GOSHEN — The numbers tell the story: 374,246 RVs shipped in 2015; 3.6 percent unemployment in December — 101,210 jobs; a 5.3 percent gain in per capita income in 2014 to $37,344 — all indicators that Elkhart County is experiencing sustained growth eight years after The Great Recession hit the county harder than any other community in the country.
Providing the heat for this economic steamroller has been the recreational vehicle industry. Building RVs and shipping them across North America is what we do here. And when the RV industry is up, so is the rest of the local economy. When the RV industry plummets, like it did in 2008 and 2009, the downturn makes the local economy sickly, like a bad stomach virus.
The RV industry hit its peak in 2006 with 390,500 RVs shipped to dealers by manufacturers. The accomplishment came ahead of the banking crisis that in 2008 and 2009 wiped away fortunes, closed factories nationwide, collapsed the housing industry and sent Elkhart County’s unemployment to 20 percent in March 2009. Thousands of RV workers and those in related industries found themselves unemployed, struggling to pay their bills and searching for jobs and hope.
The impact on Elkhart County was astounding in its scope. In June 2006 while RV companies were churning out RVs and temporary housing for victims of Hurricane Katrina and other Gulf Coast storms, 102,270 people had jobs in the county. After the full weight of the banking crisis hit and the downturn became known as The Great Recession, there were just 73,225 people working in June 2009.
In 2007 the county’s gross domestic product peaked at $11.08 billion. By 2009 the county’s GDP had fallen to $7.9 billion, according to the Bureau of Economic Analysis figures. It wouldn’t be until 2012 that the GDP rebounded and topped the pre-recession number with an $11.3 billion output. With the RV industry on a growth curve once again, the county’s GDP jumped to $12.9 billion in 2014, the latest year for numbers.
But it always rebounds
“It came back,” said Bob Martin, president of one of the “Big Three” RV manufacturers, Thor Industries. “Every year it has come back a little bit more. It came back slowly at first and it was in the entry level travel trailers and fifth wheels. It grew a little more and now the motorhomes are taking off. But it is still the less expensive motorhomes, and the Class Cs that are doing well right now.”
Thor had a record year in 2015. That followed a record year in 2014. The company’s sales jumped over the $4 billion barrier for the first time in 2015. That was a 14 percent increase over 2014.
“It has been incredible, especially the last few years,” Martin said.
He added that the company has expanded “just about everywhere.”
The other two companies in the “Big Three” based in Elkhart County, Forest River and Jayco, have also expanded their operations to meet the growing consumer demand for RVs. Two of their large projects include:
• In August Keystone, a Thor subsidiary, opened a $5 million factory in a Goshen industrial park that is now producing destination-style travel trailers.
• Forest River, a subsidiary of Berkshire Hathaway, in 2015 began its expansion just over the state line in White Pigeon, Michigan. Forest River is building three 100,000-square-foot factories over three years to produce new RV products. The $7 million project is expected to create 400 jobs.
• Jayco Inc., a Middlebury-based company privately owned by the Bontrager family, opened a new, modern factory in June to produce its Entegra line of luxury motorhomes. The opening of the new factory also freed up space for other production.
During the past last three years, according to the Indiana Economic Development Corp., RV-related companies including Highland Ridge RV, Talon Products, Winnebago Towables, KZRV, Lippert Components, Grand Design RV and Genesis have announced plans to create more than 1,250 new jobs.
According to the Economic Development Corp. of Elkhart County, Forest River has more than 6,400 employees, Thor has more than 6,100 and Jayco around 3,300. Drew Industries, Lippert Components’ parent company, a supplier to the RV industry, employs more than 4,800.
Fourth and growing
Following The Great Recession, RV companies were growing through consolidation, but industry veterans Bill and Ron Fenech and Don Clark took a different path in the fall of 2012. They risked their money to create Grand Design RV.
The company is headquartered along C.R. 2 north of Middlebury and builds fifth wheels and travel trailers.
“It is what we know,” Clark, president of the company said. “... It was tough times, I am not going to lie, but the way the economy was bouncing back and the way our industry was bouncing back kind of emboldened us to take a chance and we invested our own capital.”
The company also needed to attract experienced RV workers to the far end of the county, and that went well.
“Today, three years into it, we have roughly 725 employees,” Clark said.
And the company’s growth has outpaced the partners’ expectations.
“We have 67 acres,” Clark said. “We thought this would facilitate our growth for six or seven years. Three years later we are building on to our complex. We just completed a 65,000-square-foot addition onto one of our plants (lamination). We will move into it next month. Then we are out of space on this complex.”
The company will continue to grow across the street. Grand Design has purchased 48.8 acres and plans to build two 110,000-square-foot facilities to handle maintence of their RVs and build travel trailers.
Clark said Grand Design is now the fourth-largest producer of towable RVs.
“So I guess we are confident in our industry, we are confident in our economy and we believe it is a very, very healthy business to be in,” Clark said. “The litmus test is that three years later none of us, of the three of us, are second-guessing our decision to put up our own shingle.”
“It is probably our leading industry in this county,” said Jonathan Geiser, associate professor of business at Goshen College of the recreational vehicle industry. “It’s a big piece, but it is a cyclical industry. We go through cycles and during the up part of the cycle it puts tremendous pressure on resources as far as getting enough employees. Companies all compete with each other for the labor pool. And during the downside it sheds employees greatly. We have been through the down cycle and we back then talked about diversifying our industrial base and during the up cycle we don’t hear about that because people are just trying to find employees.”
Mark Dobson, president and CEO of the Economic Development Corp. of Elkhart County, said finding skilled and qualified employees is a consistent topic and challenge in Elkhart County.
“People are talking about it,” Dobson said “... you are hearing from all employers that it is challenging to find help right now, whether it is RV manufacturing or other manufacturing. It is quite a challenge right now.”
That competition for workers may be why wages are up in the county. According to the Bureau of Economic Analysis, Elkhart County’s per capita income rose to $37,344 in 2014. That was a 5.3 percent gain over 2013. Yet, that was still just 81 percent of the national average of $46,049.
Dobson said he has heard stories from local manufacturers who need employees.
“It is interesting... it isn’t always a pay-level issue. Many people who have help wanted signs out front are really paying healthy salaries, head of household wages. We need more people to go to work in Elkhart county to support the regional industry.”
But that is a good place to be, according to Dobson.
“It’s a much better problem to have than having 20 percent plus of our people out of work and attracting national attention,” he said. That national attention reached all the way to the White House. Newly-elected President Barack Obama made a visit to Elkhart County in Feb. 2009, in part to promote his economic recovery plans as a way to help areas with high unemployment.
But the RV industry never took any of the federal “bailout” funds offered to other industries, according to Dobson.
“It has been done locally,” Dobson said. “We would love to have the president come back and say ‘wow you guys really did this.’”
A good living
A 2014 report by the Bureau of Labor Statistics broke annual mean wages into categories for MSAs around the country and the “Production” category for the Elkhart-Goshen MSA was $30,990.
Scott Wilson, a plant manager at Grand Design RV, estimated line workers there are easily topping that number.
“We are doing really good as far as our wages. I would say we are anywhere from $1,200 to $1,600 (weekly). We are doing really good with this company here with what they have given us, me as a production manager, to get it where it is right now. Ownership has been all in. Yeah, we are making that kind of money thanks to these guys.”
“What we are doing as an industry and what they expect at Grand Design, we are really making good money. It is really helping the whole community all the way round. I know I go do more. I have more fun,” Wiles said.
Jake Larrison of Centreville, Michigan, a Nappanee native and 20-year veteran of building RVs, is also working on the line at Grand Design as a group leader.
He said that after high school in Nappanee, “You either go to college or you go into RVs. It used to be you used to chase the money, whatever place was giving the most money. I am getting older and getting smarter. The more you do in the RV industry the more you look ahead. I want to work next year. So what we do today affects how many units we sell next year... We want to be the best units out there, that way we know we are going to work next year.”
Asked if his line job provides a good income for his family, Larrison said, “Absolutely. The kids don’t eat hot dogs anymore.”
Stronger than ever
Geiser believes the recession, while awful for everyone, did leave the RV industry stronger than it was before 2008.
“A number of industries were consolidated. We have a bit more consolidated industry right now,” he said. “That is good and bad. They tend to have stronger balance sheets, they are not as stressed financially with debt load, etc... We have a bit more robust structure in that industry now, but I think we would be foolish to think we will be able to avoid the cyclical nature of the industry.”
The industry trade association, the Recreation Vehicle Industry Association, believes the RV expansion will continue through this year. The industry forecast calls for 1.6 percent growth in this year.
“We are optimistic about the industry’s future in 2016 and beyond,” said Frank Hugelmeyer, president of the RVIA. “The industry is always mindful of economic forces, of course, but we’re continuing to make inroads with younger buyers as the baby boom generation heads into retirement.”
In a 2011 marketing study conducted by the industry, buyers aged 35 to 54 were the largest segment of RV owners.
“We have about five years of baby boomers (left) entering our business,” Martin said. That is a perfect demographic coming in. You have the millennials coming in. We are starting to see younger buyers buying RVs and that is great thing for us. Once people start buying RVs it gets into their blood and they trade into other RVs”
According to Hugelmeyer the industry has a big footprint nationwide.
“Each year, the RV industry contributes nearly $50 billion in economic activity across America and more than $5 billion in federal and state tax revenues,” he said. “In 2015, RV manufactures and suppliers alone provided an economic output of $15.8 billion, so we are a vital source of jobs and taxes within the U.S. and especially Indiana.”
For Grand Design, Clark believes his company will far outpace the industry’s growth this year.
“If our company only matches the growth of our industry, you are going to see a lot of depressed people within our company,” Clark said. “We intend and plan on far out pacing the industry’s growth. And we should. We are a young company in our growth stage, even though we have had this meteoric growth over the last three years there is a lot of growth left in the existing brands we have, and we only have four brands... There are segments of our industry we haven’t even touched. So, we plan on far out pacing the industry’s growth as a company.”
Martin too believes Thor will continue to grow.
“We continue to open plants and expand production because we believe the industry can sustain slow and steady growth for years to come,” he said.
He added that the demographics of existing people who camp are in favor of the industry.
“Thirty million tent campers at some point don’t want to sleep on the ground,” Martin said. “In the evening it is nice to have a bed and a bathroom and a kitchen.”
ABOUT THE AUTHOR: Roger Schneider has been with The Goshen News since 1989. He currently serves as business and city editor. He can be reached via email at email@example.com or followed on Twitter @RSchneider_TGN