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A Brave New RV World

In Q&A interviews, top executives from three new RV manufacturers that entered the marketplace during some of the most challenging times for the industry in decades share how they got their start, how they are positioning themselves in the market, and what their expectations for the future are.

Considering that a number of RV manufacturers were forced out of business and that the rest of the industry was left reeling as a result of the Great Recession of 2008-2009, it seems counterintuitive that anyone would pick that time to start a new RV manufacturing company, especially in northern Indiana, which effectively became ground zero for the economic tailspin. And yet, that’s exactly what three companies – Heritage One RV, Riverside Trailer Inc. and Evergreen Recreational Vehicles – chose to do.

Recently, RV PRO had a chance to speak with top management of these relatively new RV manufacturers to get a sense of what motivates them, what they are offering to the market and how they feel about their prospects going forward.

About the Companies/Leaders

EverGreen Recreational Vehicles: Doug Lantz, along with three partners, Kenny Mahaffa, Steve Crawford and Kevin Slater, teamed with Kelly Rose and Michael Schoeffler from the aftermarket automotive business to form EverGreen RV. All have had a number of years experience in RV manufacturing, sales and product development. EverGreen, which incorporated in December 2008 and began production in January 2009, operates in a facility in Middlebury that previously manufactured Coachmen RVs.

Heritage One RV Inc.: Paul Miller, along with colleagues Tony Newman and Steve Smith, founded Nappanee-based Heritage One RV Inc. in September 2008. Miller grew up in the RV business. His father, Marvin Miller, founded Newmar Corp. in 1967, and the younger Miller has spent his career in the industry. Heritage One operates in a facility that formerly produced residential kitchen cabinets and was re-tooled with RV fabrication equipment acquired through several auctions.

Riverside Travel Trailer Inc.: Mark Gerber, along with business partners Ken Licklider and Kean MacOwan, bought the assets of Timberland RV Co. and founded Riverside Travel Trailer Inc. in the city of Peru. The company was incorporated in June 2009 and operates in the former Timberland RV facility. Gerber was president of Timberland RV and was previously involved with sales and corporate marketing for Fleetwood Enterprises.

RV PRO: Why did you launch your company during such bad economic conditions?

Gerber: The primary reason for the timing was the value of the assets. In a down market, even if you have to hold on for a year or so before the market returns, the value of the assets makes it worth the money to do it.

So even though the market was still in the doldrums, we thought we had a good product plan. It remains challenging to get a foothold while business is still soft, but as the economy recovers the value of starting during that period is worth the additional risk.

We also had faith that the industry is a lifestyle and not something that’s going to evaporate.

It’s all a matter of supply and demand. With so many manufacturers going out of business and the market beat down so bad so quickly, as it recovers, the supply will not be there to reach the demand and there will be very many good years in the near future. And history’s taught us that, too. If you look back at the history of the industry over the last 20 years, when it comes back it comes back pretty solid, and there’s no reason why it wouldn’t again, in my opinion.

It’s this: whatever your hobby is – golf, laying by the beach, whatever – if you have discretionary money, you’re going to do it. It’s the same with people whose hobby is RVing.

Lantz: We believed the market was going to come back. We thought it was at the bottom. We didn’t know how long the “trough” would continue to be at the bottom, but we knew it would come back. We also knew that we had something special to offer that no other manufacturer was offering.
So we designed our business model to be able to grow slowly. We did not produce a lot of units initially, but just worked on the processes and the people and the product and let that develop slowly. But more importantly we wanted to be able to build a quality product so that when the market did turn around, which is at the forefront of where we’re at now, we’ve got our infrastructure in place, our people in place, our processes down and we’re now showing significant growth in 2010.

Miller: If you live in Elkhart County, somewhere along the line you’re either connected to a supplier or a manufacturer. I’ve been in RV manufacturing since I was 16. I looked around and thought I could have bought into another kind of company, but this is what I like to do.
That’s all the three of us have ever done. The last company (Travel Supreme) didn’t make it, so after a few months I knew I had to do something. Friends and former employees said, “You’ve got to do it,” and some even offered to work for free just to get back to work. And I had a lot of encouragement and support from my wife. Another bonus is that we had a pick of employees that we probably would not have had if we waited until things picked up.

RV PRO: What is your company’s flagship model? Also, how many different models is your company producing now?

Lantz: Evergreen’s flagship products are our lightweight Ever-Lite travel trailers and fifth wheels. We’re selling what we believe to be a unique green product using our new ComposiTek construction process. Because it’s wood-free, it’s impervious to water, mold, mildew and rot, and it’s free of formaldehyde and VOCs. We’re the only RV plant and product certified with the Emerald Status from TRA, a third-party verification company.

(Editor’s note: Evergreen offers 10 travel trailer floorplans and three fifth wheel floorplans. Travel trailers range in length from 25 feet, 11 inches to 33 feet, 8 inches and dry weights range from 4,169 pounds to 5,646 pounds; fifth wheels range in length from 30 feet, 10 inches to 32 feet, 3 inches and dry weights range from 7,334 pounds to 7,670 pounds.)

Miller: Our flagship product is the Due West, which is available in eight floorplans, with options to upgrade outside or inside. Another product is called Ground Control, which is a toy hauler.

(Editor’s note: Heritage One’s Due West travel trailers are available in eight floorplans, with options to upgrade outside or inside. Lengths range from 26 feet, 11 inches to 35 feet, 7 inches and dry weights range from 4,400 pounds to 8,280 pounds. Heritage One’s Ground Control toy haulers are available in 18-foot and 22-foot versions.)

Gerber: We make one brand called Riverside, which is a traditionally constructed aluminum exterior wood-frame travel trailer. We’ve looked at that market and think people in that segment of the marketplace try to see how inexpensively they can build a trailer. We’re approaching the metal-sided market as an economy trailer, but we’re focusing on it as a full-featured unit that can be purchased at a reduced price compared to some of the more expensive laminated trailers.

(Editor’s note: Riverside currently offers traditionally constructed aluminum exterior wood-frame travel trailers available in seven models that range in length from 29 feet, 4 inches to 39 feet, 8 inches and range in dry weight from 5,940 pounds to 8,940 pounds.)

RV PRO: What do you see as a competitive advantage for your particular company?

Miller: We spent time listening to dealers and researching the “stick-and-tin” travel trailer market. We looked at surveys of what sells most and in what state and we looked at the features of the top-selling units. Then we took the best of all the floorplans and decided we could add more quality into the product. We don’t mass produce; we’re building a little over one a day now.

Gerber: The philosophical difference is that most manufacturers look at a market and focus only on price. They overlook camping conveniences that really make the trailer comfortable. So our units include a lot of convenience items found in more expensive models.

Lantz: I think we are filling a void because we’re the only truly green product out there in a travel trailer and fifth wheel. At the end of the day, 100 percent of our construction is done with composites.

Because it’s wood-free, it’s impervious to water, mold, mildew and rot and it’s free of formaldehyde and VOCs. We’re the only RV plant and product certified with the Emerald Status from TRA, a third-party verification company.

This idea is also built into how the product works. We have solar battery chargers. An Energy Star roof membrane cuts down on AC costs. We use high tint windows and a 10-blade fan that also cut down on cooling costs. There’s always room for improvement, but we’re trying to build the best value with an eye toward green.

RV PRO: What is your company’s target market?

Gerber: The highest individual segment of RVs shipped, according to RVIA statistics, is the metal-sided trailer in the 26 to 32 foot range. Everything we make is in that segment. We’re going right after the highest volume of the marketplace and doing it in a unique fashion. We’re bringing the market an economical, full-featured trailer.

I think what happens is that when business gets tough, like in the last few years, manufacturers try to out-think the marketplace and develop a product for a market that is not necessarily there.

Lantz: I don’t think we started with a target market in mind, but we’re building a lightweight travel trailer that I believe hits the sweet spot of the marketplace. It’s a travel trailer that’s 15-20 percent lighter than others in its class and can be towed by pickups and SUVs.

Miller: We see the need for a nice, low-end travel trailer. The Due West is available in several sizes and floorplans in the 25- to 33-foot range. It’s a product for people who will pay a little more, but want quality.

RV PRO: How have dealers responded to your products? Do you feel dealerships resist carrying a new brand because of your relative newness?

Miller: We were afraid at first, wondering how we’d get on the lots. But in Louisville (at the National RV Trade Show in December 2009) we picked up nine or 10 dealers and more than 60 orders. There were questions, but I think if you show a quality product, there is little resistance.

We took out a unit to get a feel for it and people took it right on the spot. And to us, it’s not “sold” until it’s “retail sold.” We can sell to dealers all we want, but if it stays on his lot, it’s not sold. So we’ve had a tremendous response from retail buyers.

Dealers are buying products like ours from large companies that mass produce 20 units a day and they complain about quality not being there. So they’re refreshed with the looks and finish of our unit.

Lantz: We had very positive feedback from the Louisville show. We were extremely busy and saw a lot of interested dealers from both the U.S. and other countries. So that went very well.

If a dealer sees the need and value, he’ll sell it. Any dealer will tell you that.

They want to know who’s behind the company. They may see a little risk, but a lot of dealers have made money from startups and new innovative products. And you’ve got to start somewhere. I think they’re comfortable with us and we’ve proven to be a good partner with dealers.

Gerber: When a dealer buys a trailer, they’re buying a hard asset that has a value to it, not like a phone service. I think that’s most important to dealers. Even if they were hurt with warranties because a manufacturer went out of business, at least in the case of travel trailers, all components have their own warranties, which continue even if the company that built the trailer goes out of business.

Another thing about dealers is they are always looking for a competitive advantage. With so many manufacturers having gone out of business, they are getting more products that look the same because there are fewer manufacturers and the big guys don’t like to change their products all that much.

That makes it harder for a dealer to make a margin because they are selling the same thing as someone else. So dealers look for new manufacturers that don’t have as much of a dealer base. That way the competition is not as great for the same product and they can hold a better margin.

RV PRO: What other plans do you have to get in front of RV dealers?

Miller: Almost every other weekend we’re going to shows and meeting with dealers. Every other week we take a unit to a dealer and we’ll do a little show and tell with other dealers along the way. We’re also cold calling a lot of dealers we’ve had relationships with in the past. We’ve also been getting a lot of hits on our Website and we’ve been sending out a lot of brochures from that.

Gerber: Primarily that happens at national trade shows like the RVIA show. It wasn’t a “barn burner,” but we had good traffic at the Louisville show. So even though they may not take you on at that point, we get a lot of exposure at shows. Plus, this spring we’ll continue to go out with a truck and trailer and show dealers what the product is. Another thing is we’ve been real aggressive about getting into the retail shows early this winter and that’s helped quite a bit.

We need to be attractive to the dealer market first, but the best way to do that is to have a product the retail market wants to buy.

Lantz: We’ll be at retail shows this spring in the U.S. and Canada. We’re also working on a new Website that is more tailored to retail so people will be able to search and find products. We’re also doing some Web advertising, we’ll have a Facebook page, a blog site and several YouTube videos.

RV PRO: How important is fuel economy and being “green” to your company?

Miller: Our target tow vehicle is a half-ton pickup. The weight is probably the same as others in the same class. We use wood framing, because we believe it’s more flexible and aluminum was not that much lighter in our tests. But the models have a nice slope for aerodynamics and we keep the wheels a little further apart for a better ride.

Gerber: Fuel economy is not as important as fuel cost. As gas goes up, discretionary dollars go down and everything suffers. But people who buy our trailers aren’t looking to buy a trailer then find something to pull it with; they already own the tow vehicle. They may lose some gas mileage when towing, but for one weekend, to go 100 miles, it’s not that significant.

Lantz: Most people today are living with tight budgets, and when gas gets to $3, then $4 like it did a few years ago, it’s a problem. We’re looking at it differently. Anytime you can put dollars back into the consumers’ pockets, it’s a good thing. Gas prices will go back up, so we want to continue to develop products on the forefront of helping to conserve energy and focused on being fuel efficient. I think we’ve done that.

RV PRO: What’s your outlook on the year ahead?

Miller: I think it will be slow for a little while. It’s going to depend on the rest of the economy and if people will be spending. But overall I think people will always want to go camping, so the market will always be there. People are cautious now, but I think with travel trailers retailing from $18,000-25,000, they are still affordable enough.

Gerber: I don’t expect there to be a huge escalation of business. Like the rest of the economy, it will be a slow recovery. In this industry, from spring until fall is when we go full bore. This winter was stable, so we feel good about the spring and summer market this year. I think by far the biggest challenge is wholesale and retail financing. A lot of dealers would love to buy but they’ve either lost their wholesale lending or it’s been significantly reduced.

Lantz: It’s going to be a good year for us. Last year was a startup year and we really didn’t ship a lot of product the first six months. I think 2010 will follow a natural growth pattern. Not only will shipments be up overall in the industry, but we’ll be up – proportionate to the last half of 2009 when we started producing. I expect that we’ll show about a 200-300 percent growth this year, then next year it will stable out.