiment, declaring the Great Recession has ended. Yet, the casualties are still being counted and in the RV industry, the damage is staggering. Changes caused by the economic downturn include:
* From 2006 through 2008, towable and motorhome manufacturing shed a total of 6,000 jobs, according to the most recently data available from the U.S. Bureau of Labor Statistics. Looking back, both segments of the industry continued to add jobs through the recession of 2001.
* Among the manufacturers going into bankruptcy court were Fleetwood Enterprises, Monaco Coach Corp. and Country Coach.
* Companies that are no longer in business include Pilgrim RV, Weekend Warrior, Sun Valley and AmeriCamp.
* Amid the manufacturers with new owners are Coachmen (bought by Forest River), Fleetwood RV (bought by a private equity firm), Monaco Coach (bought by Navistar Inc. and renamed Monaco RV LLC) and Travel Supreme (bought by Jayco Inc. and renamed Entegra).
* Between 2005 and 2008, sales of motorhomes dropped by 27,106 units while towables fell by 61,316 units, according to Statistics Surveys.
* Wholesale shipments have plunged from a high of 390,500 units in 2006 to 138,000 units in 2009 through October, according to the Recreation Vehicle Industry Association.
The pain of this recession is still radiating through the RV industry but data shows the economic upheaval of the late 1970s early 1980s was, to date, as bad as it has gotten. The combination of a slumping market and climbing interest rates created a downturn that trumps the current decline, said Tom Walworth, president of Statistical Surveys. A total of 131,500 motorhomes were sold in 1978, a retail sales record, Statistical Surveys found, that has not even been broached in the 31 years since. Also 44 RV manufacturers went out of business between 1978 and 1982 while less than half that amount permanently stopped production from 2005 through September 2009.
History has shown each time the RV industry has suffered economically, it has come back stronger. What the business will be going forward remains to be determined but representatives from three segments of the RV world give their personal assessments of what happened during this downturn and of the future.
Supplier
Tim Stephens, president of Atwood Mobile Products in Elkhart, stepped into RVs from the auto industry in 2006 and while he said the new job was supposed to be fun, it turned into a gut wrenching experience.
"I would call it the Great Depression of the RV industry," Stephens said. "When you lose 60 percent of sales, that's very hard to take."
During the 2008 National RV show in Louisville, everyone was wondering when the industry would hit bottom, he said. High fuel prices followed by the credit crunch slowed retail sales and induced dealers to quit ordering new units in favor of selling off what was already on their lots. By December and January, the entire industry was parked along side of the road.
Manufacturers "right-sizing their cost structures," Stephens said, along with developing new products like lightweight travel trailers that can be towed with smaller vehicles. Already making lighter parts for RVs, Atwood captured 85 percent of customers' contracts for lightweight products.
As production and sales grow, Stephens is watching the rise of inventories with caution. Yet looking at the baby boomers who will be coming into the market and the adaptations the RV companies have made during this downturn, he believes the business is positioned well for steady, sustainable growth.
"Don't count the RV industry out too soon," he said.
Manufacturer
Since the summer, dealers and manufacturers have been murmuring about the thawing of the credit freeze with financial institutions making loans for lower-priced towables. However, melting has not reached the high-end, luxury motorhomes markets.
"We certainly have not seen that," said John Sammut, vice president of sales and marketing at Newmar Corp. in Nappanee. "Not one bit."
He blamed the banks for only reviewing numbers and the overall economic conditions instead of understanding the RV industry. Prior to the recession, lenders were too free with credit but now, he said, they have overcorrected. Even when a customer meets the criteria and qualifies for a loan, the banks will throw in another barrier.
"It's a helpless feeling," Sammut said. "Your recovery plan, as good as it may be, lies in the hands of a third party. It's a helpless feeling but it's not insurmountable."
He remains confident credit will flow again in part, he explained, because banks will have to return to lending to make money. And once one institutions jumps in the RV pool, the others will quickly follow.
Despite the credit aggravation, Newmar has leased the same amount of exhibit space at the Louisville show as in 2008 and 2007, and will be introducing new products. In addition, it has interviews scheduled with perspective dealers and is expecting 70 percent of its existing dealers to attend the event.
"We're planning for success," Sammut said.
Dealer
Brunoforte grew up cleaning trailers and sweeping trash from the parking lot of her family's RV dealership in Arizona. Now running the enterprise, she has no plans to leave the industry even though her dealership lost 50 percent in sales because of financing at one point during the economic unrest.
"It is still a fun business," Brunoforte said. "We have fun customers. Customers come to see us because they want to enrich their lives and spend time with their families. It remains a fun business."
The decline in the RV industry began when retail sales slowed, she explained. Then dealers scrambled to reduce inventory which meant less factory orders and things ripples from there. Management in all segments of the industry had to look carefully at every single but finding ways to reduce costs was difficult because no one knew how low the market would go.
To Brunoforte, the recent recession is the worst the industry has experienced in three decades, hitting manufacturers and suppliers the hardest.
The poor habits that took hold in the good times have been erased as the entire industry has reduced inventory and debt, she said. In addition, the manufacturers have been innovative, building new products such as more-environmentally RVs and motorhomes that get better gas mileage.
Noting that campground registrations are up while RV service and parts businesses are reporting increased sales, Brunoforte said consumer demand for the product has stayed strong. And that makes her confident the industry will rebound.
"I believe RVs are here to stay," she said. "What's the alternative? People do still want to vacation and they do want to spend time with their family."