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Although Monaco Coach Corp. was profitable each quarter last year, its business suffered around the time of the U.S.-Iraq war, forcing it to lay off about 15% of its work force in Indiana and Oregon.
But Chairman and CEO Key Toolson said the leading diesel pusher Class A motorhome manufacturer learned its lessons from last year and has taken steps to avoid a repeat the next time the economy softens, according to The Oregonian of Portland, Ore.
Although Monaco hired more workers and increased its production levels during the second half of 2003, Toolson said, the company has undertaken three measures to even out the RV industry’s cycles:
• Production lines, once dedicated to as few as two models apiece, have been revamped to be more flexible so they can continue operating even as demand for the various models changes.
“If we have a model that slows down, we can keep lines going with other models,” Toolson said.
• The company’s market forecasts now are based on retail sales data, dealer inventory levels and the amount of time specific units stay on dealer lots before they are sold and Monaco’s own inventory levels. Previously, Monaco relied mostly on dealer forecasts.
“Dealers can be too optimistic or too pessimistic,” Toolson noted.
• Monaco has adopted an internal policy of maintaining a dealer order backlog valued at $350 million. Previously, Monaco sought to have a backlog valued at $250 million. The bigger backlog will insulate the company from fluctuations in demand, Toolson said.
“What they (Monaco) are doing now should help them to avoid situations like what happened last year,” said Jeff Tryka, an analyst at Delafield Hambrecht, a Seattle investment bank.