Tuesday, June 03, 2008



CHICAGO, June 2 (Reuters) - Winnebago Industries Inc (WGO.N: Quote, Profile, Research) said on Monday that it was shutting one of two key plants and laying off nearly 300 workers as it continued to face with the "extremely challenging" market for recreational vehicles.

The company, the No. 1 maker of recreational vehicles (RV), said it was closing its manufacturing facility in Charles City, Iowa, a plant the company opened in 2005, back when demand for motorhomes was strong.

Winnebago estimated that 270 salaried and hourly workers would lose their jobs. Production of the smaller so-called Class C vehicles currently made in Charles City will be moved to the company's factory in Forest City, Iowa, where Winnebago is headquartered.

It was the second time this year that Winnebago has slashed its workforce to deal with the slump in sales brought on by rising gasoline prices, falling home values and tightening consumer credit.

In January, Winnebago said it was laying off 300 workers to deal with the downturn, which drove at least one RV manufacturer -- Perris, California-based National RV -- into bankruptcy late last year.

Those who remain in business are scrambling to adjust by laying off workers, idling plants and -- in the case of Winnebago -- bringing back cheaper, more fuel-efficient van-like vehicles whose popularity peaked during the 1970s oil crisis.

In April, Fleetwood Enterprises Inc (FLE.N: Quote, Profile, Research), which makes bus-sized motorhomes and towable camping trailers and saw its fiscal fourth-quarter sales tumble 24 percent, said it had sold its Riverside, California headquarters and was deferring dividend payments on some convertible debt to boost finances.
Since peaking in 2004, total Class A and Class C motor home industry wholesale shipments have fallen 42 percent as the U.S. economic downturn has eroded consumer confidence and kept buyers out of showrooms.

Analysts like Bob Simonson at William Blair & Co are skeptical the industry's turnaround will be quick. He said it is going to take time for consumer confidence to rebound and predict 2008 will wind up being another down year for retail sales -- the fourth in a row.

Winnebago shares lost nearly 4 percent, or 59 cents, to close at $14.33 on the New York Stock Exchange, or at less than half of their 12-month high of $32.35 set on Oct. 11.

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