South of the Border
Do you remember when you first learned about Fleetwood opening up the first RV manufacturing plant in Mexico? I remember when that news first came over the wire, I had mixed feelings. From a business perspective, it seemed to be a pretty smart move but, like many Americans, I hate to see jobs leave the U.S. Like many of you, I wondered if this was the beginning of a slow, steady migration of RV manufacturers to Mexico.
It seems our concerns were unfounded because no other manufacturers followed suit. Fleetwood didn’t whole-heartedly close up shop in the U.S., either.
Interestingly enough, a southbound migration is occurring. I just read a story http://www.msnbc.msn.com/id/25175249/ about how consumers are crossing the border to fill up their gas tanks. The story says that in Tijuana diesel is only $2.20, but just a few miles north in San Diego, diesel is $5.04 a gallon. That is a pretty big difference.
Mexican government subsidies are keeping the price down, which raises the question, “Is it cheaper to manufacture raw goods like steel, aluminum and fiberglass down south?” My guess would be, “Yes, for right now.” Will the trend continue?
I am told from various suppliers that the cost of building materials for RVs and aftermarket products has risen substantially with the rising cost of oil. If labor is less expensive in Mexico, and the cost to build and buy raw materials is less expensive in Mexico, and the fuel price of shipping the RV to the dealer is 50 percent cheaper from Mexico, the questions I ponder are, “Are other RV manufacturers taking a harder look at Fleetwood’s decision and potentially considering a move?” and “How much of a margin does this really build into a unit?”
Many believe some of the economic conditions we see today are effects of how the world is changing to a global economy. Will the factors that make Mexican RVs, hitches, furnaces, sinks and other products so attractive continue to impact our industry or is this merely something short-lived that we must weather?
July 8th, 2008 at 12:34 am
Remember people. Fleetwood closed down 4 plants when they moved to Mexico. a lot of Americans lost their jobs because of that move. the Mexican goverment will not allow units built and shipped into the U.S. from mexico, can not come back into that country for repairs. Fleetwood has kept 1 of their service depts at one of the plants they tore down open, to do the repairs on the mexican built units, in Rialto Ca. if the American people would stick together and not purchase these units, other companys would think twice before considering a move to mexico.
June 18th, 2008 at 1:24 pm
Companies will always take into consideration the stability of the host country’s economy. Mexico’s government can change policies (like subsidies) on a whim. One of the reasons China has been so attractive is the fact that its government and economy are solid. Ironically, if China ever did switch to a democracy, the ensuing instability, though temporary, would probably drive out many companies.
Most large companies will invest a portion of their business offshore, but it would be foolhardy to move 100% of their operations to any one country, especially a loose cannon like Mexico.
June 18th, 2008 at 12:11 pm
Mexico no , China yes!
I may not have all of my facts straight but if China can manufacture a 26′ Travel trailer for $6000.00 and send it overseas for $2000, that’s $8000. We sell that same size unit to the dealers around $10,000. If I am a dealer I could purchase another $1500 of cool electronic
gadgets and stuff them in my cheap Chinese Rv and still sell the unit less then it’s US counter part!!
I would worry more about what’s coming out of China then South of the border and with RVIA extending the “Olive Branch” it is only a matter of time!
June 18th, 2008 at 11:36 am
Is this low sulfer diesel?