MIDDLEBURY — Two leading recreational vehicle companies have merged, creating a giant in the industry that dominates Elkhart County’s manufacturing.
Thor Industries announced Friday that it has purchased Jayco Corp., a Middlebury-based RV company that had been founded and operated by the Bontrager family for 48 years.
“It was the right time for the family,” said Jayco President and Chief Executive Officer Derald Bontrager. “As we think about the future it was also the right thing to do for the company and leverage with Thor and take Jayco to the next level.”
“For Thor, we are just excited to partner with such a great company with such a long legacy,” said Thor’s CEO Bob Martin while he stood with Jayco’s chairman Wilbur Bontrager and Derald in front of Jayco RVs at the Jayco welcome center. “The goal is to not change very much at all, to change as little as possible and to keep management and let them run the company the way they have been successfully running it for many years.”
Thor paid $576 million in cash for the company. $360 million of that amount was borrowed, according to Martin, but the return on the investment should be quick. He said Thor expects to repay the debt in three years.
Jayco’s revenue last year was $1.5 billion, with $70 million of that being before-tax income. Thor’s fiscal year will end July 31 and the company expects to reap little in the remainder of this fiscal year from the purchase due to costs associated with the acquisition, according to information from Thor.
Thor has been riding the wave of success of the RV industry in the past few years and posted record sales and earnings for its 2015 fiscal year. The company had $4.01 billion in sales in 2015, which was a 14 percent increase over 2014. Net income for 2015 was $202 million, which was 15 percent higher than 2014.
Thor announced June 6 that its third quarter sales were a record $1.28 billion and its income for the quarter also set a record at $79.2 million.
A good addition
Thor expects Jayco to enhance its market share across all lines of RVs, especially in the towable segments. Jayco has the best-selling travel trailer in the industry.
“It’s hard to re-create a 48-year legacy and a brand such as Jayco,” Martin said when asked why Thor purchased the company instead of investing in more plants and products on its own. “For me it’s a little personal. I have lived up in this area and I have driven by the complex my entire life and so it is a name that I have known and admired. When you talk to dealers and mention Jayco it is just one of the premier names in the industry. For us it was just an opportunity we couldn’t pass.”
Talks about the acquisition began last fall, according to Wilbur and details were worked out over the months since then.
“We are excited about this relationship and working with Thor,” Derald said. “Our cultures are very similar and we liked Thor’s model of allowing their subsidiaries to operate independently. So we will compete in the marketplace as we did before and will come out with new products as needed with Thor’s backing... It gives us a launching pad to continue to grow the company.”
Family is staying
He said he was asked several times Friday if he or the other six Bontrager family members with Jayco intend to leave or retire, and he had been answering no.
“I have gas left in my tank and I am not ready to give it up. I fully intend to stay and help Jayco into the next chapter of its life,” Derald said.
He said one of the reasons the family accepted Thor’s purchase offer was to tap into available capital to continue Jayco’s growth.
“The RV industry has a long track of growth and we are approaching some high end numbers,” Wilbur said, “some of the highest we have seen in years.”
To meet demand Jayco is currently building a new Highland Ridge division plant in Shipshewana to produce Open Range travel trailers. Another new plant is going up at the Jayco complex along South Main Street in Middlebury. That plant will be used for additional towable products.
“The market is so strong,” Derald said. “We have been growing with leaps and bounds and our backlogs are to the point where we can’t provide enough products to our dealers, so we just have to continue to grow and this relationship will just fast forward that.”
Jayco has 3,000 local employees and another 200 at its Idaho facility. Thor, headquartered in Elkhart, has 11,000 employees, according to RV Business. The magazine reported Friday that with the merger Thor/Jayco will account for 47.1 percent of all RVs produced in the United States. Forest River Inc., a Berkshire Hathaway company, also based in Elkhart, accounts for 35.66 percent of RV sales so far this year, the magazine reported.
While the corporate tag has been added at Jayco, production and sales will continue as they have been, according to the chairman.
“We are going to be back to work next week as before,” Wilbur Bontrager said. “The same people, the same company and continuing to build on our legacy.”
Follow Roger on Twitter @rschneider_tgn