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Archive for Sunday, August 30, 2009

Reviving the RV

Winnebago CEO optimistic about expanding market

August 30, 2009

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— A high school graduate who learned everything he knows about motor homes from “the university of Winnebago” has navigated one of the industry’s leading manufacturers over very bumpy terrain in the past year.

Robert Olson, 58, took a job installing motor home windows at Winnebago Industries Inc. at age 18 in hopes of saving money for college. He never left, foregoing a college education for on-the-job training that led him to where he is now, 40 years later, sitting in the CEO seat.

Actually, the seat he chose for a recent interview was a tan plush leather sectional sofa in the company’s newly unveiled $300,000 Itasca Ellipse.

The 42-foot home on wheels — the company’s largest motor home ever — was parked outside Winnebago corporate headquarters in Forest City, a small farming community of 4,500 people near the Iowa/Minnesota state line.

Production takes place in a campus of several factory buildings encompassing 2.5 million square feet. Components aren’t just assembled here, but seat covers, dashboards, water tanks and cabinets — more than half of the motor home parts — are manufactured here.

Olson proudly discusses the Ellipse’s amenities: ceramic floor tile, granite countertops and cherry wood cabinetry. There’s a gas fireplace in the living room beneath a large flat-screen television. A second TV faces the king-sized bed in the back of the RV, which you reach after passing a bathroom, and a washer and dryer enclosed in a hallway closet.

“This is what our customers who like to go camping are asking for,” Olson said with a smile.

Going camping these days, it seems, isn’t what it used to be.

Q: It’s been a torturous couple of years for your industry, a 55 percent decline in shipments in the past year alone. Tight credit, high fuel prices and job losses hit you and your competitors hard. What has it been like?

A: I think you’re going to be hard-pressed to look at any recession this industry has had where you’ve had 10 manufacturers go out of business. They’ve physically shut their doors, sold their assets and they’re done. You’ve also got four other manufacturers who have filed for bankruptcy protection. Some of those are really big names in this industry.

Q: You’ve had to cut total number of workers by nearly 50 percent to around 1,700, close factories, make other cuts. Is that what enabled you to get through it?

A: We learned a long time ago that you always carry a war chest of cash in reserve and we did that again. We’re still at a point, even being in this recession for about 24 months, where we have no debt. We think that’s a very important part of our success.

Q: If the economy is beginning to recover, are you able to capture some of the customers who might have bought from former competitors?

A: We think we are. Those 10 manufacturers made up only 4 to 5 percent of the market, so there’s not a lot there you’ll gain. Some of those in bankruptcy — Monaco Coach Corp. and Fleetwood Enterprises Inc. — made up nearly a third of the market. One of the things that’s a little disheartening to us is that you can file for bankruptcy and get a clean slate. You get to start over. So, now we’ve got two competitors we thought were about down and out who get to come back, and will probably be stronger than ever.

Right now we’re just about 19 percent of the market and we’ve picked up some.

Q: Describe your average buyer.

A: They are typically in the 62- to 65-year range, although that range is starting to widen. I think one of the reasons why it’s so important for us to doll up our models a little bit more is to go after that younger customer. Next year when we talk, maybe that range will be 60 to 65. That’s the reason why we are looking at something other than just a conservative type RV.

You can’t lose sight of the fact that projections are that until 2030 you’re going to have 350,000 baby boomers per month joining our potential customer base.

You also have people living longer. We’ve got customers out there like at last year’s annual rally of Winnebago motor home owners, a guy was 87 years old and he was dickering on a coach.

Q: Any other factors that might have an impact on sales?

A: What I’m really excited about is that 2004 was one of the biggest years this industry has seen in volume. Our average trade-in cycle is four to six years. So we’re right in the heart of those people wanting to trade their used coaches off for something new.

The whole market is starting to grow. Three years ago we had an African American RV club camped here and the Hispanic demographic is starting to grow.

One thing about it is, you’ve got my generation and even my kids’ generation, their parents took them camping, they took them to the lake and they sat around a campfire. A lot of people now look to gain a simpler life. They’re looking at wanting to share those types of memories with their kids.

Q: Do you have a motor home?

A: Not yet.

Comments

Seamus 4 years, 7 months ago

Nothing like getting away from it all by dragging it all along with you!

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