Recreational Vehicle Industry Faces Challenging Year

Article excerpt

Byline: Tim Christie The Register-Guard

After a bumpy ride in 2007, the recreational vehicle industry faces more potholes in 2008.

The industry - the second--largest private employer locally - shipped 353,400 motor homes, trailers and campers in 2007, down 9.5 percent from the 390,500 shipped in 2006, according to the Recreational Vehicle Industry of America. The industry's chief forecaster, Richard Curtin, director of consumer surveys at the University of Michigan, expects RV shipments to decline 4.8 percent more in 2008.

Even with declining shipments, Curtin notes that 2007 and 2008 will go down as the fourth- and fifth-best years in the past 30 years after a record setting 2006.

Curtin's biggest concerns for 2008 are lessened support from home equity cash-outs because of the home mortgage crisis - many buyers rely on home equity to finance the purchase of a motor home - and diminished discretionary income because of higher fuel costs. On the positive side, lower interest rates may help stabilize sales, Curtin said.

Julio Guardado, an investment banker in Menlo Park, Calif., and editor and publisher of RVInvestor.com, said he expects the industry to be down 10 to 15 percent in 2008 compared with 2007. But he expects the high end of the market to weather an economic downturn.

"The people who buy high-end Country Coach and Monaco models - people spending $500,000 and up for an RV - they're not particularly sensitive to interest rates or gas prices or any of those things," he said. "That market chugs along."

Both Guardado and RVIA point to larger population and demographic trends that paint a favorable long-term outlook for the industry, including baby boomers reaching retirement age. In addition, the fastest-growing group of RV owners is aged 18 to 34, according to the RVIA.

In Lane County, the transportation equipment sector, made up mostly of RV makers, lost about 300 jobs in 2007, dropping to about 4,100, after losing 400 jobs in 2006, according to Brian Rooney, regional labor economist with the state Employment Department.

"Manufacturing was one of the first industries to show the effect of a slowing economy, both locally and nationwide," he said.

Looking at 2008, Rooney said many analysts expect the economy to rebound late in the year, which would be positive for transportation equipment makers.

Monaco Coach

Monaco Coach Corp., with headquarters in Coburg, is the largest of the local RV manufacturers, selling coaches and trailers under six different brands and employing about 5,200 workers, including 2,100 in Oregon, most in Lane and Linn counties. It also has plants in Indiana.

Recent changes the company has made to its business model has left Monaco "poised to do well in any market," said Craig Wanichek, Monaco's director of investor relations.

"We've managed the business to meet the market," he said. "We're a leaner operation."

Those changes include consolidating its production facilities to become more efficient, and striking a partnership deal with International Truck and Engine Corp. to jointly build rear-engine diesel chassis jointly at Monaco plants in Coburg and in Elkhart, Ind. "Our profitability increased substantially" in 2007, he said.

The company also is diversified, selling high-end Class A diesel-powered motor homes as well as less expensive gas models and towable travel trailers. It also operates luxury RV resorts in Las Vegas and Palm Springs and is opening a new RV resort this year in Naples, Fla. …