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12/31/2017 6:16:00 PM
Rolling strong: RV industry eyes eighth year of sales growth in 2018

Doug Leduc, Greater Fort Wayne Business Weekly

Increasing sales for the recreational vehicle industry had a number of its major players in northeast Indiana expanding production capacity this year, and the Indiana General Assembly took steps to support its continued growth in the state.

The passage into law of an Indiana sales tax exemption for RV sales to out-of-state consumers was a highlight of the RV Indiana Council’s legislative efforts this year, according to Ron Breymier, its executive director. The exemption will be phased in over the course of two years. 

“The industry greatly appreciates the role Indiana Senate President Pro Tempore David Long (R-Fort Wayne) played in pulling together RV industry leaders and legislators to legislatively help the industry to continue its growth of RV sales in Indiana due to this new exemption,” he said.

A bill grandfathering Tesla’s ability in the state to sell directly to the public while blocking other auto manufacturers from the practice of direct selling was passed into law. RVIC made certain the law will continue to protect the ability of Indiana’s RV manufacturers to sell directly to consumers.

Demand grows

Strong consumer demand for recreational vehicles was evident in the attraction of more than 36,000 interested consumers at the five RV shows produced by the association this year, Breymier said.

That was an increase of more than 3,000 over the 2016 attendance level, he said. The Fort Wayne RV & Camping Show set an all-time attendance record this year, drawing a crowd of 12,644. The 2018 Fort Wayne RV & Camping Show will be held Feb. 1-4 at the Memorial Coliseum in Fort Wayne.

The success of the recreational vehicle business is important to Indiana because it is among the state’s key industries.

Indiana makes 85 percent of the RVs produced in North America. Early this year, industry projections forecast it would produce 445,000 RVs in 2017. That forecast was increased three separate times during the year, and final RV production figures were expected to reach 505,000 in 2017, Breymier said.

Demand for recreational vehicles was strong enough to cause the industry’s shipments to reach 430,961 units in 2016, which was 15 percent above the 2015 level and the best annual total in 40 years.

The growth expected for 2017 is expected to go down in recent history as the eighth consecutive annual increase in RV shipments, which the Recreational Vehicle Industry Association said earlier this year was continuing a consistent climb that started in the valley dug during the Great Recession.

Among the industry’s busiest major players in Indiana this year were Patrick Industries Inc.; Thor Industries Inc. and Forest River Inc.

Expanding, workers needed

They all have their headquarters in Elkhart, and the Indiana Department of Workforce Development held one of its first digital job fairs in Elkhart County this year to help employers there meet staffing needs.

The interest participating employers had in developing a new recruitment tool was partly “driven by the current state of the challenge employers are facing finding skilled workers, and the way people are wanting to get information, which is online,” Bob Birge, DWD’s chief communications officer, had said around the time of the event in mid-November.

Danielle Szczechowski-Sosa, a human resources specialist with Thor Motor Coach, and Tori Jorgensen, a talent acquisition specialist with Patrick, were included on a panel of presenters for the event.

The most recent labor force data available at the time showed in a ranking of Indiana’s 92 counties by their September unemployment rates, Elkhart had the lowest, at 2.5 percent.

About 90 percent of the potential employees signed up for Elkhart County’s digital job fair lived within 30 miles of it, including job seekers in Michigan and Ohio. The list also included residents of Kentucky, Illinois and Missouri, Birge said.

About 5 percent of the job seekers were employed part-time and the rest were evenly divided among those who were unemployed and employed full-time.

The RV Industry Council did what it could to help members find additional workers, using “2017 as an opportunity to build awareness of employment opportunities in Indiana’s RV industry,” Breymier said.

“The association is working more closely with the Indiana Department of Veteran Affairs and the National Guard Association of Indiana to attract veterans and members of the National Guard to our industry,” he said. “We hope to have a new program introduced that will help manufacturers, suppliers and retailers target veterans coming off deployment who will be returning to Indiana without jobs.”

Patrick continued to increase its production capacity with strategic acquisitions as well as organic growth. The company announced in March plans to sell 1.35 million shares and use the proceeds to pay down debt. In connection with the offering, Patrick expected to grant the underwriters a 30-day option to purchase up to an additional 202,500 shares of common stock from the company.

A few weeks later it announced an expansion of its credit facility to $450 million from $360 million as well as an extension of it to March 17, 2022 from April 28, 2020.

“The increase in our credit facility capacity, coupled with our recent equity offering, provides us with a strong financial foundation to continue to execute on our long-term strategic growth plan and capital allocation strategy and drive both organic and acquisition-related growth initiatives,” Andy Nemeth, president, said in a statement.

A prospectus for the offering filed with the Securities and Exchange Commission showed the company had executed on a number of new product initiatives and invested close to $351 million during the previous three years to complete 14 acquisitions involving 19 companies.

Buying spree

Acquisitions announced by the company this year included, in Elkhart, Nickell Moulding Co., Indiana Transport Inc., Elkhart Wire Design and Medallion Plastics Inc. It also announced this year the acquisition of California-based LMI Inc. and of Leisure Product Enterprises in Lavonia, Ga.

Thor Motor Coach announced plans in July to expand operations in Elkhart, Wakarusa and Bristol, and said it already had started the process of hiring workers to fill 400 new positions.

In Wakarusa, Thor Motor Coach was to purchase an existing building for Class C production and a new lamination operation with six lamination lines to support motorhome production at multiple facilities. It was completing an addition to a Class C campus in Bristol to support its popular Quantum motorhome line, and was making a major addition to a Class A plant in Elkhart that would enable the addition of a future second production line for some of the highest volume, in-demand gas Class A motorhome models.

In all, more than a half million square feet of work space was being added, increasing the overall size of Thor Motor Coach’s five Elkhart County campuses to 2.3 million square feet of manufacturing space, spread across 300 acres.

Plans to start production at these facility additions would commence in late summer and continue through the remainder of 2017.

Thor had announced in February new facilities of its Heartland RV subsidiary would add more than 500,000 square feet of space to its campuses in Elkhart, Middlebury and Howe, as well as in Nampa, Idaho.

RV manufacturer Jayco, a Thor subsidiary, broke ground in February on several building projects it said would add more than 400,000 square feet of production space to its Middlebury campus and create more than 300 jobs. Thor acquired Jayco last year for $576 million.

Later in September, Jayco also broke ground on a 237,000-square-foot manufacturing facility it said would house two new production lines for the its best-selling travel trailer brand, Jay Flight, and add about 300 jobs to the Middlebury campus.

Forest River announced in November plans to purchase 50 acres of agricultural-zoned land southwest of the intersection of North Main Street and Perry Road in Ligonier to expand its operations in the city by about 400 jobs.

The announcement came three months after it bought property there creating more than 100 jobs in the city. The company, owned by Berkshire Hathaway Inc., had established production in Ligonier’s industrial park to meet the growing demand for its Palomino-brand Puma line of toy haulers.

Looking ahead

Looking ahead to 2018, the recreational vehicle industry could benefit from the completion of a national, two-year pilot study, which began early this year, looking at the outdoor recreation economy.

The Bureau of Economic Analysis, which is known for measuring the country’s gross domestic product, is working with the Federal Recreation Council to develop what they call a satellite account for tracking the economic impact of outdoor recreation.

Much of the study’s funding comes from the FRC, a collection of seven federal agencies, each tasked with managing different aspects of public lands.

Agencies on the council are are the U.S. Forest Service, National Park Service, Fish and Wildlife Service, Bureau of Land Management, Bureau of Reclamation, U.S. Army Corps of Engineers, and National Oceanic and Atmospheric Administration.

The first step of the study is to define the range of activities that should be covered in an ongoing measure of the outdoor recreation economy. A group of almost 40 economists began working early this year on a number of possible definitions, including some that were broader and some that were narrower.

The council has worked for years from a study conducted annually by the Outdoor Industry Association, based on the parameters it sets.

The association’s annual report released in April said the outdoor recreation economy generates $887 billion in consumer spending, sustains 7.6 million U.S. jobs, and generates $65.3 billion in federal taxes and $59.2 billion in state and local taxes each year.

Activities traditionally covered by the report have included camping, fishing, hunting, motorcycling, off-roading, snow sports, trail sports, water sports, wheel sports and wildlife viewing.

To keep the report up to date with shifting demographics and growing urbanization, this year it also started including data related to surfing, skateboarding, horseback riding, mountaineering, scuba diving, sailing, and running for more than three miles.

Working from reasonable definitions the government economists established this year, the council and bureau planned to have data sources identified and methodologies for the study developed by the end of November and prototype estimates available this month or in January.

Depending on the final definition used for the study, the contribution of the outdoor economy to the gross domestic product might fall between 4 percent and 7 percent, which would put it among the nation’s largest economic sectors.

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Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR

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