Una qué idea estúpida para Fleetwood?
Just writing this blog pains me greatly for I truly LOVE Fleetwood and marvel at the incredible job they have done in turning the company around with quality products created and made by talented people. But, I can’t help but scratch my head and wonder what this company was thinking when they announced today that they would begin manufacturing travel trailers from a plant in Mexico.
It’s not Mexico that bothers me so much, it’s that Fleetwood just laid off hundreds of American workers the week before — then announced they would build the same trailers in a foreign country, ship them back to America and sell them to the friends and neighbors of the laid off workers. It sounds like such a slap in the face to the people who have worked diligently to help Fleetwood turn the corner.
If the company had announced they would begin building a new line in Mexico, I don’t think I’d be nearly as conflicted. If the company had a plant at full capacity and they announced they would expand production into Mexico, it wouldn’t bother me so much. After all, 2006 census estimates suggest the population of Mexico currently stands at 107.5 million — not including the 12 million Mexican citizens living illegally in this country. That’s a sizeable market for any company to pursue and the best way to pursue it would be by building units in that country as demonstrated by Toyota.
There must be another reason for Fleetwood to jettison talented, hard-working Americans in favor of cheap labor a few miles south of the border. Could it be an indictment against the bureaucratic American government which lectures companies about bringing “good jobs” and “living wages” to local communities, then punishes the companies every step along the way. Not only do companies have to worry about union demands, they must comply with OSHA demands, EEOC demands, EPA demands, a myriad of complicated labor laws, DOT requirements, IRS inquires and God knows what else just to make a product and bring it to market. And don’t forget the taxes, fees, tolls, permits, licenses and other government-orchestrated drains on profitability. And that’s only at the federal level. Add equally restrictive state laws, fees and taxes, and local zoning ordinances and I can see why a company would look for greener pastures elsewhere.
But Mexico is no better. Yes, the labor is cheaper, but whatever companies pay to governments here in taxes and fees, the companies must pay to corrupt government officials in Mexico in the form of bribes and kickbacks. I’ll admit I have never toured a Mexican manufacturing plant, but I question whether the product quality is the same as that found in American plants. It seems that if Mexican workers were as talented as we’re led to believe, their country’s economy would be booming and our citizens would be seeking work and a better lifestyle there.
Now that Fleetwood has cracked the border to produce units in Mexico, it will be interesting to see how the move will impact product quality of the travel trailers made there. It will also be interesting to see how many other RV companies rush across the border to build RVs more cheaply, or to supply the manufacturers who do so. Because, if Fleetwood is marching to Mexico for a price advantage, that will be short-lived if other companies follow suit.
I just don’t get it. To me, it seems like a dumb idea (or to get with the lingo, una que idea estupida) for Fleetwood or any company. Am I wrong?
March 21st, 2007 at 8:28 pm
With all due respect to the CEO of Freedom Roads/Camping World, I take exception to his analysis of the way we do business in America today.
Marcus wrote: “The model of best practice, better known as “plagarism” is the best busines model. Fault them for that?? I think not.”
Our trusted dictionaries will tell us that plagiarism is something that most business people do not partake in; the meaning of which is: “the unauthorized use or close imitation of the language and thoughts of another author and the representation of them as one’s own original work.”
Best practice is just that - the best business practices that are proven, time-tested, and ethical for all parties including customers, suppliers, dealers, and manufacturers.
The Winnebago and Thor examples are excellent, but I don’t think Bruce Hertzke, Wade Thompson and Peter Orthwein would want their business success tied to Marcus’s interpretation of how we do business in this country, and in this industry.
Fleetwood would do well to emulate Winnebago and Thor during this rebuilding initiative, but I don’t think Mr. Eskritt has any intention of stooping to plagiarism to achieve his goals!
Plagiarism is not “the best business model” at Winnebago and Thor, and I don’t think it will be at Fleetwood.
As for Freedom Roads and Camping World ….. we’ll just leave that one alone for now!
March 20th, 2007 at 9:23 pm
I must admit that Fleetwoods attempt to streamline their operations, improve margins, decrease and ever increasing cost to the labor pool and and most importantly to think progressively is right on. Over the last several years the cost plus pricing model of the travel trailer group has left the individual price points brands on the outside looking in. Fleetwood must continue to reduce sga as well as other selling expenses in order to bring the retail price points in line and leave the dealer with an acceptable margin. All dealers who currently sell their product, our group being the largest, applauds this continued effort to improve their business. Although you would not be able to find one politician who supports laying off american workers, particulary in an election year, would ever buy or hold a stock of a company over another company whose margins and EBITDA was better. The American way is to create a return on sharholder investment. Be good to the customer, be better to the employee and when all else fails be the most competitive. That is what fleetwood is doing. Winnebago and Thor have proved that flat business models and tight controls along with innovation is why their return better than most, not just in the RV space, but in the american economy. The model of best practice, better known as “plagarism” is the best busines model. Fault them for that?? I think not.
Kudos, and good luck. Our 1.6 billion of sales and 36,000 units sold a year will continue to support you.
March 18th, 2007 at 9:59 am
Most difficult business decisions will evoke strong feelings on both sides of the argument, as did this one by Fleetwood to move some of their manufacturing to Mexico.
At the end of the day, whether we like it or not; whether we agree with it or not, you must congratulate Paul Eskritt for having the guts to address the issue head-on and explain Fleetwood’s decision, including the bad timing associated with it.
I agreee with Greg with respect to the signficant turnaround at Fleetwood. This was not an easy task as anyone that follows the company can attest. They are still in the process of regaining customer confidence in their products and restoring damaged relationships with many of their dealers, but they are doing it. You just can’t turn an ocean liner in the same amount of space as a speedboat, no matter how hard you try.
Time will tell if they can comde all the way back to their former stature, but at least they are going in the right direction. The new management team should be given more than a few months to work miracles with the damaged goods they inherited from those who preceeded them.
We can at least take comfort in the fact that they are technology proficient and well aware of the role that the Internet will play in their company’s future. They read and respond when others run and hide under their desks!
March 16th, 2007 at 6:03 pm
Hello Greg:
Thank you for your candid thoughts on the recent changes in our travel trailer division. I would like to take this opportunity to respond to a few of the points you brought up.
First, let me start by saying that the decision to wind down operations at our three U.S. travel trailer plants was very difficult, especially when considering the length of service of our dedicated associates and how long we’ve operated in each of the communities. Although this was a painful course of action, it was a necessary step to become profitable in a very competitive market. One piece of good news is that our motor home plant in Riverside, Ca. has significant hiring needs and it is our hope to place many of our Rialto associates at this location.
As for our new facility in Mexicali, which will start production on our Pioneer and Mallard products in May, I will admit that the timing of our announcement was unfortunate. Regardless, its opening is not related to the U.S. plant closures. In fact, none of our U.S. plants recently affected by the decrease in operations produced Pioneer and Mallard.
Our plans to open a manufacturing center in Mexicali began over two years ago, during which time we were extremely impressed with the diversity of companies that have facilities in the region (General Dynamics, Kenworth, Black & Decker and Sony, to name a few), as well as the quality of the people.
Mexicali is also home to several accredited universities. In fact, our new facility’s entire management and supervisory teams are made up of degreed graduates from Mexicali’s university system, who have also participated in seven weeks of intensive training held at our manufacturing facilities in the Pacific Northwest.
In response to your comments about bribes, kickbacks, and corrupt government officials… this is simply not true. Fleetwood and the hundreds of other U.S. companies operating in the maquiladora areas of Mexico and elsewhere in the world must and will comply with the stringent requirements of the Foreign Corrupt Policies Act (FCPA). As a result of FCPA and NAFTA, the Mexican officials whom we deal with do not participate in any corrupt activities. Although there may be previous history of such activities in some areas of Mexico, we have not experienced any situation that would compromise our business values or otherwise force us to reconsider our decision to expand our operations into Mexicali.
As always, we are 100% committed to providing products of high quality and superior value; and we appreciate your support and encourage your feedback.
Sincerely,
Paul Eskritt
Executive Vice President – RV Group
Fleetwood Enterprises, Inc.
March 16th, 2007 at 1:59 pm
Can anyone say Chinese. An Australian company Swagman Motorhomes is going to traget America with a new line of Class A motorhomes built in China. So between China and Mexico we can kiss our American built morohomes and trailers good bye and the loss of another American industry. This should be great we can drive our Mexican or Canadian built truck to pull our Mexican built trailer while using all of our Chinese built appliances and wearing our clothes from China or Taiwan. Where oh where did America go.
March 15th, 2007 at 5:46 pm
I have to disagree with some of these posts and will vehemently defend my claim that Fleetwood has turned the corner.
When I entered the RV industry in 2000, one of the first shows I went to was the Fleetwood dealer days event. At that show, I remember sitting at a table when a corporate suit stood up and announced the firm would be opening corporate dealerships around the country. Three dealers at my table tossed down their pens and announced they would rather liquidate their Fleetwood inventory than compete against the company.
From 2000 to 2003, the company struggled with product quality and direction. But I truly think that has changed. Fleetwood’s product managers are brilliant men with tremendous long-term vision. They are true innovators in bringing product to market. This company listens to consumers. They offer dealers a first class marketing program. Their team focus approach to production ensures that communication flows quickly up and down the chain.
These are positive fundamentals that can’t easily be dismissed. Why do they continue to lose money? I honestly don’t know. To me, the products appear to be excellent. Dealers tell me they back their products well and treat their dealers right. Anytime in the past two years, when I’ve talked to consumers about their RVs, I don’t think I have ever heard someone make a negative comment about a Fleetwood product.
The only beef I have with Fleetwood — and I mean ONLY — is their decision to close American plants to move production to Mexico. If you read my original post, I even mentioned several scenarios in which I could agree with the firm’s decision to launch production in Mexico.
Back in 2000 or 2001, Winnebago stock traded as low as $11 a share. That didn’t make sense to me because that firm also demonstrated solid fundamentals. Within two years, Winnebago stock was trading at $70 a share before splitting.
I see the same thing happening to Fleetwood, just not in Mexico.
March 15th, 2007 at 3:44 pm
So another company goes to Mexico are we supprised, I am sure there will be plenty more to follow. We have created a society where the kids today do not want to work. The parents have given them everything they ever wanted and never had to earn any of it. When I try and hire workers 90 percent of those that show up are from south of the border and the other 10 percent are Americans only looking because there beneifits are running out. The first thing the Hispanics ask is how soon can I start. The Americans ask how many breaks do I get and how much are you going to pay me. So who do you want working for you ? A hard days work in this country is really fading away from our mentality. I wounder if we had not already put a man on the moon in the 60’s could we put one on the moon today I really doubt it. Pride in your work, pride in your country and all but a memory and a fading once great country.
March 15th, 2007 at 5:59 am
I’m with you Ed, and I suspect there are many, many more out there just like us! My wife gets mad at me because I walk through a clothing store with her and read the “Made in” labels out loud so everyone can hear …. China, India, Malaysia, Taiwan, and on, and on, and on.
Ted Williams is my hero, and the only guy who could have done a movie on his life would have been John Wayne! Ted wouldn’t stand for this stuff either, and wouldn’t be quiet about it.
We, as a country, and not free of blame though. Our corporate structure and welfare mentality have contributed to the sitautations that cause companies to close plants rather than work out issues between management and workers. The most important people in our companies are the worker bees that make the products, not the executives that watch from above. We must start treating these people with respect and they must start earning it. It should be a two way street, but it isn’t. Right now it’s only going one way, and that’s out of the country. If we dont find and solve the root of the problem, these stories will be the norm and not the exception.
March 14th, 2007 at 6:27 pm
I’ll probably draw criticizm for my statements here about global economies and isolation and the like but…It just seems to me that some things just aren’t “right” unless they are American made. I’m 71, a retired Rv dealer, and a John Wayner! I recently ordered a new pair of boots from my fave cowboy supply house where I have been buying stuff for fifty years or more. The boots came…I grabbed to loops to pull one on and it ripped. I glued it. In a few days the leather came loose from the sole where it is stiched. Ugh! Now I examined to boots more carefully and found the “made in India” stamp. I sent them back and asked them to NEVER send me any cowboy stuff made in India or any shirts made in China for that matter. I’d rather do without. Would John Wayne wear boots made in India? Me thinks not. He likely wouldn’t buy a camper made in Mexico either……(although he did like Mexican women). I won’t buy an RV unless it is made in AMERICA. Don’t you wish there were more of me.
March 14th, 2007 at 2:55 pm
What are you talking about a Fleetwood turnaround? How can you say that about a company that looses Million’s each quarter (recently 29.9 million)? And what about the massive company debt? The only thing that saved them a couple quarters last year was a big FEMA deal. How can you love a company that is so confused about what they are doing that they re-organize time and time again and change up product lines over and over and over? The reason they are closing plants here and opening in Mexico is just another one of their “throw it up against the wall and hope it sticks” solutions. If that doesn’t work, they’ll close that plant too.
March 13th, 2007 at 2:56 pm
This country is in such bad shape and the politicians are getting worse and worse, the typical American is just trying to get by while everyone in the world hates us and blames us for all the ills of the world. I always thought America was the greatest and the people were the most generous people on the planet but I guess after watching the news and hearing our very own politicians tell us how horrible we are then it must be. Why is it that almost everyone in the world still wants to move to America ??? Are company is in Los Angeles and it seems like a daily occurance some official has his hand out for another fee, permit, license, inspection, violation, workers comp injury and you just want to close your doors and go work for someone else. I understand a companies move to another country however I do not support that as there is no free lunch and the very Americans running these companies are slowly destroying there own homeland. Sad Sad and shame on American companies.
March 13th, 2007 at 8:12 am
Bob, there was indeed a raid here locally, but only 36 were arrested. Here’s a link to one of the stories about it in the local paper.
http://www.etruth.com/news/NewsStory.aspx?id=403502
March 12th, 2007 at 3:16 pm
Greg.
It seems most are missing the point you are trying to make. Build and buy American. No one seems to care that we americans have little or no steel industry, no textile industry, and the automotive companies are about done. Mr. Enyeart says Toyota in the only American made car in NASCAR, but he fails to say that most all parts for the American ASSEMBLED Toyota’s are imported AND FORTY SIX PERCENT of all Camery’s sold in America are still built in Japan. Brian this is just the start of an ever lowering GNP. Look at the housing problem that is currently devastating the state of Florida. The housing was booming down there because the northern baby boomers where retiring down there. Ask any Realator in Florida and he will tell you it’s because the auto workers both blue and white collar worker can no longer afford the move and mostly due to the inability to sell their home up north where there are no jobs to attract a home buyer. Don’t think that if Fleetwood pulls this off and becomes very competitive in this low cost RV market that those plants up in Elkhart won’t move south quickly. Then where are you and you children going to get an income. who’s going to buy your RV product. This IS something to worry about. Just ask those who worked in the above mentioned factories how long it took for thier livelyhoods to be pulled out from under them. It’s said many times all we have to do is educate our workers. Ask the educators if it’s a realism to think that our ENTIRE work force can work in the electronic and communication fields. I don’t beleive so. No I think it’s the start of the demise of the RV industry in the USA.
March 12th, 2007 at 2:32 pm
My own opinion is that as time passes, this will be considered another of the countless mistakes made by Fleetwood. $750,000 plus million in the toilet since 2000, what’s another $250,000 to make it an even billion with this experiment. I suppose the dealers in the Northeast will be eyeing product from Mexico and glad to pay the freight rates, no..nothing is going to change about this company until the Riverside “cult” philosophy changes on how to treat(mainly mistreat) a dealer. Mexico or Honduras or Canada, it wont matter, Fleetwood IS Fleetwood. The End.
March 12th, 2007 at 9:01 am
Greg.
Americans are their own worst enemy. It is evidenced evry day that we walk into Wal-Mart. Every day when a prospect will shop ten stores for a lower price. Everybody wants a lower price and will forego quality for it. Loyal to their pocketbooks only and never will we contemplate the result of our action.
Like Toyota in Nascar The Camry is the only american made car in nascar. The Monte Carlo and Charger are built in Canada and The fusion in Mexico. Most of the Chassis that we sell are made in Mexico. Remember that if the VIN # starts with a 3 its built in mexico.
So more power to Fleetwood its about time they made the move thier only the 65th company this month to do so. But I’am different I would rather pay twice as much for the products that I buy to take care of my fellow americans(yeah right).
March 10th, 2007 at 8:31 am
Brian,
Are you sure that wasn’t the story about the 300 illegal aliens that were rounded up in a New Bedford, MA company that was enjoying a $92 million dollar contract with the Federal Government to make armored protection vests for our brave men and women in Iraq. Talk about having no conscience at all … and our new Governor is more concerned about the protection of the illegal aliens than he is about the low-lifes that hired them!
When does the government recognize and correct the real problem … the illegal aliens!
March 10th, 2007 at 12:47 am
Greg, I again need to take you to task on a recent editorial of yours, this one concerning the opening of an RV factory in Mexico.
In the first place, the headline is incorrect Spanish. Guessing at your intended meaning, is should read, “Qué una idea estúpida para Fleetwood,” which translates to, “What a stupid idea for Fleetwood.”
While it is sad for the loyal Fleetwood plant workers to be tossed out of their jobs, why disparage our neighbor to the South with cheap shots like: “Whatever companies pay to governments here in taxes and fees, the companies must pay to corrupt government officials in Mexico in the form of bribes and kickbacks.” What is your basis for saying this? Have you operated a manufacturing facility in Mexico where this was the case or are you simply repeating this common and biased slur? I have toured factories in Mexico and elsewhere in Latin America, and while some of their workplace standards and manufacturing technologies can leave something to be desired, these plants are successfully producing to quality standards required in today’s global market place.
I know the workmanship on GM vehicles assembled in Mexico (and Canada, for that matter) to be of equal quality to the American built units. These include some of General Motors’ marquis models, including the Tahoe and Suburban SUV’s. You may oppose Fleetwood’s move, but to single out Fleetwood without addressing the dozens of other companies making the very same move is misleading.
You also seem to smear the “12 million Mexican citizens living illegally in this country,” without explaining why they are here. It would seem logical that to draw a portion of these workers back home, Mexico needs economic development of the type that the new Fleetwood plant embodies. Wouldn’t it serve both of our countries’ interests for Mexico to share in the development of a manufacturing economy? If we choke off development in Mexico don’t be surprised that their most desperate and able-bodied workers flea to the North.
Like it or not, we are part of the North American Free Trade Agreement (NAFTA). Policy makers from both major parties have seen the wisdom of working with our American Neighbors, to the North and the South, to create a giant trading bloc that is intended to benefit all parties to the agreement.
NAFTA will certainly cause shocks to particular communities, however, as Fleetwood will demonstrate, it is not possible to build a wall at the border to prevent a solid stream of shinny and affordable, new travel trailers from coming to the States, thank God.
March 9th, 2007 at 9:07 pm
I think that Fleetwood has the right to build there units whereever they want to, the dealers and retail customers will determine if they are worth buying. I don’t think that hiring workers in Mexico to work in Mexico is as bad as employing illegals in the USA. I live in Elkhart, IN. and I’m always hearing stories about the illegal workforce. This week I heard that 300 illegals were arrested in Middlebury, IN. while working for a leading manufacturer.
March 9th, 2007 at 5:53 pm
I question whether you will see a quality difference. I think RV quality is very substandard to begin with. I will say there are a few manufacturers that use the highest quality products and have great quality control people but I fail to see it in many. So many manufacturers seem to just slap things together in haste.
I believe that the manufacturing days are over for this country. We can not compete globally and we enjoy low prices. Who wants to pay $20.00 for a pair of socks? Not I, I’m happy with my Chinese socks for a couple of bucks.
Although I hope I’m wrong, I imagine we shall see other companies have Mexico operations. I am actually shocked that they are all made in this country. I’m sure that Fleetwood is not the only RV company to ponder over this notion.
March 9th, 2007 at 5:11 pm
Greg
You might have missed to biggest draw back to doing business in the USA - product liability. Unless there is some tort reform - jobs will continue to go out of country. The current Congress is not going to pass a reform to help business interests. They are going in the opposite direction of business by increasing minimum wage.. If increasing minimum wage is a good thing - why not make it $50.00 an hour ?.Just think of all the votes they would get for proposing that idea ! Voters would have plenty of time to vote because thay would be unemployed.
So American companies are headed to foreign soils to produce while the foreign companies are headed here to manufacture their products. Whats wrong with this picture ?