Saturday, August 26, 2006
LEE RESIGNS FROM NRV BOARD
In his letter dated Aug. 21 Lee said: "I have been largely unsuccessful in persuading the board to take any action to deal with the ongoing crisis of this company."
Lee, who founded the company's Country Coach subsidiary in 1973 and has been a director since November 1996, said that "it is irresponsible to continue to retain a CEO who has lost some $80 million in a short period of time with additional losses a virtual certainty in the near future."
He added that the board's "lack of action could create personal liability of directors to shareholders for the loss of this company" and that the crisis "threatens the very future of this company."
In November, the company rejected as inadequate a takeover proposal worth about $92 million from CC Acquisition Group, led by Lee.
National on Aug. 11 reported a second-quarter net loss of $7.1 million. It said more than $5 million of that loss was was attributable to defective fiberglass sidewall material used on about 70 motor homes, and that $1.1 million was attributable to a reserve established in the quarter to address a recall of tires the company determined were defective.
It has sued the sidewall supplier to recover damages.
Shares of National were unchanged at $3.93 on the New York Stock Exchange.
Thursday, August 24, 2006
NEW WORKHORSE CHASSIS
Thursday, August 24, 2006
In a move that may well reinvent the Class A chassis business, Workhorse Custom Chassis LLC in late August released a rear-engine motorhome chassis available with either gas or diesel engines. While gas-powered 2007 units will be available this fall from several motorhome builders, the Union City, Ind., company won’t unveil its diesel models until next year – with an assist from its new parent company, International Truck and Engine Corp.
"You might say that we are reinventing Workhorse," said Workhorse President David Olsen, whose firm was purchased by Chicago-based International last year.
Dubbed the UFO – for "Universal Fuel Option" or "Universal Floorplan Option," take your pick – Workhorse quietly introduced the 26,000-pound GVWR chassis over the summer with a quirky marketing campaign centering on a website reporting imagined UFO sightings.
Behind it all, however, is a dead serious initiative by a company that wants to appreciably alter the modern-day Class A business.
"If you look at the Class A market today, it’s been fairly simple," Olsen told RV Business. "If you wanted gas, the engine came in front. If you wanted diesel it usually came in the rear. Front engines had their advantages, and rear engines had their advantages. But you could not mix the advantages. You had to choose one or the other. Our solution is the universal fuel option – one product, two fuel options. If you like a floorplan, which is the No. 1 reason that people buy a motorhome, make that decision first, then you get to choose the engine.’’
The gasoline-version of the UFO chassis launched in August with a Chevy 8.1-liter Vortec engine, the same power plant Workhorse installs in its market-leading W-series chassis. Sometime in the spring, the diesel version will debut with a Cummins ISB engine and in the fall with International’s V-8 Maxxforce power plant, the horsepower ratings of which have not yet been released.
The gas chassis is being released first, said Bob Wert, vice president of sales and marketing, because Workhorse’s service infrastructure is already in place for its front-engine W-series gas chassis. Integrating Cummins ISB in the spring and International Maxxforce engines next fall will take more preparation with regard to service, Olsen said. Olsen said motorhomes featuring the gas-fueled UFO chassis likely will debut during this fall’s retail RV shows.
In private market surveys Workhorse commissioned during the last two years, Olsen and his senior managers explain, some 72% of current RV owners said they would prefer a rear pusher chassis and 54% said they would prefer that chassis to be gasoline powered. "That’s pretty strong demand for a product that didn’t even exist yet,’’ Wert said.
Based on the analysis of those statistics and others, Olsen said, Workhorse estimates that rear-engine gas chassis could eventually account for 35% of the Class A market. Workhorse’s management figures that high-end gasoline-powered motorhome buyers initially will migrate to the UFO chassis, followed by mid-priced coach consumers. Meanwhile, in Workhorse’s view, front gas engines will remain the norm for "entry-level" coaches.
"We think this chassis is a game changer," Wert observed. "It will allow manufacturers to become more efficient and develop floorplans that their customers want without regard to whether it has a gasoline or a diesel engine.’’
For instance, front-gas floorplans are limiting because the layout requires a mid-coach or rear entry door. "That prevents the manufacturers from developing floorplans that have dual opposing slideouts, and it cramps the galley," said Bill Walmsley, marketing manager.
Additionally, he said, the UFO chassis will feature flat cockpit floors because a "dog house" that usually contains the drive train won’t be necessary. Ditto in the rear of the coach where neither gas nor diesel designs protrude into the living area and OEM’s won’t have to build elevated platforms along the back wall.
In the big picture, Olsen said, the UFO chassis should assure Workhorse a substantial position in the diesel pusher market. "In order to be a major player going forward, we needed a solid diesel strategy and solution," Olsen said. "We had a pretty good strategy, but, frankly, we were a very small customer to people like Cat and Cummins as a stand-alone company. That’s changed now that we are part of International.’’
The integration of International’s V-8 Maxxforce engine – now installed in some 300,000 Ford diesel pickup trucks annually – into Workhorse’s UFO chassis will be International’s first direct product-related venture into the RV industry. However, it’s not likely to be the last. "As the fight goes forward," Olsen said, "you are going to see a predisposition for ... Workhorse to sell chassis with International diesel engines in them.’’
Workhorse isn’t worried that the rear-engine chassis will take sales away from Workhorse’s front-engine gas products. "We spent little or no time worrying about what it will do to our product," Wert said. "We brought the W22 out because it had features that customers wanted, knowing full well that it would destroy the P-series chassis that we retired last year. We have no concern or regard about cannibalizing our own products.’’
Monday, August 21, 2006
FLEETWOOD LAYS OFF
Monday, August 21, 2006
Fleetwood Enterprises Inc. laid off 38 managers and staff at its Riverside, Calif., headquarters Friday (Aug. 18), said company treasurer Lyle Larkin.
According to a report in the Press-Enterprise, Riverside, the RV and manufactured housing maker also cut 122 jobs at other facilities across the country.
Larkin blamed the layoffs on previously announced sluggish sales of recreational vehicles, particularly motorhomes, but also on a decline in sales of travel trailers.
He said about 550 people work at the Riverside headquarters.
Manufactured housing sales are also lower than at this time last year, Larkin said.
On Aug. 3, Fleetwood said revenue for the first quarter of its fiscal year had dropped 14% over the same quarter last year to $529 million.
Preliminary numbers showed that RV sales declined 12% to $370 million, while manufactured housing sales dropped 29% to $145 million. Volatile gas prices and rising interest rates caused some of the problems, the company said.
"We are anticipating that we are not going to see significant improvement in either industries until next spring," Larkin said Friday. "So we are doing what we have to do as a company to get through the next several months and come closer to breaking even."
Prior to its most recent revenue announcement, Fleetwood experienced two profitable quarters in a row, but still lost $28.4 million during its 2006 fiscal year, which ended April 30. It was Fleetwood's sixth losing year in a row.
The company has 11,500 employees nationwide and 2,000 in Inland Southern California.
FEMA AND EPA TESTING TRAILERS FOR FORMALDEHYDE
Monday, August 21, 2006
EDITOR'S NOTE: The following is an Aug. 21 article by Elkhart Truth reporter Marilyn Odendahl examining the use of formaldehyde in travel trailers supplied to the Federal Emergency Management Agency (FEMA) for relief efforts. A study conducted by the Mississippi chapter of the Sierra Club, a high-profile environmentalist group, allegedly showed high levels in some emergency units that may have caused illnesses among residents. The testing prompted a class action suit against FEMA and several RV OEMs. Recently, FEMA announced that it would be conducting its own testing for formaldehyde in conjunction with the Environmental Protection Agency (EPA). The validity of the Sierra Club’s testing has also come into question.
Tending to the steady stream of youngsters who tramp in the office with colds and sinus infections forms the heart of Dr. Scott Needle's pediatric practice in Bay St. Louis, Miss.
Nothing unusual, nothing out of the ordinary. Just prescribe some bed rest and maybe a dose of antibiotics.
But in a town that practically took a direct hit from Hurricane Katrina, some of the little tikes that have battled colds that lasted longer or that have returned after the medicine bottle was empty.
Needle began noticing a subtle pattern that all the children with these chronic respiratory illnesses were living with their families in trailers provided by the Federal Emergency Management Agency (FEMA).
Colleagues and parents suggested formaldehyde as the cause of his young patients' maladies and then Needle was given a set of test results which indicated the air inside a sample of those units contained elevated levels of the chemical.
"At this point, (formaldehyde) is what I'm suspecting the most," said Needle. "I can't say for sure."
Indeed no one can say for sure that formaldehyde is the culprit behind the illnesses many Gulf Coast residents are experiencing in the aftermath of the series of 2005 hurricanes which left many homeless and the region devastated.
The Mississippi Chapter of the Sierra Club has been using off-the-shelf devices to test the indoor air quality of the FEMA trailers and has recorded consistently high readings of formaldehyde.
Now, the Environmental Protection Agency (EPA) has agreed to examine some of the trailers being used as temporary housing. The federal agency issued the following statement about the test: "Although EPA does not regulate indoor air, a provision in the Stafford Act allows FEMA to ask us for help in this matter. EPA is currently working with FEMA to develop a sampling plan. Once EPA has collected the samples, the agency will send the results to an independent lab and have no further involvement."
EPA spokesman Dale Kemery would not discuss the details of the procedure, declining to answer when the tests would start, what method would be used to sample the air and how many units would be tested.
"It's a good solid conservative defense method," Baker & Daniels attorney Ken Weaver said of the testing by the EPA. "I'm proud of the government for doing something right for a change."
Weaver, who has been representing the recreational vehicle and manufactured housing industries since the late 1960s, explained FEMA appears to be gathering data to counteract claims linking health problems to formaldehyde. He said the air monitoring devices being used by the Sierra Club produce results that are "notoriously unreliable" because the final readings can be impacted by slight changes in protocol like the number of people walking into the room during the test.
Weaver predicted the EPA would use a more sophisticated testing process which first requires the unit be vacated and closed for 24 hours and then draws the air through distilled water for about two hours. Afterwards the water is analyzed for formaldehyde content.
Many recreational vehicle manufacturers that built the units for FEMA are watching the situation in the Gulf but, Weaver said, are not panicking or "saying we have a major problem."
A round of testing that the Mississippi Sierra Club did in July indicates the formaldehyde fumes may be abating in the FEMA units. Becky Gillette, president of the Magnolia State chapter, said four out of the seven units tested below the federal limit of 0.1 parts per million of formaldehyde and others tested close to the limit. Previously, testing had registered indoor concentrations of 0.2 ppm and 0.3 ppm.
"We would hope this is a problem that is getting better," Gillette said. "There's a 100,000-plus people still living in these things."
Still while Gillette noted that the symptoms many are fighting are consistent with formaldehyde poisoning, she also pointed out that the burning of tons of waste created by the hurricanes as well as the constant stress the Gulf Coast residents are living under may be contributing to the rash sickness.
"We've done a heck of a lot of work in the last year to rebuild homes, businesses and communities," Gillette said, giving special recognition to the many volunteers from around the country who came to help. "We're better. There has been a lot of progress but there are still some lingering concerns about the health impact of the hurricanes."
Some of the youngest victims are repeat visitors to Needle's practice who come in whining, coughing, sleep-deprived, and clinging to their mothers.
The Johns Hopkins educated pediatrician is pushing for formal medical studies to be conducted on FEMA trailers to determine if formaldehyde is elevated and if those levels are causing the illnesses he has been seeing.
"It's people's worst nightmare to lose everything and then be exposed to this," Needle said. "Basically we're just trying to get some answers."