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Since coming out of retirement and assuming the reins of Fleetwood Enterprises Inc., Elden Smith has been on a fast track trying to revitalize the recreational vehicle and manufactured housing builder A Walk Into Abstracts – Volume Two .
The following article ran recently in the Riverside, Calif., Press Enterprise, chronicling Fleetwood’s history and Smith’s efforts since returning:
Elden Smith has been digging around in closets at Fleetwood Enterprises, searching for artifacts from the company’s 55-year history to decorate his office: miniature versions of discontinued RVs, paintings of old sales brochures.
“I like these old things. Fleetwood has a fabulous history,” said Smith, a company veteran of almost 30 years who came out of retirement March 9 to take the top job.
But Smith is looking for other ties to the past as well: the kind that made the Riverside-based manufacturer a $3 billion king of the road.
Finding them will take some work.
A one-time Fortune 500 company and the nation’s largest RV maker, Fleetwood lost both titles over the past four years. The company also lost money – more than $500 million since July 2000 – and ran through three chief executive officers.
In early March, Fleetwood announced a loss of $55 million for the prior three months and said its results would be no different for the fiscal year ending in July.
A few days later, Fleetwood’s board of directors surprised the industry by dismissing chief executive Edward B. Caudill and immediately replacing him with Smith, 64, the well-liked former head of the RV division, who had retired in 1997.
“I still had a tremendous amount of interest in the industry,” said Smith, who split his time between homes in La Quinta and Whidbey Island in Washington state.
“Most of my friends are still active or worked for Fleetwood, and I kept in close touch with them,” he said. “Over time, I became more and more concerned about things going on there, changes in the culture, focus and direction of the company.”
In January, Smith called Fleetwood chairman Thomas Pitcher, who also lives in the Coachella Valley, and asked if he’d be willing to listen to some suggestions.
“Instead of being a critic, I offered to come back and help,” he said.
The news that Smith had been hired lifted Fleetwood’s stock price, cheered company suppliers and brought a standing ovation at an employee meeting.
“I don’t know why he took the job,” said Larry Hughes, a friend of Smith’s and another former Fleetwood executive who worked directly under him for 27 years. “But he is the only guy who could come in and save that company.”
Carl Pfalzgraf, the head of sales and marketing for Rockford, Ill.-based Atwood Mobile Products, which supplies Fleetwood with water heaters, stoves, chassis hardware and other products, called Smith “a breath of fresh air” for Fleetwood.
“If the attitudes of the people who work there are any indication of the force behind Elden, it is going to be easy for him,” Pfalzgraf said. “He’s an excellent thinker and he has a decisive leadership style.”
Barbara Allen, an analyst for Avondale Partners who has covered Fleetwood for 16 years, raised her rating on the company in response to Smith’s hiring. “I had been telling people to avoid the stock before that, telling them to sell when it was at $15.”
Although Allen believes Smith isn’t as familiar with the manufactured housing side of Fleetwood as he is with RVs, he has hired someone who is, she said.
Even competitors are complimentary.
“I hated to see him come back because I liked the direction they were going,” said Kay Toolson, chief executive of Oregon’s Monaco Coach Corp., with a laugh.
“It is a daunting task I suspect, but he is smart and he’s got inherently good skills for knowing what he needs to do,” he added. “I’m sure he’s good for the company.”
Founded in 1950 by John Crean, Fleetwood practically invented the modern RV, starting with 12-foot trailers and moving on to bigger, more innovative models. In 1963, the company moved from Anaheim to Riverside; it went public two years later.
By 1982, Fleetwood had begun manufacturing mobile homes as well and logged its first billion-dollar year. But the company’s fortunes began to decline in the late 1990s as it lost touch with its customers in the face of ever-growing competition.
The biggest mistake came in 1999 when Fleetwood made a $300 million decision to follow its competitors into the retail side of manufactured housing. The move backfired shortly thereafter when that industry went into a six-year slide.
In July 2001, at the end of its fiscal year, Fleetwood reported its first annual loss in more than 20 years, $284 million. In 2002, the company lost $162 million, primarily due to problems in the manufactured housing industry.
For the first time in its history, Fleetwood then looked outside itself for leadership, hiring former trucking executive Edward Caudill as chief executive officer in early 2003.
But Caudill wasn’t able to change Fleetwood’s direction. In July 2003, it reported a $70.7 million loss. Last year, although the company made its first quarterly profit since 2000, it didn’t help in the end: net loss as of July 2004 was $22.3 million.
“In the recent past, there have been some initiatives that were distractions,” Smith said, citing the retail housing division and a chassis development program that went nowhere. “We need to focus now on our core business and on our customers.”
Smith’s immediate goals are to make Fleetwood a profitable company again and to restore the pride that he called “one of the things we have going for us.”
In just over two months, he has already replaced several key executives and put the company’s retail mobile home division up for sale. Several companies have shown an interest in buying it, Smith said, although he did not identify them by name.
In early May, he had lunch with company founder Crean, who lives in Newport Beach. “He was pleased I had the job and felt I had my work cut out for me.”
Future goals include getting Fleetwood’s products back in line with customer demands; making sure the company doesn’t overproduce as it has in recent months; and creating better relationships with dealers in the Midwest and elsewhere.
Figuring out how to do all this without laying off employees or losing any more market share will be difficult, said Smith, who has moved to Riverside.
“That’s why we come in at 6 a.m. and go home at 7 or 8 at night.”