BLOGSPOT: Local economy is extraordinary

BLOGSPOT: Local economy is extraordinary

  • By ROGER SCHNEIDER City/business editor of Goshen News


It’s been a wild ride for Elkhart County workers since The Great Recession.

Back then I was watching the monthly recreational vehicle stats and noticed a dip in shipment growth in 2006 and a 9 percent downturn in 2007. But the dip didn’t seem to indicate the trouble to come.

Then the banking crisis dropped from the sky in 2008 and fell heavily on the industry.

Our news staff covered the depressing weekly layoffs at local factories that produced recreational vehicles and supplies for that industry. The banking crisis dried up credit. And the few consumers who had cash on hand were reluctant to spend it on luxury items, including RVs. Consumers who wanted to borrow money for a new travel trailer or motorhome found banks had tightened loan qualification standards.

RV shipments fell 32.9 percent in 2008 and then dropped another 30.1 percent in 2009.

As a result of those dips, unemployment rocketed here. By March 2009 the jobless rate in the Elkhart-Goshen Metropolitan Statistical Area topped out at 18.9 percent.

But things have changed drastically for the better. The good times have returned and the RV industry is super hot.

In February the local unemployment rate was 3.3 percent. “Help wanted” and “hiring now” signs are prevalent in storefronts and along the roads in industrial parks.

During the past few months I have marveled at how far the local economy has come since The Great Recession.

Last week I drove up to Bristol’s new Universal Trailer Corp. factory. While taking the plant tour I marveled at the combination of automation and human skills to produce the company’s cargo trailers. While robotic welders were in use, the machines still had to be fed by hand and human welders were busy joining steel that the robots could not reach.

The company has hired 50 people so far and will be adding more workers as shifts are added.

Genesis Products broke ground March 22 on a 200,000-square-foot facility in the Goshen Industrial Park. The company’s laminated panels are mostly used in the RV industry.

One of the most significant developments in Goshen in recent years may be the one offered by Greg Hoogenboom. Back in January, Hoogenboom’s development company, Hoogenboom-Nofziger, started construction on a 20,000-square-foot industrial building. As far as anyone could recall back then, it was the first local industrial building to be erected on speculation in many years. The building is intended to get the ball rolling on filling up the company’s 10-lot industrial park, Waterford Commons Business Park.

Also in January, Forest River, a maker of recreational vehicles, said it would create 425 jobs this year and in 2018 by opening four new plants in LaGrange.

Thor Industries’ Heartland subsidiary is also expanding this year. The company is adding production space to build more travel trailers, fifth wheels and toy haulers at its Elkhart, Middlebury, Howe and Nampa, Idaho campuses.

Last year Thor expanded production capacity at its Thor Motor Coach subsidiary by purchasing a factory building in Bristol.

The above projects are bullet points in a longer list of local companies and retailers that are taking part in our nation’s expanding economy. While there will always be some churn with local companies coming and going, overall our economy is enjoying extraordinary success.

We should count ourselves very fortunate.

RV Business News: Heartland Adding Second Production Line in Idaho

Heartland Adding Second Production Line in Idaho

June 10, 2016


Heartland Recreational Vehicles LLC announced the planned Dec. 1 opening of a second assembly line at its Nampa, Idaho, manufacturing facility, positioning the company to better service current dealers while strategically growing its presence on the West Coast.

The 248,000-square-foot facility, situated on 25 acres in Nampa, officially launched production in April building Heartland’s aggressively priced Wilderness laminated travel trailer line. With the additional expansion this December, the company will add two travel trailer brands targeting key segments of the West Coast market, including Heartland’s lightweight laminated Sundance and Shadow Cruiser by sister company Cruiser RV.

“The opening of the second production line keeps us firmly on schedule for the timetable we envisioned when Heartland announced construction plans in Nampa last September,” said Coley Brady, vice president of sales for the Elkhart, Ind.-based Thor Industries Inc. subsidiary, in a press release. “It also confirms that we truly listened to our dealer partners and are bringing in product that is in step with the West Coast consumer. The result has been that demand for our brands has exceeded our original expectations, and this second production line will allow us to continue to meet our dealers’ needs.”

The move also extends the reach for Howe, Ind.-based Cruiser RV, acquired by Thor in January of 2015 with Hermon overseeing operations.

“I am very excited as we are able to bring Cruiser’s Shadow Cruiser line closer to our West Coast dealers,” said Kyle Miller, senior general manager for Cruiser RV, noting, “It’s a big move for Cruiser RV since we became part of Thor. It’s been impressive to watch them take us from a smaller player in the market to a company that dealers are really excited about.”

Chris Hermon, president of Heartland, Cruiser RV, DRV and Bison, added, “I believe what makes Thor great is their ability to let us all be independent companies while still maintaining a structure and support that really sets the tone for the future of our industry. The business we all love continues to evolve quickly and those companies that change some of the ways of the past will be the leaders of tomorrow.”

“The West Coast is a very important market to Heartland and I believe our moves in Idaho show that commitment to our West Coast dealer partners.”

RV Business News – Production Rolling at Heartland’s Idaho Facility

Production Rolling at Heartland’s Idaho Facility

April 27, 2016

(L-R) Blue Dog Director Parts & Service Tony Schilling; Director of Sales Jason Poole; Heartland General Manager Mike Creech; Blue Dog co-owners John Asplund Asplund and Rebecca Asplund; Coley Brady, Heartland vice president of sales; Steve Khoma, regional sales representative; Blue Dog Operations Manager Marc Hauser (Operations Manager)

(L-R) Blue Dog Director Parts & Service Tony Schilling; Director of Sales Jason Poole; Heartland General Manager Mike Creech; Blue Dog co-owners John Asplund and Rebecca Asplund; Coley Brady, Heartland vice president of sales; Steve Khoma, regional sales representative; Blue Dog Operations Manager Marc Hauser

Production is in full swing at Heartland Recreation Vehicles LLC’s new plant in Nampa, Idaho, as the company marked a milestone last week with its first unit shipped to Blue Dog RV in nearby Post Falls.

“It was a testament to our Nampa team that we were able to roll out production right on schedule,” reported Coley Brady, vice president of sales for the Elkhart, Ind.-based Thor Industries Inc. subsidiary, in a press release. “We will continue to up production to fulfill our backlog of West Coast orders that currently runs into late August. It’s a significant step and confirms that the Idaho location truly represents a difference maker for Heartland.”

The 248,000-square-foot facility, situated on 25 acres in Nampa, provides Heartland with a gateway into the lucrative West Coast marketplace, eliminating costly freight charges and opening new relationship-building opportunities with key dealers in the region.

”Our overall partnership with Heartland has been strengthened with the addition of the new Idaho manufacturing facility,” noted John Asplund, co-owner of Blue Dog RV, which operates 10 locations in the Northwest states of Washington, Idaho, Oregon and Nevada.

Heartland announced plans for construction of the new facility last September, preluding the Elkhart County RV Open House which annually draws thousands of dealers to the industry’s manufacturing hub in northwest Indiana.

“It was opportune timing for Heartland as dealers head to Open House preparing for the coming year in terms of product selection and which manufacturers they want to do business,” said Chris Hermon, president of the Elkhart, Ind.-based Thor Industries Inc. subsidiary. “We were able to pick up several new dealers, and continue to add to that network, while also better servicing our existing dealers in the region.”

Initially, the Nampa facility will focus on the lightweight laminated Wilderness line, a “feature-rich trailer with an exceptional price point for the West Coast,” according to Brady, with plans to add a second production line for Cruiser RV and Sundance laminated travel trailer lines in early 2017.

“The Wilderness product line is well-suited for the customers in our markets and we anticipate it will be a high-volume brand for our dealerships,” said Asplund.

The Nampa site represents the latest in a series of expansion moves for Heartland, including the acquisition of Cruiser RV LLC and its sister company DRV LLC along with a major expansion focusing on service, parts and administrative operations at its expansive campus in Elkhart.

“The Nampa expansion is an extension of Heartland’s commitment to providing industry-leading response to the needs of our dealer partners, and our owners,” said Hermon. “It significantly expands our supply chain to the West Coast. The travel trailer business is booming and we want to be on the leading edge of that tremendous growth.”

RV Business News – Thor’s Investor Q&A: ‘No Signs of a Slowdown’

Thor’s Investor Q&A: ‘No Signs of a Slowdown’

March 23, 2016

 On the heels of an impressive second-quarter financial report, referred to by Thor Industries Inc. Chairman Peter B. Orthwein as the “strongest first half of any fiscal year in the history of our company,” the publicly held Elkhart, Ind.-based firm’s senior management has addressed a series of questions as part of an “Investor Q&A” accessible on the company’s website. Those questions not only deal with the intricacies of Thor’s own balance sheets, but with a few general industry topics that is highlighting here:

Q: What is the current state of the Canadian RV market? What do you anticipate the market will be like for the remainder of calendar 2016?

The Canadian market is still challenging as we see continued volatility in the value of the Canadian dollar relative to the U.S. dollar. Since we sell our products to Canadian dealers priced in U.S. dollars, this creates an upward pressure on prices in local currency which has an adverse impact on demand. As a result, total Canadian retail registrations as reported by Statistical Surveys Inc., fell 12.9% for the full calendar year 2015, with towables decreasing 12.0% and motorized decreasing 26.7%. Other factors impacting the Canadian market include increased job losses, an economic recession and tighter lending practices. However, even with these negative headwinds, we are seeing some areas of improvement in certain geographies and lean, healthy dealer inventory levels in the channel.

Q: Have you seen any signs of a slowdown in demand for RVs?

At this point, we have not seen any indications of a slowdown in demand at the dealer or retail level in the U.S. Despite the recent volatility in the stock market, consumers remain positive, as the impact of lower fuel prices, increasing job creation and lower unemployment have helped consumer confidence to remain strong. This positive consumer confidence is met with improved product offerings in our industry and, combined, these factors have driven continued growth surpassing the growth rate of the broader economy.

Q: Describe the current competitive environment; is there much discounting going on?

The RV industry is always competitive, but in the past year or two, we have seen less of the more extreme discounting than we have seen in prior years, with pockets of more aggressive discounting on certain high-end products.

Q: Have you seen any softness in markets that have been heavily impacted by the oil industry?

The largest state with exposure to the oil industry is Texas, which, based on retail registration data from Statistical Surveys, accounted for 31,656 units in 2015, which was up 8.5% for the year. At this point, we have not seen signs of reduced demand in the large metro regions of Texas, though we continue to monitor the situation closely.

Q: What is the current state of dealer sentiment and dealer inventory levels?

Dealers in general remain optimistic regarding calendar 2016. Early season shows on average have been well attended with very solid sales volume. Dealer orders are generally expected to reflect a 1-for-1 replacement as units are sold at retail. Dealer inventory remains appropriate for current conditions in both towables and motorized.

Q: Do we anticipate further RV industry consolidation?

Although a significant amount of consolidation has already happened within the industry since the last recession, we do believe that opportunities remain for additional consolidation within the industry. Consolidation in our industry does not threaten the competitive environment as years of consolidation have evidenced. So, even with more consolidation, we are confident that the competitive environment that drives innovation and improved product offerings throughout our industry will continue. In addition, we have seen a number of new or returning entrants to the RV manufacturer base since the recession as well. As these new entrants grow, there may be additional consolidation. 

Q: Are we at the peak for shipments?

We do not believe we are at the peak for shipments. As an industry, we are impacted by many macro-economic factors such as consumer confidence, interest rates and credit availability, employment levels, inflation rate, and a number of other factors. Currently, many of these macro-economic factors remain favorable. In addition, a positive future outlook for the RV segment is supported by favorable demographics – both as more people reach the age brackets that historically have accounted for the bulk of the retail RV sales as well as an influx of younger consumers that are attracted to the RV lifestyle. These younger consumers in particular are generally attracted to lower and moderately priced entry-level products and are, in part, fueling additional growth in the industry beyond historical levels. In addition, RVIA recently updated their forecast for calendar 2016 and are now projecting 2% growth, to 381,800 units.

Q: What is the status of the new Heartland plant in Idaho?

The Heartland facility in Idaho is progressing according to our original timeline. We are ramping up production at the new western facility that is on track to begin producing and shipping units by the end of the fiscal third quarter. The Nampa facility will produce travel trailers to meet the strong demands of the West Coast dealers of our Heartland subsidiary.

Q: Thor has lost market share in calendar 2015. Why have you lost market share and what does the company plan on doing to address or reverse the losses?

From a share perspective, we have gained significant market share in motorized, which has been partially offset by some decreases in towable share, most notably in high-end fifth wheels and some travel trailers. Market share is certainly a key metric that we monitor for all our product categories – however, it is not the only metric. Overall, we generally try to take a balanced approach to growing or maintaining market share and growing or maintaining gross margin. The RV industry is extremely competitive and pricing discipline can come at the expense of market share for all participants, including the largest. We have developed a variety of new products that we believe address the largest and fastest growing segments of the market, which should help to improve share as they penetrate the broader market.

Q: What is your outlook for the rest of the year?

Continued strength in the RV market and a healthy dealer channel should result in continued, but more modest RV revenue growth in the second half of the fiscal year. Growth in gross profit margins will become more challenging as improvements in material costs and warranty expenses that were realized in the second half of fiscal 2015 will create difficult comparisons for the second half of 2016. In addition, certain benefits to gross margins, specifically the impact of the retroactive reinstatement of tariff rebates on certain imported raw material, which had a significant positive impact on gross margins in the fourth quarter of fiscal 2015, will not repeat in the fourth quarter of fiscal 2016. Finally, the effective income tax rate will likely remain higher on a year-over-year basis, compared with the relatively low rate in the second half of fiscal 2015

Q: What is your strategic plan for future acquisitions?

We have established a very disciplined approach to acquisitions to ensure we remain focused on the factors that provide the greatest likelihood to a successful acquisition and that will provide long-term value to our shareholders. We are opportunistic in our approach and seek willing sellers at a reasonable sales price. We also seek companies with strong management teams. We remain focused on acquisition opportunities within or adjacent to the RV industry.