RV Weekly

With thousands of people left homeless by the ravaging wildfires that torched California, it will be interesting to see how FEMA responds to this latest tragedy.

Sitting in storage sites along the Gulf Coast are hundreds, if not thousands, of quality temporary shelters produced by the RV industry in the weeks following Hurricane Katrina. Many have never been lived in. But all can be shipped to California by Monday, with a little coordination and planning on behalf of our federal emergency response agency.

We’ll see if FEMA has the guts to do the right thing and send those units to California, or if they will side with the Sierra Club and keep the units locked up tight over fears they’ll “poison” people because of so-called toxic levels of formaldehyde.

By the way, neither FEMA nor the Sierra Club have been able to come through with my offer to spend a week in a FEMA trailer to prove the alleged toxic effects of our products are nothing more than environmentalist whacko hot air.

Our hearts go out to the folks at Franklin Coach who lost everything in the tornado that ripped through Nappanee, Ind., late last week. I can only imagine the emptiness that owners Don, Rick and Steve Abel must feel in after investing time, effort and money in the 62-year-old business only to lose it all in the blink of an eye. Employees who also invested sweat equity in building the business must also be devastated after realizing how quickly they were put out of work.

The staff at Gulf Stream also has its hands full cleaning out tons of debris from fallen buildings, smashed products and the remains of the Franklin enterprise blown onto their property from across the street. Because they are located in the heartland of America where people genuinely care about others, I’m confident the Gulf Stream team will rally around the company and get it back on its feet quickly.

In the other end of the country, ultra-fast-spreading wildfires have already destroyed several RV parks and, likely, RV dealerships. The disaster is advancing so quickly that government officials admit they don’t have an accurate count as to how many homes and businesses have been destroyed. At the very least, the thick smoke blanketing the area is rendering the RVs on dealership lots unsalable.

Fueled by 70 mph winds and extremely dry conditions, the impact of this disaster will be unfolding for days to come. Already, 374 square miles of land has been torched. Nothing can stop it. Witnesses on a 10-lane Interstate highway helplessly watched as 100-foot flames raced up the land, lept over the pavement and scurried up a hill to consume 10 homes in less than 10 minutes.

More than 500,000 people have been forced to flee from the area. It’s unfortunate that many of them likely own RVs, but can’t legally park them in their driveways or yards in order to evacuate themselves, their pets and their neighbors when emergencies like this arise.

These sobering incidents remind us all of the absolute necessity to frequently and consistently back up important data — and store it off site. They also remind us that the government is essentially helpless in truly protecting us from disaster. To rely on them before the fact is foolish and dangerous.

The incidents once again give the RV industry another opportunity to step up to the plate and help those affected by natural disasters. If there is anything we, as an industry, can do to help our fellow business owners recover, I’d like to know what it is. I’ll be happy to use this blog and our forum to post their needs in hopes of marshalling resources quickly to the impacted areas.

We’ve proven over and over again that our industry not only helps its own, but it rushes in to help others as well.

With two RV dealerships under its acquisition belt, Charter Equities has distributed a brochure to potential investors suggesting they could generate a 1,000 percent return on their investment in Charter stock. I’ve uploaded a copy supplied by a reader which you can download by clicking on Charter Equities Bull Market Investor Alert.

In a publication distributed called the Bull Market Investor Alert, Charter Equities boldly claims “The Recreational Vehicle Industry Continues to Earn Record Revenues” — something that may come to the surprise of many RV manufacturers and suppliers going into the fourth quarter of 2007 scratching their heads and muttering “what happened?” Maybe someone should tell Charter that they are seeking investors in the recreation vehicle industry not in recreational vehicles.

“CEQI could be the hottest stock of the fall,” the publication claims. “Early investors could make huge profits with CEQI.”

Noting that Charter Equities has acquired Saddleback RV, “a $24 million per year Recreational Vehicle Dealership with plans to acquire additional dealerships by 2010 delivering potentially over $150 million per year in additional revenues.”

I certainly wish any company luck in their ability to grow a $24 million RV dealership into a $150 million enterprise in 26 months.

To add credibility to these outrageous claims, the document drops names of truly influential companies like Winnebago Industries, Fleetwood, Monaco and Thor Industries. The firm even manages to tie its own future success story to that of Warren Buffet’s acquisition of Forest River.

The full-color brochure highlights the wonderful accomplishments of many manufacturers and features RVIA-supplied lifestyle quotes from celebrities, sports heros and even Barack Obama. However, the point of Charter Equities apparently is to acquire RV dealerships. Wouldn’t it make more sense to promote the profitability of dealerships than the profitability of manufacturers?

“Are you seeing the potential? CEQI is trading at THIS LOW PRICE and has OVER $24 million per year in revenues. At THIS PRICE can you imagine where this could be in a few years if CEQI has over $150 million per year in revenues? OPPORTUNITY IS KNOCKING! CALL YOUR BROKER AND PICK UP SOME SHARES TODAY!! A $20,000 investment could easily be worth $100,000 in a very short period of time. You could take your profits and buy your own Recreational Vehicle.”

I checked. The stock is trading today at 30 cents per share. So, yes, it would be a good deal.

In the past couple of months, my inbox has overflowed with ridiculous offers from various Chinese companies trading stock for pennies, but poised for immediate growth. I never thought I’d see the same tactics applied to companies in this industry.

For the record, I have attempted to contact Charter Equities several times to meet with them when I’m in Phoenix next month. Apparently, they are too busy scrounging up investors for the Recreational Vehicle Industry and laying the groundwork for HUGE PROFITS to return my call.

Here’s yet another example of our federal government punishing small business owners for being successful. I learned that the Small Business Administration limits the amount of loan money it will guarantee to people wanting to buy profitable RV dealerships. In fact, any retail business that grosses more then $6.5 million annually does not qualify for SBA financing.

In fact, it’s not even “financing” we are talking about; it’s just a signature that indicates if the loan goes bad the SBA will cover up to a certain percentage of the loan amount. Banks like these deals because they don’t absorb 100 percent of the risk. The SBA jumps in to reimburse the bank for something like 40 percent of the loan amount.

The issue came to light when someone forwarded an article to me that appeared on a business Web site about one guy’s attempt to buy an RV dealership. The buyer needed an SBA loan to close the deal.  The dealership posted net profit of $440,000 and the owner was selling the business for only $550,000. It looked like a good opportunity for some entrepreneur. Here’s the catch. The business grossed $13.5 million annually in sales — more than double SBA’s common size standard for a small business.

I’ll admit to being an idiot editor with limited business sense, and when it comes to banks I am pretty sure I will never understand how they arrive at loan decisions. I also recognize that this is a federal agency I’m talking about, not a bank, so all common sense goes out the window. But, if you buy a business with a cash flow of $13.5 million for $550,000, and that business drops $440,000 to the bottom line every year for three years — doesn’t that prove the business is healthy and that the loan is relatively secure? A simple loan calculation shows the payments would be about $80,000 a year which still leaves ample profit for the new business owner to personally use or reinvest into his business.

Few people will disagree that small business is the engine of the American economy. More jobs are created in small business every year than all corporations combined. It is essential that we create an environment that is attractive to entrepreneurs and rewards them for working hard and taking risks. As I see it, the purpose of the Small Business Administration is to help business owners either buy or start small businesses that will create jobs, and thus taxpayers for the federal government. They should be willing to support any reasonable effort to start or buy a business, especially those that are proven successful in creating well-paying jobs.

In the process, the federal government can’t be stupid. They need to be reasonably certain that the business will survive and thrive before they risk taxpayer’s money. I could understand the SBA being nervous if someone were to need a $13.5 million loan when the business only had $440,000 available to pay it off. But this isn’t the case. And why should it matter what the top line of the business is anyway? It’s what he keeps that counts, isn’t it?

The $6.5 million SBA cap is unreasonable and unfairly applied across the board to all retail operations regardless of what it sells. A theater owner selling $8.50 movie tickets and $8 tubs of popcorn would have to serve 393,939 customers before it crossed the $6.5 million threshold. On the other hand, an RV dealer would only need to sell 162 $40,000 RVs before he reaches the same ceiling, not including service, F&I, parts and accessories.

So, if banks won’t lend 100 percent of the money without collateral or some type of federal loan guarantee; and the federal government won’t loan money to buy a reasonably successful dealership because it sells expensive motorhomes, not movie tickets or widgets; what is an RV dealer suppose to do when it’s time to exit the business? 

Ironically, the SBA’s own Web site features a section on exit strategies for small business owners.  One of the articles posted to that site contains this gem:

The process for getting out of business successfully requires the same amount of planning as going into business. While the process should be easier, it is likely to be less enjoyable and more stressful. The best advice for business owners is to think about the future during the early stages of getting into business. Exert managerial influence to ensure that complications and problems which could affect dissolution and net value do not develop into roadblocks. When the time for getting out of business comes, engage the invaluable expertise you will need, and prepare a plan.

So there you have it. The SBA says it takes planning in the early stages of business development to successfully get out of a business. Apparently that means you should plan to only grow so much. Limit your sales, reduce your profitability, don’t sell many $100,000 motorhomes, don’t hire staff to service customers and you’ll be a true “small business” as defined by the federal government.

You might not have many customers, but at least the poor schmuck who will eventually buy your business will qualify for an SBA loan.

The news over the past few days is filled with such lunacy that I had to double check to make sure there is not a full moon over North America. There isn’t. In fact, we’re in a new moon phase which might explain the void in thinking that is impacting people in politics and business. Each of the subheads below links to a different story, if you’d care to read them.

Don’t smoke in your RV in California

The news out of California this morning is that the state just passed a ban on smoking in motor vehicles if children are present. I’m hopeful that RVs have been exempted from this further encroachment upon the freedom of Americans, but I don’t know for sure.

What I do know is that I’m smoking mad at politicians who are constantly hammering at the rights of smokers. Don’t get me wrong, I’m not a smoker and I don’t like hanging around those who do. However, for years, state, local and federal government has hammered away at smokers through stifling taxes and a barrage of laws prohibiting where they can smoke. Excuse me, but if smoking is so harmful to people why doesn’t the government just ban it?

For the answer, just follow the money. Government generates scandalous amounts of money from smokers and tobacco companies.

So, until the 25 percent of Americans who smoke actually stand up and blow it in the faces of politicians, or until politicians actually work up the courage to actually ban the product outright, expect more of the same.  Today, that means if you’re traveling down the highway in California, you can’t smoke in a vehicle – even with your window open.

I certainly hope the looney legislators in California never figure out that campfires produce smoke around children.

Auto workers go on strike

Only in unionized America! Let’s say your company is being hammered by the competition. Your sales plummet and marketshare goes out the window as consumers abandon your company in droves for products that are better built, less expensive and offer more features. If you worked for that company, wouldn’t you likely scratch your head trying to come up with ways to increase buyer confidence and, thus, sales? Apparently, not in Detroit.

In the Motor City, where workers build inadequate vehicles consumers don’t like and won’t buy – and where workers have successfully backed their companies against a financial wall – the response would be to dig yourself into a trench. That’s what union workers basically did at Chrysler and General Motors this week and last. These crybabies who have extorted billions from their firms now want the company’s to guarantee job security.

It’s not like the companies have grown 5.5 percent this year, but cut their workers’ pay anyway because they didn’t hit the 6 percent forecasted growth. No, these are companies in deep trouble. Yet the workers pulled themselves off production lines (as if anyone could tell they were actually working), picked up signs and pouted until the company caved and basically said, “Yes, we’ll guarantee that you can continue building cars consumers don’t like and won’t buy. And, yes, we will continue to pay $18 billion in long-term retiree health care costs we were forced to give you years ago on another occasion when you stopped ‘working.’”

Give me a break. Where’s Ronald Reagan when we need him? Either send in more robots or fire these boneheads, hire people who believe in good old American work ethic, and put the companies back on track to long-term profitability.   

Congressional staffers encouraged to get shots before attending a NASCAR race  

It’s no secret that people elected to and employed by Congress are seriously out of touch with the rest of the country. It’s also no secret that these elitists loathe working class people who pay big bucks to sit in the sun and watch others burn barrels of fossil fuels in high-speed racing events. But this story out of Washington defies all logic.

The House Homeland Security Committee planned a fact-finding trip about public health preparedness at mass gatherings and decided to conduct the research at two of the nation’s most heavily attended sporting events, NASCAR’s Bank of America 500 event this weekend and the UAW-Ford 500 last weekend.

Staff who organized the trips advised the NASCAR-bound aides to get a range of vaccines before attending — hepatitis A, hepatitis B, tetanus, diphtheria and influenza.

In other words, Congress thinks its as dangerous for people to visit NASCAR events as it is to visit some backward country in South America (or central Detroit).

Too bad we can’t inoculate Congressional staffers — and their bosses — with an extra-potent dose of common sense.

Democrats propose a $1,000,000,000,000 tax increase

We are in such desperate need of common sense in Washington, an entire 50-mile area around the capital city should be cordoned off and nobody allowed to enter until he or she can prove successful completion of sixth grade economics.

As it stands now, nearly 23 million Americans will be hammered with extra taxes next year thanks to the brilliancy of the Alternative Minimum Tax. The ATM was proposed by Congress many years ago after a few wealthy individuals proved they could scam the system and avoid paying taxes all together. But today, thanks to lazy and stubborn elected officials, the ATM ceilings haven’t been changed and middle class Americans get to pay the tax. In fact, if reforms aren’t passed by the end of the year, one out of six working people will be tapped in April for ATM taxes.

So, in a classic Congressional smoke-and-mirrors game, Democrats have proposed eliminating the ATM tax that generates $800 billion in revenue with one that will generate $1 trillion. According to Politico.com,

Robin Hoods expect (Dem. Senator Charles) Rangel to swap the AMT for a new tax targeted exclusively at the highest-income payers. One often-mentioned idea, proposed by Leonard Burman, director of the Urban Institute’s Tax Policy Center, would impose a 4 percent surcharge on unmarried taxpayers making more than $100,000 a year and couples making more than $200,000. 

Yeah, let’s punish unmarried people! And we’ll certainly want to punish anyone with income high enough to afford a recreation vehicle.

Seriously, as of this nanosecond, the federal government estimates there are 303,099,171 people living in America. The Department of Labor estimates there are 146,300,000 people employed in America (not including congressional staffers). That means 48.3 percent of America is actually employed in a job that produces something to generate income. The rest are children, retirees or autoworkers. According to the Tax Foundation, 121 million Americans will pay absolutely no federal tax this year — and that doesn’t include children.

So, when Congress proposes a $1 trillion tax, it will fall on about 150 million people to pay for it. That means, for this one new tax alone, the average share per taxpaying America (not all Americans are taxpayers) will be roughly $6,667 per person.

When you think about it, our federal government spends $2.6 trillion per year. If every single man, woman and child paid his “fair share,” it would come out to $8,472.47 per person. The average family of four would need to pay $33,889.90 in federal taxes alone. Remember that the next time you hear some yahoo complaining that “the rich” should pay their “fair share.”

Just like unionized auto workers will certainly bring about the demise of the America auto industry, unionized federal employees and their accomplices in Congress will bring about the demise of the American taxpayer.

It’s looney tunes, folks!