RVRESOLVE

by Connie Gallant of RV CONSUMER GROUP, rv.org

PART ONE of HUMPTY DUMPTY OFF RV WALL:

"It's been a long time coming," said one of the group around the campfire.
"Yeah," said another. "Been getting too big."
"And it costs a fortune to go anywhere," said a third.
"Fuel close to five dollars was the last nail in the coffin," quipped someone.
"It'll never be the same again," lamented a previous speaker.
"Can't sell mine for any price," a new speaker shook his head.
"Well, ours is going to make a beautiful guest house" said a woman cheerfully.
"Mine's my only home," added the first speaker. "Gotta become a pure snowbird."
"That'll work for me, too," said another while nodding.
"Hope they can put Humpty-Dumpty together again," said a new voice.
Now everyone nodded.

For about a decade, we've all watched the RV industry sitting on the edge of the wall like Humpty-Dumpty. Although it tottered a number of times, it took the closing of Trail Wagons, a high-quality builder of Class C's in Washington State, to turn the tottering into a slight tremor. Then came the closings at Sunline Coach, National RV, and Western RV — and the tremor turned into a real shaking. Even as Humpty-Dumpty was holding on tight and trying to figure out what was happening, Travel Supreme suddenly disappeared and Alfa Leisure followed on its tail. Now Humpty-Dumpty is looking at the ground and really wondering what will happen if the shaking gets worse.

Humpty-Dumpty might or might not fall. Much depends on the politics of fuel prices and demographics. If the big fall happens, what then? Can we salvage some of Humpty-Dumpty? Is there any way we can prevent the big fall? These are the multi-million dollar questions that face the RV industry—questions that most of us don't have a clue how to answer.

One thing we can do is try to reconstruct history and maybe gain a better understanding of what happened. To accomplish this, the RVCG staff put together the following summaries of RV manufacturer closings in the last few years:


TRAIL WAGONS: 1971 to 2005

The Chinook has been around for so long that it's often seen in the backyards of suburbia as if it were an icon of the "good years." A family-owned business since 1971, Trail Wagons started building a small camper van line primarily on the Toyota chassis. When Toyota stopped providing chassis for RVs, the Chinook continued with small Chevy and Ford chassis and engines. Early in the nineties it also started to upgrade the "house" with more fiberglass and luxurious interiors. By the end of the century, the Chinook had become a high-priced small home on wheels.

To many of us, it appeared that Trail Wagons was doing the right thing. RVers in the nineties were starting to spend more money on motor home travel. Instead of keeping up with the Joneses with a bigger yacht, many upper middle-class Americans were keeping up by having a good-looking motorhome in their front yard. And, in suburbia, keeping a vehicle in your front yard meant it had to be small. The Chinook seemed to fit the picture perfectly.

We don't know what happened. Research tell us that Trail Wagons somehow got overextended after it started producing "ultramodern" models like their Baja Edition — a very expensive all-terrain vehicle. At the time we thought it was a big gamble for Trail Wagons, but it appeared they must have had oodles of cash reserves or they wouldn't have taken the chance. Apparently the gamble didn't work. After a desperate and unsuccessful search for a buyer when creditors were threatening foreclosure, the doors of Trail Wagons closed forever.


SUNLINE COACH: 1964 to 2006

As JD Gallant and his group of faithful followers visited manufacturing plants, dealerships, and RV shows from 1990 on, there was never a question about the faithfulness of Sunline's dealers. For a low-priced towable manufacturer, Sunline held onto a good reputation for quality of construction and service. Not only were their products competitively priced, but the company worked hard at keeping both the dealer and the consumer happy. According to RVCG polls and surveys, this Pennsylvania manufacturer of travel trailers accomplished just that.

Sunline appeared to be on top of its game in the spring of 2004 when it was purchased by an investment group amid claims that the change would allow for the considerable expansion and extended hiring planned by the formerly family-owned company. Known for its well-built, no-frills, lightweight, trailer lines, the company used its new money to add a toyhauler, an ultralite line, and a disability-accessible trailer to their inventory.

A little over two years after the investment group took over, the workers were told to go home and not come back. It was a shock to the industry, to most of the employees, and especially to recent purchasers of Sunline trailers. Although the new owners said they were looking for a buyer, a soft retail market appeared to kill that prospect.

There are questions we can't answer. Were Sunline's plans for expansion too ambitious for the new owners' resources? Did they run out of capital in a mere two years? Did all the customer, dealer, and industry praise add up to nothing in terms of sales? Were they selling their trailers too cheaply? We may never know what killed Sunline, but fuel prices were not the cause.


NATIONAL RV: 1963 to 2007

JD Gallant and his ratings staff visited the National plant a number of times during the nineties. In his comments, and from the photos that we extracted from the thick National file, it was clear that National had superb management during those years. JD mentions in his notes that Wayne Mertes, founder and president, was on the scene throughout the day and even after the lines were shut down. Raul Gimenez took over the reigns from Mertes in the summer of '99 when JD last visited the plant in Perris, California. JD noted that Gimenez was intelligent and industrious, but a bit pushy in areas where Mertes was conservative. Because of the differences between Mertes and Gimenez, he wondered if the new president would work out. He didn't.

By spring of 2001, Gimenez had left the position and National RV Holdings, consisting of National RV and Country Coach, went back to its founders: Wayne Mertes of National and Bob Lee of Country Coach. By this time we were getting the idea that these two were definitely trying to liquidate their assets in the companies. With the economy already starting to fall apart, the 9-11 disaster seems to have triggered some downhill movement.

In the five years between the first of 2002 and December of 2007, something happened that allowed this major company to fall apart. It's difficult to say exactly what happened, but here are some highlights.

2004: National starts having severe problems with its walls.

March, 2005: National reports a profitable year after 5 years of losses.

July, 2005: National reports losses due to a "softening market."

November 2005: National executives reject a buyout offer of $92 million.

November 2005: National stock is purchased by its executives.

February 2006: David Humphreys, a former RVIA president, becomes a director.

March 2006, National reports it's "outperforming" the industry in sales.

July 2006: National announces that it's having severe problems with its sidewall material from Crane Composites.

July 2006: Brad Albrechtsen, president of National, says the company is becoming profitable.

August 2006: National reports $7 million in losses for the quarter.

August 2006: Bob Lee resigns from board. Says he doesn't like Albrechtsen's performance.

November 2006: National sells, then leases back 50 acres of its properties in order to accumulate $30 million in needed cash.

January 2007: National sues Crane Composites.

January 2007: Bob Lee (founder of Country Coach) bails out of National by selling all his stock.

February 2007: National RV Holdings sells Country Coach to a group formed by Bob Lee for almost $40 million.

March 2007: National reports losing almost $20 million in 2006.

April 2007: National stock down to $2.18 a share from $6.34 early in 2006.

June 2007: David Humphreys becomes chairman. Humphreys, an attorney, was president of the RVIA from 1979 to 2006 and during his tenure became the industry’s leading spokesman. Prior to 1979 he served for nearly 10 years as RVIA's outside legal counsel. According to reports, he is currently acting as a legal consultant to various organizations, including RVIA.

August 2007: David Humphreys becomes CEO when Albrechtsen leaves.

November 2007: Humphreys announces two new motorhome brands.

December 2007: National closes it doors. Stock sells for $.10 (That's 10 cents!) a share. Can't find Humphreys saying much on the subject.


ALFA LEISURE:

Although Alfa Leisure and RVCG battled it out a few times, we were suprised to see it close down in April of 2008.

Owned by Johnnie Crean, son of Fleetwood's founder John Crean, the 35-year-old company sold a controlling interest to a Los Angeles investment firm in 2005. Because Alfa kept going after three years of new ownership, the shutdown was unexpected -- especially since Johnnie Crean was still involved in its operation.

Crean claimed that they had the same problem with sidewalls from Crane Composites as did National RV; and, combined with the economic turndown, continuing production became an "insurmountable" issue.
Conclusion: You figure it out. We can't.


AMERI-CAMP: 2002-2008

Founded by a group of former Carriage RV employees in 2002, towable builder Ameri-Camp enjoyed initial success, even garnering annual awards from the RV industry. In 2005, however, after going bankrupt, Ameri-Camp was acquired by RV Manufacturing Enterprises, LLC, the manufacturing arm of the Suncoast RV chain of dealerships. With the new financial backing and directorship, Ameri-Camp's existing lines were revamped and new lines were added.

The outlook was optimistic in 2005, which was a good year for most of the industry. Ultimately, with the shriveling demand for new RVs caused by soaring fuel prices and the credit crunch, Suncoast's rather large investment in Ameri-Camp failed to pay off over the next few years. Unable to pay its outstanding debts, Ameri-Camp closed in October, 2008. No comment was forthcoming from Suncoast.


TRAVEL SUPREME: 1988-2008

The shutdown of the Travel Supreme plant seemed to be a surprise to everyone. The 20-year-old company apparently started to lose too much money to keep operating. The Troyer family obviously wanted to avoid bankruptcy.

A few years ago we questioned the wisdom of Travel Supreme entering the luxury coach market. It appeared to us that Travel Supreme's management was stepping way beyond its expertise. Of course, the slowing of the economy and the high price of fuel didn't help the company in this venture. The woes of the nation simply interfered with Glenn Troyer's dream. We are sorry to lose Travel Supreme fifth wheels.

Jayco, Inc,. has taken over Travel Supreme's plant and has purchased some of its assets, including its intellectual property. They have formed a subsidiary named Entegra Coach, Inc. The new company will apparently pick up where Travel Supreme left off, building class A's and luxury fifth wheels.

Jayco's lack of success in the past with the high-end market makes us wonder why they were eager to enter an arena that's currently under duress — particularly because in early October, Jayco consolidated its operations in Twin Falls, Idaho and laid off about 40 employees.

Jayco has also just announced the closure of its Starcraft subsidiary in Topeka, Indiana in an attempt to reduce operating costs. Starcraft production will continue at Jayco's Middlebury plant and maintain its own brand identity and dealer network. Management expressed regret that the move could cause hardship to the 244 workers and their families affected by the move.



PILGRIM:

Rumors were flying in early summer 2008 that towable manufacturer Pilgrim International -- the four-year-old upstart brainchild of Dave Hoefer, former head of Dutchmen -- was about to meet its demise. However, a factory representative we spoke to in August assured us that production was proceeding as usual and that their new CosmoLite line was scheduled to hit dealers' lots no later than the beginning of 2009.

Pilgrim, you'll recall, was one of the manufacturers called before the House Oversight Committee in regard to high formaldehyde in FEMA trailers. Ironically, their new line of towables is made from formaldehyde-free materials. Mr. Hoefer confirmed to reporters on September 29, 2008 that, "It's over."

We will be interested to see if other manufacturers will be quick to take advantage of TekModo's lightweight composite plastic CosmoLite for building their new lines.


TETON HOMES: 1967-2008

A recent casualty of the downturn in RV sales was Teton Homes, venerable manufacturer of luxury fifth wheels located in Casper, Wyoming. Founded in 1967 by Robert "Boots" Ingram, the company got its start building conventional travel trailers, and only later specialized in fifth wheels designed for fulltime living.

In May of 2005, Teton was purchased by Webster Capital, a private investment firm based in Boston. Tony Ingram, son of the founder was to remain at the helm. His eagerness for the deal with Webster may have been fueled by an announced desire to branch into the building of high-line motor homes with half-million-dollar price tags.

Two years later, Ingram was gone, with the appointment of former Fleetwood executive Chris Braun as CEO. Braun, like Barry Lown, who was brought into Western RV (see Part I) as VP of sales and marketing when the company was about to go belly-up, had an education in accounting and experience in sales and marketing. Teton, however, managed to stay afloat for another year and a half.

In September of 2008, Charlie Larkin of Webster Capital denied rumors that Teton was closing. He would only admit to "restructuring" that was supposed to promote a "more viable business" and claimed that no layoffs were planned. Nevertheless, customers had been told by Teton employees the week before its closing that the company was shutting down and all warranties were void. Parts and service were unavailable. Five days after the Larkin interview, the news was official that Teton was in foreclosure — and less than two weeks later all equipment and assets were sold at auction.


WEEKEND WARRIOR: 1988-2008

Ever since April of 2008, with the resignation of several key executives from toyhauler manufacturer Warrior Manufacturing, there has been speculation about the Perris, California-based company's imminent closure. Founder and head man Mark Warmoth even said recently, "I'm circling the drain," and, "We're not going to make it" (uncharacteristic statements for a manufacturer). Production stopped in early July, and Warrior has been liquidating some assets, laying off employees, and consolidating plant space. Warmoth attributes the 19-year-old company's tribulations to the collapse of the California housing market, high fuel prices, a sluggish economy, and "internal" issues. On August 13, he finally announced that the company ceased operations.

Warrior Manufacturing, founded in 1988 in Warmouth's garage, achieved its peak success as a leader and specialist in the toyhauler market. In 2004, they acquired National RV's trailer and sports utility division (also in Perris) and Idaho-based Extreme RVs. By 2005-2006, the company employed 2,000 workers, had expanded production space to four plants in the Perris area alone, and ventured into the class C motorhome market.

Although the popular Weekend Warrior brand enjoyed unprecendented growth at the height of the toyhauler craze, competition from just about every RV manufacturer in the US — eager to ride the wave themselves — began to take the wind out of Warrior's sails. There were approximately twice the number of toyhauler models on the market in 2006 as there were in 2004. By late 2006 and throughout 2007, escalating gas prices and the general contraction of the RV market added to Warrior's woes. Add to that the shrinking number of venues for off-road toys as a result of legislation to protect the environment — legislation that Warmoth fought consistently to further his business interests — and the combination of factors was a recipe for disaster.

With the haste of so many manufacturers to cash in on the toyhauler phenomenon, we wonder how much they overextended themselves. We must also wonder how much the market glut of these vehicles contributed significantly to the waning fortunes of the RV industry as the fuel crisis took its toll. Warrior Manufacturing, after tottering on the wall like Humpty Dumpty, has fallen. Although Warmouth regrets leaving customers "hanging" at this point, he admits that customer care after a sale is "a little weak" in the industry. An understatement?



WESTERN RV:
JD Gallant and his staff hit Western RV hard when it introduced its Alpine Coach back in 1998. According to JD's recorded evaluation at the time, "The Alpine house is sloppily put together. We found flaws throughout that should never have left the line. It's almost like they hired people off the street to put the Alpine together." Although JD praised the Peak chassis after visiting the factory, he was still appalled by the assembly process. He did later state that it got better after a time, but the improvement took far too long.

The Alpenlite fifth wheels were always rated "good" — sometimes even excellent. When the founder, Bill Doyle , was running the company, the profits were high and quality stayed pretty much in line. Some say the Alpine Coach was the brainchild of Ron Doyle, who assumed the presidency after his father retired.

The first sign of problems was in November of 2006 when an investment firm working with Bob Lee (founder of Country Coach) agreed to acquire and recapitalize Western RV. With an announced debt of $13 million, all that we could figure at the time was that Western overcapitalized by pushing its Alpine Coach to new limits. After intense negotiations, in February of 2007 Monomoy Capital Partners and co-investor Bob Lee paid $53 million, including debt assumption, for the company.

Less than six months after its purchase (and after Ron Doyle left Western), trailer manufacturer Pilgrim International pressed for a merger between the two companies. When they couldn't pull it off, we took a happy deep breath and hoped that Western would do some serious belt tightening until the economic downturn was over. Apparently that didn't happen.

In January of 2008 the board brought in a new president. Bob Wert immediately promised new and better things for Western. Then a month later the board brought in Barry Lown, a former executive from Fleetwood, and appointed him vice president of sales and marketing. For a few weeks it looked like Western had a future.

In March of 2008, Western started laying off workers. On April 1, the bill collections and lawsuits started. Then on April 16, Western shut its doors. People waiting for warranty service waited and waited. They never got the service.



WEST COAST LEISURE HOMES:

The Canadian company, known for its truck campers and Okanagan towables, closed its doors in mid-September. Although no reason was given for the closure, there are indicators that the shrinking market for new RVs was at least partially to blame.


PART TWO of HUMPTY DUMPTY OF RV WALL:

On Part I of this article, we asked whether we could salvage some of the RV industry, and whether there was any way we could prevent the big fall. During the past two months, we have been dismayed watching the industry unravel further — and Humpty Dumpty virtually falling on its butt.

Although gas prices and credit problems have been used as standard excuses for the present chaos in the RV industry, it's clear from the following examples that other factors were in play before the current economic problems reared their ugly heads. Overextension and undercapitalization were the actual culprits — and the increasingly dismal economic climate provided the extra push that has toppled Humpty Dumpty from the RV wall.

As consumers lose their homes/properties and are forced to live in an RV, the trend will be to buy used instead of new — and avoid the warranty woes that will increase with the closures of more RV manufacturing plants and dealerships.


Although, to our knowledge, they have not closed their doors yet, we heard that Nu-Wa (makers of Hitchhiker brand) has currently stopped production. We certainly hope that this is a temporary and cautionary measure on their part.

The problems faced by the RV industry have a wide ripple effect within the entire industry, including all optional equipment manufacturers, RV repairs, campgrounds, and publications. For example, we are saddened to learn of the upcoming closure of Western RV News - an excellent newsletter that has been around for 42 years. We send big kudos to its publishers, Tom and Darlene O'Connor, for giving all of us such pleasurable and informative news throughout the years. If you would like to thank Tom and Darlene for their years of service, please send them an email to: publisher@westernrvnews.com.

We are curious to see what will rise from the ashes of the crumbling RV industry. On a very positive note, we believe that this crisis will pave the way for an age of "green" RVing — something all RV manufacturers should have been taking seriously for quite some time. We're keeping our fingers crossed that Humpty Dumpty gets back on the wall... patches and all.