Q&A with Monaco RV's Mike Snell
This year has proven to be a very eventful one for the RV industry, but perhaps the biggest single development was Monaco Coach Corp.’s bankruptcy filing in March and the subsequent acquisition of the company’s assets in June by Navistar, the $14.7 billion juggernaut known primarily for producing heavy-duty commercial trucks, military vehicles and school buses.
Since the acquisition was finalized, many in the industry have waited anxiously for news of what Navistar intends to do with its new RV manufacturing division – which it has renamed Monaco RV LLC – and what impact any changes in the company will have upon its network of dealers and the industry as a whole. Recently, RV PRO interviewed Mike Snell, Monaco RV’s senior vice president of sales and product development, and Ryan Lee, Monaco RV’s director of marketing, at length on a variety of topics to help get a sense of the company’s new direction and its plans for the future.
When it comes to Monaco RV, do you want dealers and consumers to think of you as a “new” company because of the new ownership, or an “old” company because Monaco Coach was in the marketplace for years?
Snell: As a new company. Truly, we’re a Navistar company now. … But we do want to utilize the strengths of the assets we acquired (from Monaco Coach Corp.) such as the facilities, brands and people to ensure the new company’s success.
When Monaco Coach filed for Chapter 11, production pretty much came to a standstill. Can you comment on production levels now, and where that production is taking place?
Snell: Navistar basically bought the two big (Monaco Coach) campuses: Coburg (Ore.) and Wakarusa (Ind.). … In Indiana today, we currently produce most of our towables and all of our Class B, Class C and Class A gas units. In Coburg, we produce all of our diesel units and we produce a small, lower priced segment of the towable market.
Obviously freight is a huge part of the towables business and pricing structure, so it’s very advantageous for us to have the low dollar towables built out here for the West Coast. So diesels are here and a small amount of towables …
We are producing very slowly. We are producing below what our demand is out there, and that falls into the strategy where we’re not going to build a big yard like several of the large manufacturers have done in the past, and then have to discount them to alleviate them, which creates an instable dealer network on pricing.
We are very focused on build to order. We will not ramp up until the demand is there.
Speaking of discounting, current and former Monaco dealers interviewed by RV PRO in preparation of this article asked if Monaco RV would continue Monaco Coach’s practice of deeply discounting RVs to move units. Can you comment as to what Monaco RV’s policy is?
Snell: It (pricing) is purely uniform now. You know, some dealers may not come onboard now partly because of that strategy – they’re not used to playing with the rest of the group of dealers, and that’s the way it’s going to be now if they want to carry Monaco branded products. So it is definitely uniform and it is not like the old company’s past practices.
Another question dealers wanted to know is whether Monaco RV will have uniform freight charges for delivering RVs to dealerships, or will it continue the practice of Monaco Coach and many other manufacturers of charging varying rates depending upon the location of the dealership in relationship to your factories?
Snell: You know, we’ve built in a certain mileage into the units, especially on the motorized. There is not going to be standardized freight; there is going to be some freight cost to the dealers that are farther away. But we have put some of that into the cost of the unit, to help subsidize that.
And then on the towables side, by building in both locations we feel we combat that purely because we’re geographically set up to handle the United States.
Monaco RV recently announced it had recruited 100 dealerships to carry its product line. Can you give a sense of how that compares with the number of dealers Monaco Coach had?
Snell: Well, we’re actually up to about 130 (dealerships) now. That’s about 28 percent of what we were before. A majority of what we’ve signed now is towables, because that’s where the market has really gone to.
With the motorized side, we used to have dealers that just carried one model or two models and we had multiple brands. Now, we’ve really focused on a smaller group of dealers, giving them a little bit more territory than the old company did, and trying to develop more full line dealers.
We’ve been very careful and slow on ramping up our dealer network. We’re doing our due diligence and obviously Louisville (the National RV Trade Show in December) is going to be a big stage to further strengthen the numbers we have today.
Is it fair to say the company is in a “rebuilding” mode?
Snell: Well, with it being a new company, I would call it “building.” The landscape – not only on the manufacturing level, but on the dealer level – is very fragile out there. It’s a fragile market. There’s been a lot of change on the dealer side and the manufacturer side, so it’s not a speedy process.
The market is going to come back – the dealers know it, the customers know it and the manufacturers know it. So, although they’re not in a huge hurry to be purchasing expensive diesel motorhomes, they (dealers) do know that they need to align with strategic partners that produce the motorhomes for the long-term future. And that’s what we’re doing, and they’re doing.
Lee: And we’re cognizant that there are some fractured relationships out there with Monaco Coach Corp. and dealers. … With any relationship it’s going to take time but, as Mike touched on, it’s a new company; it’s new dealer contracts; it’s new agreements. We really are starting from ground level. …
The date for the National RV Trade Show is quickly approaching. Will Monaco RV be displaying new models at this year’s show? If so, what can dealers expect to see?
Snell: We’ll have a couple of displays there. We’ll have a towable display that’s about 15,000 square feet and we’ll have a motorized display that’s kind of separate that’s about 15,000 square feet as well.
We are going to have new units there: we’ll have 2010s. There are certain models that we’ve really focused on because of the price point and where the market is today. We’re going to show some exciting changes in some of our entry-level diesels. We’re going to show some neat new floorplans in gas and we’ve got a lot of new colors and graphics in our towables. …
We’re obviously a little leaner company than the old Monaco Coach, but we really focused on where we think the market is and we also tried to make as many changes as we could. We realize we need to have the product as much differentiated from the old company to the new company.
Much has been made of Monaco RV benefiting from the strength of Navistar. Can you give some specific examples of this?
Snell: There are many benefits for Monaco RV. Purchasing power is one of the first benefits that come to mind. Second would be product design and engineering. Navistar has been in business for over 175 years, and innovative products have been a big part of their success. So we feel we can benefit from their expertise there.
They are a very strong supporter. They give us financial stability to ensure that we’re here for many years to come. They’re going to give us a lot of help.
They’ve got design teams, they’ve got people who are involved in aerodynamics, they’ve got such an infrastructure that they’re going to give us so many benefits to our products long term. They’ve got great inventory controls, great parts controls. I think you’re going to see them help us improve our dealer interaction when it comes to parts and warranty authorization. They’re very innovative that way.
Speaking of parts, some Monaco dealers told RV PRO about the extreme difficulty in obtaining parts like windshields and caps after Monaco Coach went into bankruptcy. Is there anything Monaco RV can do about making parts available to dealers who need them?
Snell: We’re seeing progress every day. …There are a lot of propriety parts like windshields, caps and bay door designs that we own the molds to, and they were idle (during bankruptcy). So when we came online we hired people back and we were just flooded with calls with pent up demand on those parts. We threw our resources at it and we’ve slowly been churning through the orders we had.
And we’ve made great progress. We’re going to see that continue. Our (telephone) hold times were 20 minutes and they’re now down to five minutes, so we’re making progress. We’ve had several thousand parts requests that were faxed in and a lot of those are proprietary parts like windshields and caps that only we can produce. …
Getting back to the issue of the strengths of Navistar, are there any plans at this time for Navistar to offer flooring for units, like Navistar does for dealers in other industries that it serves?
Snell: At this time it’s not part of the RV segment, but that could definitely change in the future. Right now they’ve got their hands full with their part of the business. Obviously it’s an extension of their financial (business), but it’s also tied to the banks. But we definitely want to eventually implement it for the RV side of the business like they have in theirs. And they have that same desire.
Lee: But it’s not something we see in the near term. It’s definitely up for discussion. Nothing is set in stone at this point.
Monaco Coach was recognized in its day for a number of innovative developments, including its dealer franchising program, Franchise for the Future. Does Monaco RV have plans to continue that program?
Snell: I was part of that in the old company. We truly believed that this was going to be good for the industry. I think we couldn’t have launched it at a worse time. When we launched it the market was starting to go south.
Going forward, the new company chose not to go that direction. And with how fragile the market is today, we’re just going to produce RVs and we’re going to have a whole program similar and competitive to our competitors. Really, right now … our focus is going to be building the best possible, best quality motorhomes and towables for our dealers and end users.
If Monaco RV doesn’t continue Franchise for the Future, and it doesn’t operate RV resorts like Monaco Coach did, how will the company differentiate itself from competitors?
Snell: You know, we’re really going to try to differentiate ourselves by our product and the service we have as a company. The other things you mentioned –Franchise for the Future and the RV parks – they were parts of the business that we thought benefited the industry. The parks were actually a very successful venture, a profitable venture, for the old company.
But we’re really focusing on the products and our dealers and our support. I can tell you what really made us a dominant player in diesels is that we have one of the strongest support networks for our customers, as far as end users, and supporting them with our products.
Lee: It really comes down to keeping within our core competencies. We are an RV manufacturer — that’s what we need to be the best at and that’s what is going to continue propel our business moving forward. Previously we were doing service centers and things like that; we’re not doing that anymore. We have an emergency service center here in Oregon, but we’re allowing the dealers to handle that end of the things.
We’re trying to do the best things to make our dealers successful, and we think that starts by building a great product and it follows up by having the best customer support in the industry. RV resorts and other things aside, our focus is being the best RV manufacturer out there. Period.
Snell: But, if the market comes back, there will always be opportunities in this business. We’re not shutting the door that we wouldn’t expand into anything else, but right now our focus is getting back to building RVs and getting market back and a dealer network back.
Some dealers may be wondering why Navistar kept some of the key leadership from Monaco Coach at the helm of Monaco RV. What is your response to this?
Lee: The one thing to note is they (Navistar) kept the right people because they had the knowledge to run this company. Navistar isn’t an RV manufacturing expert, so we needed to have the right people in place. But it’s important for people to understand that ... the reporting system and who Mike reports to is completely different than what it once was.
Snell: They (Navistar) bought this company because of the facilities … and the brands and definitely the people. Obviously we answer to them, but there’s not a bunch of people from Navistar in here running this company. They’re guiding us, they’re giving us input, they’re giving us tools, they’re giving us synergy opportunities, but they’re not (running day-to-day) operations.
This business is a lot about relationships. Our dealers now, probably most all of them we have a positive relationship with, even despite the challenging times we went through.
Predicting the future is always a tricky proposition, but do you have a sense yet of what 2010 might look like for Monaco RV and how it would compare with 2009?
Snell: I think, as we both know, it’s really difficult to predict what’s over the horizon for 2010. I do think the market will be better than 2009. Towables have obviously not taken as big of a hit as the motorized, so I think it will stay steady and increase.
But as the credit markets improve and consumer confidence rises, I think we’ll see more and more buyers return to our dealers. I know RVers want to buy new products, but right now they’re just being very cautious. When those things do happen I believe those things will benefit manufacturers, us included.
Last question: Have you and the rest of Monaco RV’s leadership given any thought as to where you’d like to see the company, say, five years from now?
Snell: Well, I see us producing real high quality RVs that satisfy our customers’ needs and wants and allow our dealers to sell a product that allows them to make a good profit and return on investment. And I see us being a leader in design, aerodynamics and other chassis-related functions, as well as the house. …
Lee: I think you’re always going to see Monaco RV as the leader in motorized products especially. When you look at stats, our brands have some of the strongest sales in the Class A market. I think we’re still going to be the dominant diesel player out there. Frankly, we’ve got some excellent footholds out there. But I also think we are going to make major strides with our towable products and gain market share.
I also think we’re going to be a company that really takes advantage of the way the world goes, and I see the world going more toward the greener side. Being a partner with Navistar (it’s notable that) they’re the first company to introduce the first hybrid plug-in school bus. So they’ve got a lot of great “green” technologies that we’re going to be able to leverage and take advantage of on the RV side, and I think you’ll see us come out with some really innovative products in the future that help us move our customers around and get to different places while having less impact on the environment.