The announced acquisition of Elkhart, Ind.-based Forest River Inc. by Berkshire Hathaway, the holding company headed by billionaire Warren Buffett, is being viewed as a shot in the arm for the industry, according to a report in the Elkhart Truth.
“To have somebody like Warren Buffett look at your company I think is very complimentary to your leadership,” said Bill Bradley, executive director of the Economic Development Corp. of Elkhart County. “It has the potential to be very positive for the community because Berkshire Hathaway has the financial capacity to really grow a company.”
This is not Berkshire Hathaway’s first acquisition of an Elkhart-area company. In 2002, Buffett’s company acquired CTB International Corp., a manufacturer of equipment for grain storage and poultry, hogs and egg farming in Milford, Ind.
Pete Liegl, founder and sole owner of Forest River, sees the acquisition as a way for the firm to continue to expand, particularly in the commercial bus market and possibly in the boat and RV industries as well.
Buffett’s track record in the manufactured housing industry may serve as a blueprint for Forest River. Manufactured housing builder Clayton Homes, based in Maryville, Tenn., said its ability to expand is a result of becoming a wholly owned subsidiary of Berkshire Hathaway. Within a year of being acquired, Clayton was able to buy its competitor, Oakwood Homes.
Chris Nicely, vice president of marketing at Clayton, said that without the “capital strength” of Berkshire Hathaway, his company would have had to purchase the company in pieces rather than buying the entire package at once.
He said the acquisition of Forest River by Berkshire Hathaway could be good news for the entire RV industry. When Berkshire Hathaway acquired Clayton Homes in 2003, the stock prices of manufactured home makers rose throughout the industry.
Indeed, Buffett’s entrance into the RV industry could be seen as a sign that the RV market is maturing and will not be subject to the ups and downs of the economy.
Liegl said a major objective of the deal was to ensure that the Forest River employees “will be taken care of.”
Berkshire has a reputation of buying companies and continuing to run them, often with the local management team remaining in place.
Nicely agreed, saying daily operations did not change when Berkshire Hathaway acquired Clayton. The acquisition enabled Clayton to expand its market share which Nicely said created more job security.
At Clayton, the work force grew from 8,000 at the time of the Berkshire acquisition to 13,000 today.
“For us, it has meant opportunity and continued growth and strength for our team members,” Nicely said.
Bradley said local leaders must continue to entice Forest River to build in Elkhart County by attracting good workers and providing quality-of-life amenities as well as giving economic support in the form of tax breaks and infrastructure construction.
“We have to be vigilant as a community and make sure we’re as competitive as we can be,” Bradley said.