Jayco Inc. recently laid-off 130 employees, or about 10% of its labor force, in order to reduce expenses and to bring production into line with the dealer demand for its products, according to Sid Johnson, marketing director.
However, the company, which primarily builds towable RVs, sees the wholesale market for towables improving beginning in the third quarter of this year, Johnson said.
Additionally, Jayco is going ahead with plans to open its Class A motorhome assembly plant north of Middlebury, Ind., on May 7, he added.
Dealers continue to be “very, very cautious” about ordering more units from the manufacturers despite the fact the retail market for towable RVs is relatively healthy, Johnson said.
Dealers are ordering fewer new units from the manufacturers because they are worried about the economy slipping into a recession and they are turned-off by high interest rates. The fact three major dealer inventory finance sources left the RV industry last year also makes it more difficult for dealers, particularly larger ones, to order the number of units they ordered a year-ago.
“A big dealer might have $30 million in outstandings, $10 million from each of three (inventory finance) sources,” Johnson said. “If one of those lenders leaves the RV sector, then it’s awfully tough from him (the dealer) to replace that $10 million (in borrowing power).”
Consequently, Jayco executives decided about two weeks ago that shorter work weeks were not enough and that 85 production workers and 45 office workers would have to be let go, Johnson said.
Jayco also delayed the opening of one of its two new towable RV assembly plants in Middlebury at least until the second quarter.
The recently laid-off workers will be the first to be called when Jayco needs to staff the new towables plant and the new Class A motorhome plant.
However, the labor force at the Class A plant will be small during the first several months of operations because that sector is weaker than the towable segment of the RV business. But by the middle of 2002, Johnson believes the Class A motorhome market “will pick up appreciably.”