RV companies digging out
Armed with spreadsheets and sales projections, Derald Bontrager and key executives at Jayco huddled in fall 2008 to figure out how their recreational vehicle manufacturing company could reduce costs enough to survive the depths of the recession.
Again and again they met during the next several months, each time realizing more jobs held by local workers had to be eliminated. And in a family owned business like Jayco, which is based in Middlebury, laying off people is personal.
“That was the most difficult and challenging part of the downturn,” said Bontrager, president and chief operating officer at Jayco.
The company laid off more than half of its work force, or about 1,300 people, between late 2008 and mid-2009. During that time, Jayco also closed two subsidiary companies, Starcraft RV and Entegra Coach, whose brands were absorbed into Jayco.
“It seemed like whenever we got done with another cost-cutting phase,” Bontrager said, “the market would fall further and we’d have to keep going back to the table, figuratively speaking.”
Experts agree the RV industry led the country into recession. But whether consumer demand actually is behind recent shipment increases, which would indicate the sector is leading the country out of the recession, remains to be seen.
Like Jayco, RV manufacturers across the country dramatically slowed production after consumers, many of whom lost their jobs or access to credit, stopped buying in 2008. Shipments plummeted, about 250,000 RV-related jobs were eliminated and about 180 dealers shuttered during the recession.
It was not until mid-2009 that the credit market loosened a little, which lured some consumers back to the dealer lots. The industry has started feeling a level of normalcy again as people adjust to new financial situations.
The dealers that endured the perfect storm of economic conditions tried moving vehicles off their sales floors by offering steep discounts to the few consumers shopping for a new RV. Manufacturers went back to the drawing board to refocus on future product designs.
Shipments are expected to rise moderately in 2011, and job and industry growth should remain subdued as the industry feels the lingering effects of the economic downturn.
Industry leaders say time will tell whether higher shipment figures are actually the result of more consumer purchases or dealers replenishing their inventories.
About 500 Jayco employees have been called back to work since August. Other manufacturers also have been slowly adding to their work forces. Still, the aftereffects of the recession are causing leaders like Bontrager to feel cautious moving forward.