Although Fleetwood Enterprises Inc. is selling more travel trailers and fifth-wheels, that portion of the company’s business has been described as being only marginally profitable.
But Fleetwood President and CEO Ed Caudill said last week the company’s design engineers were addressing the situation and that travel-trailer and fifth-wheel division earnings will improve in Fleetwood’s second fiscal quarter (which will end in late October), and third fiscal quarter (which will end in late January).
Chris Braun, senior vice president of Fleetwood’s RV Group, said the engineers are looking at the total cost structure in the travel-trailer and fifth-wheel group.
“We have several initiatives under way to get our (material and labor) cost structure down,” he said.
“Our engineers are looking at reducing the labor and material costs while maintaining a high level of quality,” Caudill added. “We should see the (positive) impact during the end of our second and third quarters.”
Over the past three calendar years, Fleetwood’s combined travel-trailer and fifth-wheel market share has declined from 15% in 2001 to 12.7% in 2003 “due to increased competition in the travel trailer industry, our lack of participation in a few growing market segments, including the luxury, hybrid and sport-utility segments, and only moderate acceptance of redesigned core products of conventional and fifth-wheel travel trailers introduced at the industry’s largest trade show in November 2002,” Fleetwood reported in its Securities & Exchange Commission (SEC) Form 10 K, which was published last week.
Although Fleetwood’s travel-trailer and fifth-wheel shipments increased 14% during the 12 months ended April 25 to 34,351 units, its travel-trailer and fifth-wheel retail market share slipped to 11.6% during the first four months of this year, Statistical Surveys Inc. reported. That occurred because the travel-trailer and fifth-wheel retail market expanded at a faster rate – 17.3% – during the first four months of this year.
“Recently we entered the sports utility segment with our Gearbox lifestyle support vehicle, as well as introducing several new, innovative floorplans in other market segments,” the company stated. “We believe that with these recently introduced floorplans, combined with new products under development, our market-share position should improve.
“The Travel Trailer division introduced new products covering 60% of its model lineup at the national trade show in 2002,” Fleetwood also reported in its recently published 10 K. “The new products were well received, as evidenced by the double-digit percentage sales growth since introduction. However, due to the breadth of change in terms of the number of models, content and resulting complexities, the impact of the new products on manufacturing efficiencies negatively affected the operating results in the last half of fiscal year 2003 and in fiscal 2004. We anticipate more normalized operational efficiencies in the future.”
Fleetwood’s travel-trailer and fifth-wheel sales revenue increased 29% during the 12 months ended April 25 to $590.4 million, and, Fleetwood stated in the SEC document, “Although we’re pleased that the division showed an operating profit, this remains an area of management focus. We’re looking at operations from every angle and are confident that the changes we’re making to products and processes will result in a consistent trend of improvement in revenues, market share and profitability.”