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Extended Credit Crunch Seen For RV Industry

Credit crunch that caused massive layoffs in RV industry likely won't loosen anytime soon and companies might want to band together to create their own financing machine, says banker.

SOUTH BEND, Ind. (AP) -- The credit crunch that has caused massive layoffs in the recreational vehicle industry likely won't loosen anytime soon and RV companies might want to band together to create their own financing machine, a founder of a boutique investment bank says.

"I don't see credit freeing up for 12 to 18 months because there is such an issue with asset values," said Rob Snow of Carillon Capital Partners.

Snow spoke Wednesday at a Recreation Vehicle Industry Association seminar on how the U.S. Treasury programs and the federal economic stimulus package will impact the industry.

Layoffs from northern Indiana's RV plants have been the driving factor in the loss of some 12,000 jobs in Elkhart County alone in the past year, pushing the county's unemployment rate up to 18.3 percent.

RV officials, however, say healthy attendance at recent retail shows around the country has reassured the industry its products are still popular with consumers.

"It's one thing if you said consumers don't like the product where you as a manufacturer can get at it, can fix it, can design it," said Richard Coon, president of the RV association. "It's another thing to say what do you do with the financial markets where you have little or no control. That feels worse. I'm not in control of my destiny at all. That is really aggravating."

Snow told the RV officials that the recent federal programs have provisions that could still hamper the credit market's willingness to make RV loans but the association was hopeful that some the restrictions will be eased.

"We have an avenue to make things work," Coon said. "It's not a home run yet but I can tell you this, if we weren't in it, we would be nowhere, we wouldn't have another avenue."

The news that credit may flow back into the RV markets comes at a time when many manufacturers are worried about their futures. Chapter 11 bankruptcy filings by RV giants Fleetwood Enterprises and Monaco Coach has other manufacturers concerned they could find themselves in the same situation if sales do not improve, Coon said.

Wholesale shipments of RVs dropped nearly 33 percent in 2008. Richard Curtin, director of Consumer Surveys at the University of Michigan, has forecast that in 2009 the industry will fall another 45 percent, shipping only 130,100 units. This compares to the 237,000 RVs that were shipped in 2008 and the 353,400 units shipped in 2007.

Coon said what happens to RV manufacturers and dealers as a result of this retreat depends on how long the downturn lasts.

"If the industry drops and stays there for a couple of three years, then this industry is going to have to size down significantly," he said. "If it's a one-year hiatus and business starts to pick up and grow again, then I think we have a chance of getting back to business as usual."

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