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Back in the saddle for only two weeks, new Fleetwood Enterprises Inc. President and CEO Elden L. Smith fielded questions from the financial community Wedesday afternoon in a conference call that triggered plenty of industry buzz.
Of course, Smith’s return to Fleetwood following the exit of his predecessor, Edward B. Caudill, a former PACCAR executive who faced an eroding financial situation at the southern California manufacturer, caused enough buzz in itself.
Saying that he feels comfortable back at the company he had first joined in 1968, Smith, who had taken an early retirement in 1997 after last serving as senior vice president of Fleetwood’s RV Group, commented on a variety of topics:
On the Reason Behind his Re-Entry: Having closely monitored Fleetwood’s plight, Smith felt that he could no longer watch from a distance. “I reached the point where I was a critic of Fleetwood from the outside for long enough,” said Smith, who made the first approach to Fleetwood chairman Thomas B. Pitcher. “I wanted to be part of the solution.”
On his Goals at Fleetwood: In fulfilling a five-year commitment to Fleetwood’s board, his chief priority is to produce “consistent and sustainable profitability.” And a real key to the corporation’s recovery will be a renewed emphasis on product based on improved customer focus.
On Current Inventory Levels: Smith likes what he sees, with inventories contining to decline since a peak in late January. “I think we are in pretty good shape,” he said.
On Pending Changes in the RV Group: “I think there will be a number of changes, maybe not that significant to the outside world, but in terms of the way we approach the market, the way we rationalize our products, the way we focus some of our associates’ efforts in being more responsive to our dealers and also the consumer. We are evaluating all of those aspects of the operations, not just in RVs, but in manufactured housing to not only streamline the company but make us more effective.”
On Fleetwood’s Current Management Team: Asked if most of the right people are currently in the right places, Smith said: “Ninety percent of what we need is here, and if not in place, very close to being in the proper place right now.”
On Litigation with The Coleman Co. Inc.: Although it had begun to look as if Fleetwood and Coleman were making headway in coming to some sort of settlement over its dispute with Coleman regarding the use of the Coleman brand name in the RV business, that’s no longer the case. “At this point,” Smith said, “talks have broken down, and we are fully intending to pursue an aggressive appeals strategy.”
On Exclusive Diesel Chassis Vendors: Smith confirmed the fact that Fleetwood had recently switched its exclusive agreement for diesel Class A motorhome chassis from Spartan Motors Inc. to Freightliner Custom Chassis Corp. “It was a matter of thorough negotiations,” he said. “We found a supplier who was more competitive and have been able to strike quite a favorable situation with a company we consider to be a reliable and quality manufacturer.”
On the Manufactured Housing Business: The way the company has always been structured, the senior vice presidents of manufactured housing and recreational vehicles were always parallel on the flow chart, aware of each other’s plight and generally “joined at the hip,” said Smith. But this could change. “While I admit there are some, but relatively few, synergies to having the two businesses in the same organization,” he said, “I’ve been with the company long enough to know that they are counter-cyclical. They are seldom both down at the same time… Although I am comfortable keeping both businesses together, I never say never. There may come a time when it makes sense to separate them. However, I think both businesses need to be stronger than they are before that will be the case.”
Does that mean he would consider selling the housing division if someone made a reasonable offer, he was asked? “We certainly would consider any offer,” said Smith. “(But) what I was saying was that at this time it would be difficult for us to show the true value of the manufactured housing group in that kind of situation based on our recent past performance.”
On His Forecast for 2005: “Right now, I would say – and some of the industry numbers indicate – that it will be flat to maybe slightly down.”
On Fleetwood’s Outlook for Fiscal ’06: “I see nothing in my first couple of weeks that gives me the feeling that we can’t be significantly improved next year,” said Smith, “and that involves generating profitablity. To what degree, at this point, I can’t say.”