Keystone RV Co.’s decision Thursday (Aug. 7) to lay off 290 workers, spread across its 15 production facilities, represented the first time the Goshen, Ind.-based towable builder was forced to make cuts coming out of the summer selling season – a common practice in the industry.
The South Bend Tribune reported that heading into fall and winter seasons, business typically slows down, according to Keystone President and CEO Ron Fenech, who has been with the Thor Industries Inc. subsidiary for 11 of its 12 years.
“But all of our years we never had to adjust the employment,” he said. “This year as much as we tried there were enough questions with the strength of our dealer ordering we felt we had to make some adjustments. We are not at the pace we have seen in the past.”
He added, “These are not easy decisions we have to deal with. We recognize when we lay off a person, it’s somebody who needs the income, and we don’t make the decisions lightly.”
Fenech said that slow sales had caused dealers to be more cautious on ordering in an effort to keep inventories in line.
“I would say we have two things going on,” he said. “Retail sales are off some and on top of that dealers are reducing their inventory. Those two issues combined are creating a situation where you see a slowdown in our industry.
“It’s all about uncertainty and trying to be careful on our dealers’ part.”
High gas prices were a factor, he said. But it’s more than that.
“The slowdown is much bigger than just a gasoline price issue,” he said. “Gas prices have hurt consumer confidence and that’s having an impact on the overall economy. However, we are also affected by the tight credit markets.
“It’s something we have to watch very closely. The dealers are saying it’s harder to get loans for customers wanting to buy RVs.”
The Tribune reported that the layoffs leave Keystone with around 2,500 employees. The company has 11 plants in Goshen, one in Howe, Ind., and three in Oregon. Fenech said those laid off should not expect to be called back soon.
“The next six to nine months are going to be very difficult,” he said. “Then it becomes a matter of next spring. Are there enough customers to build dealer confidence and get a natural rhythm back to our business and get dealers ordering aggressively again?”
Fenech said retail sales are only down less than 10% the first seven months at Keystone. Still, Fenech strongly believes the industry can come back strong.
“Once we get past the election year, if and when the economy picks up, you will see a very quick rebound of the RV business,” he said. “I say that because our industry has become kind of an integral part of millions of RV users’ lives. And Americans like their free time and like to vacation and RVing is a very affordable and pleasurable way for them to vacation.”