RV Weekly

Apparently, the RV industry has been all a twitter in the past few weeks with speculation that financial tycoon Warren Buffett has his eyes on buying an additional RV manufacturer for his portfolio. Worth an estimated $46 billion, he could gobble up on the entire $12 billion RV industry and still have money left for a weekend in Vegas. But industry speculation seems to be focused on three companies. Gulf Stream is on top of the list for many people — except the Gulf Stream staff. With Buffett already heavily invested in the manufactured housing industry, he’d have a natural connection to both industries through Gulf Stream’s Fairmont Homes division. Gulf Stream is a solid company with innovative product lines that cross multiple markets. And, as a family-owned business, they could be evaluated under the public scrutiny of stockholders and other investors. Coachmen has also been mentioned as a possible item on Warren’s buffet. A full-line manufacturer, Coachmen has been struggling lately for some reason to the point that CEO Claire Skinner abruptly announced her resignation this summer. Coachmen would fit the Buffett’s investment strategies nicely.

According to the online encyclopedia Wikipedia, Buffett looks for companies that:

• Are undervalued but possess a margin of safety that meets expected return-to-risk characteristics. Coachmen has been flying under the radar, but still offers a promising product line.
• Where company events are not related to market changes like mergers, acquisitions and liquidations. In the past year or so, Coachmen has become lean and mean, shedding off other companies that don’t contribute to its core production.

So Coachmen would be a nice fit, as would Fleetwood. Another struggling company over the years, Fleetwood has sound fundamentals once again, but is lead by a president called out of retirement. While Buffet prides himself on not interfering with the companies he controls, he does insist on having sole decision-making authority over the top executive and the CEO’s compensation. Buying Fleetwood would another good fit for Buffet who could install his own minion to oversee day-to-day operations and motivate a highly-talented existing group of managers to reach new heights. Perhaps the coup d’etat for Buffet would be the purchase of Thor. Buying the industry’s largest “manufacturer” (Thor actually owns manufacturing companies) would be a spectacular way for Buffett to say “Hello, let’s play” and raise the stakes to the rest of the industry. The acquisition would give him a sizeable foundation upon which to swing the entire industry — and the purchase would be immense enough to send shockwaves through Wall Street, thus attracting even more capital to the industry.

Unlike my Friday the 13th Doomsday scenario, this Halloween idea may pack far more treat than trick for the RV industry. What do you think? ____________________

Readers have two choices in replying. They can reply to the blog directly or engage in an interactive discussion with others on the RV Trade Digest forum page, located here.

Not too long ago, one of the RV industry’s most trusted manufacturers announced the creation of a Franchise for the Future program. In it, the OEM would help subsidize some of the dealer’s advertising costs and pitch in to create in-store and exterior décor to “brand the store.”

The proposal was greeted with much fanfare and cited as a business model for the future. But, if the Franchise of the Future is such a good deal, why are many of the franchisees frustrated? Because hidden deep within the contract — not too far away from the clause that requires franchisees to accept all terms or lose the product line — rests a provision that allows the manufacturer to pay the dealer’s salespeople directly for selling the firm’s motorhomes.

Why a manufacturer thinks it can usurp an RV dealer’s ability to manage his day-to-day business is cause enough for concern. But, going around the dealer’s back to pay his staff in some type of under-the-table transaction goes against everything the RV industry is trying to do to improve customer service.

If our salespeople are supposed to “listen to customers” and “discover their needs” and “recommend an RV to fit those needs,” how is that possible when one manufacturer dangles a giant carrot in front of a salesperson. In the process of doing so, isn’t the manufacturer telling the salesperson in a not-so-subtle way to put the OEM’s best interests ahead of dealer’s and the consumer’s.

If a salesperson receives a check at home from a manufacturer for each franchise-branded RV he sells, human nature suggests the salesperson will avoid recommending another RV brand that may better suit the customer’s unique needs.

Along those lines, would not another manufacturer be justified in one-upping the original OEM to provide a better under-the-table incentive to the salesperson?

The natural result of this slippery slope will be the creation of a sales team that acts less like sales advisors and more like free agents.

I can see it now. Joe Sales has a customer torn between two competing units. The customer makes an offer on both and the salesperson excuses himself to consult with the sales manager. But, along the way, he calls both OEMs and entices them into a spiff and incentive bidding war to secure the deal. Whichever company offers him the better incentive, that’s the deal he pitches to the sales manager, politely explaining to the customer that the other motorhome just couldn’t go for the asking price.

I’m certainly not saying our salespeople are deceptive, but why create the opportunity? Beyond the bribes and the possible deception, the current policy is a slap in the face of the entrepreneur charged with running his dealership, training and managing his staff, and growing his business.

But, apparently the idea has merit. So, in that regard, I suggest that RV dealers adopt a similar Compact for the Century. In it they would pay a spiff directly to the person who processes the OEM’s warranty claims without question. Since the check will go directly to the employee’s home, the dealer can include a few bucks for approving claims past the warranty period. After all, the OEM’s employee is simply looking out for the firm’s customer and dealer partner, right? Perhaps the OEM’s employee in charge of shipping parts could earn a few bucks slapping on a next day air label to the box instead of using standard UPS ground.

Realistically, let’s just allow manufacturers to stick to what they do best – assemble RVs – and let’s let dealers do what they do best – sell and fix the RVs. That way, each entity can be assured that its own employees are watching out for the business’s best interests because the business’s owner is the only one who writes the checks.

After speaking with several people at the RV Dealer’s Association convention and expo, I believe the RV industry needs to develop a plan should Camping World and Freedom Roads meet an untimely end.

I don’t make this statement lightly, but there are several facts that need to be addressed and plans made for what could be either a devastating blow to the industry or a tidal wave of opportunity.

In September, on our Web site, we reported that Freedom Roads CEO and President Marcus Lemonis had been appointed CEO and president of Camping World.

Lemonis’ leadership of Freedom Roads, while admired by some, has left others yawning. His hard-nosed approach toward the entrepreneurs who founded the RV dealerships Freedom Roads purchased has left several with bad feelings. In fact, Lemonis has fired a few of the entrepreneurs.

As a result, there appears to be a ground swell of opposition arising which, combined with a desire for revenge or at least retribution, may not bode well for the Empire.

Since it’s founding almost three years ago, many in the RV industry have wondered what would happen when the entrepreneurs who founded Freedom Roads dealerships eventually left the scene. After all, we’re told that’s one of the primary reasons why they sold out in the first place ‘ to retire and enjoy the fruits of their labor.

Other companies and groups who attempted to establish dealer franchises failed largely because they weren’t able to hire managers with enough ambition and entrepreneurial spirit to make it work. Just ask Coachmen, a company I’m told which, to no avail threw incredible incentives at managers of its franchise stores in hopes of enticing them to take ownership of the businesses.

But, anyone who has actually founded a business knows that managers aren’t likely to stay awake at night wondering how the company will make payroll next week, or deeply regretting a multi-million dollar expenditure that didn’t pan out as expected.

Lemonis’ track record is hardly stellar, having guided Holiday RV Superstores into bankruptcy in 2003. With Affinity Group having lost $16.5 million during the first six months of their fiscal year, I wonder if it’s a smart move to entrust one of the most recognized retail brands ‘ Camping World ‘ and the future of 57 RV dealerships accounting for well over $1 billion in annual sales to an individual who may be very book smart, but lacks the charisma necessary to lead a network of profitable businesses ‘ and business professionals.

Yes, I know that people who keep their ears to the ground will hear a lot of dirt. But, in the same light, I feel the “buzz” is certainly cause for concern.

The RV Dealers Association Convention/Expo was, thankfully, the last time I get to visit that city in 2006. But, next year, I’ll be there again, and again and again. Most years, I’ll make at least four trips to the sin city. My record is six. That means I’ve made at least 15 trips in three years.

For some reason, Las Vegas is all the rave for RV industry meetings and shows. From what show organizers tell me, Las Vegas is the “ideal” city for conferences because it is easy to access from just about everywhere, the casinos have huge conference centers than can easily accommodate 60 RVs under one roof, and the casinos are big enough to house all participants and exhibits in the same location.

That may be true, but for those people actually footing the bill for transportation, lodging, food, taxis and entertainment, I don’t know if they’d buy that argument.

Once home to the $4.99 steak dinner and the $29 hotel room - all offered to attract people to a casino’s gambling tables - Las Vegas visitors today better bring plenty of cash. Hotel rooms are easily $140 a night, buffets are now $24, a good sit-down meal will cost $125 per person, and taxis are $20 from the airport to anywhere on the strip. When it costs a supplier $350 in union labor to hang a banner, or $120 to plug in a cord, or $50 to deliver a box, Las Vegas isn’t cheap.

Time is also money. When it takes 45 to 60 minutes to get my luggage and another 45 to 60 minutes to get a cab, my blood boils and it’s not due to the Nevada weather.

Even if you are an infrequent table gamer like me, you’ve had to notice that the minimum bets on any table at the conference centers hosting RV meetings is usually $10, if not $15. A few months ago at Caesar’s Palace, people were shelling out $25 or $100 chips at the roulette table. Don’t like gaming? Tickets to a good Vegas show will run $75 to $125 per person.

I wouldn’t mind visiting Las Vegas once or maybe twice a year. Las Vegas is a great venue for the RVDA Show, but there have to be other places in the 3,755,241 miles that make up the United States of America which will welcome an opportunity to host one of our trade shows. Here are a few that come to mind: Orlando, Chicago, Atlanta, Dallas, Houston, Phoenix, Albuquerque, Minneapolis, Nashville, Seattle, Memphis, Denver (even if you factor in the $40 cab fare) and San Diego.

How about it, conference planners, can we see a change of venue any time soon?