RV makers bullish on their industry.

Byline: Joe Harwood The Register-Guard

Lane County's recreational vehicle industry should stay on the freeway this year, building on the momentum it picked up in the second half of 2003 and avoiding a detour to the slow-going gravel road it found itself on in 2001.

Shipments of motor homes from factories to U.S. dealer lots are forecast to hit 320,000 units this year, which would come close to the record mark set in 1999, according to the Virginia-based Recreational Vehicle Industry Association. Reaching that goal in 2004 would translate into a 25 percent gain from the 256,800 units shipped in 2001.

After a shaky first and second quarter in 2003, business picked up for local motor home makers Country Coach Inc., Marathon Coach Inc. and Monaco Coach Corp.

In the case of Country Coach and Monaco - which last spring pared production and shed workers as discretionary spending declined sharply amid the invasion of Iraq - the market momentum they are carrying into 2004 is likely to restore, and possibly increase, worker counts to pre-layoff levels.

The RV manufacturing sector in Lane County directly employs almost 4,000 workers, and indirectly supports hundreds more jobs.

Local companies said the national RV market, which includes motor coaches and trailers, is shaping up nicely going into 2004. And demand for the specific expensive diesel motor homes made in Coburg and Junction City appears to be even stronger than the industry in general.

Through the first nine months of 2003, shipments of motor homes to dealers increased by 8.2 percent compared with the same period in 2002 - a strong year in which dealers took delivery of 311,000 units, according to the RVIA.

A rebounding stock market that props up wealth, low interest rates that make borrowing cheaper for buyers, dealers and factories, and the security hassles that make commercial air travel inconvenient are the primary factors driving the industry's good fortune.

"The stock market increasing really helps wealth, and RVs are definitely a luxury item," said Brian Rooney, a labor economist for the state Employment Department. Rooney said Lane County RV makers came through the recession that started in 2001 fairly intact.

"I was surprised by the strength of the RV industry," he said. "I would expect them to see some slight gains this year."

Country Coach bullish 

At Country Coach in Junction City, the luxury coach maker plans hire an additional 200 workers over the next three months, boosting its total employment to about 1,300.

"We are truly optimistic going into 2004," said Country Coach President Jay Howard. "Our business and the RV business (in general) is very good."

Fueling the optimism is the demand for a new motor home the company launched last year. Retailing for $220,000 to $260,000, the Inspire line is considered to be an entry-level model for high-end diesel motor homes that can cost $1 million or more.

Demand from dealers for the Inspire has outpaced Country Coach's production capacity, Howard said. Burned in the past after rapidly ramping up production and then watching the market stumble, Country Coach is taking a more controlled approach this time around.

If RV makers build too many coaches and demand wanes, they often have to offer discounts and incentives to move their finished inventory. Such discounting quickly erodes profits.

In order to clear more factory space at its Junction City facility to build additional Inspire models, Country Coach in December moved its Prevost bus conversion segment - RVs that sell for $1 million to $1.5 million - to 30,000 square feet of leased space on Airport Road in Eugene.

The company also signed an exclusive franchise agreement with large-RV dealer Buddy Gregg RV, which will help Country Coach almost double its output of the luxury bus conversions, Howard said.

Country Coach's parent company, National R.V. Holdings Inc., based in Perris, Calif., has lost money in 10 of the past 11 quarters. National R.V. in 2002 reported a loss of $21.4 million on sales of $300.2 million.

But National R.V. CEO Brad Albrechtsen said late last year that the company should return to profitability in 2004, thanks to a series of cost-cutting moves that have trimmed overhead.

Through the first nine months of 2003, the company reported sales of $242.9 million, a mild improvement over the year-earlier period. The company's $91.3 million third-quarter sales marks the best third quarter since the red-hot RV boom of 1999.

"We are implementing a business model that is sustainable and focuses on customer relations and dealer relations," Howard said.

Growth at Marathon

Marathon Coach, the leading luxury bus converter in the nation, reported record sales in 2003 of just over $100 million. Based in Coburg, the privately held manufacturer makes coaches that sell for as much as $2 million.

Marathon controls about 35 percent of the conversion market, and plans to increase production at its Coburg factory by 20 percent over the next two years, said Steve Schoellhorn, executive vice president of sales.

Schoellhorn said the company is bullish on its prospects for the next several years and will build 62 to 65 of its custom motor homes this year and more than 70 in 2005.

Marathon employs 370 workers in its Coburg factory and at its sales and service operations in Texas and Florida.

Also making big strides is Monaco Coach, the largest maker of diesel-powered motor homes in the United States. With an estimated 2,600 workers in Oregon, mostly in Coburg, the company has been steadily hiring back workers to replace the 800 it laid off last March after vastly overestimating the demand for its products.

The Coburg-based company made significant production cuts last spring and offered discounts to help dealers move its RVs.

Like other RV makers, Monaco saw big improvements in the third quarter of 2003, and started increasing output. The company, which expects to post sales of about $1.2 billion for 2003, last year completed a new plant in Indiana that will double its capacity to produce trailers.

Dealers to expand

RV dealers are likewise optimistic going into 2004.

Junction City-based Guaranty RV, one of the top three dealers in the nation, last year posted RV sales of just over $300 million, a 12 percent increase over 2002, said Bill De Groot, the company's marketing director.

The RV industry has been helped by the economic recovery sweeping across the country and the increase in the number of Americans who are taking to the road to avoid air travel or overseas vacations, he said.

Another factor is the baby boom generation, the heaviest buyers of RVs. Relying on U.S. Census figures indicating that about 10,000 Americans will turn 50 every day through 2010, the industry for years has said baby boomers would drive an RV industry boom.

"We've been talking about baby boomers for as long as I've been here at Guaranty," De Groot said. "That portion (of sales) is getting stronger."

Guaranty, which operates RV dealerships in Junction City, Coburg and at two California locations, plans a series of expansions this year.

De Groot said the company will expand its travel trailer department in Coburg and create a separate fifth-wheel lot just south of its Junction City dealership.

"We are extremely bullish," he said.

Eugene-based RV Corral also is expanding its operations as well. The company last year announced plans to spend $1 million to open a second location on a 2-acre lot in Coburg next to Interstate 5.

In addition to Guaranty and the RV Corral, the I-5/Coburg area now boasts three other dealers - La Mesa RV, Ingram RV and a Featherlite outlet.

CAPTION(S):

Country Coach worker Tommie Taylor buffs the exterior of an Inspire diesel motor coach at the Junction City factory.