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In 1968, four friends pooled their wealth – about $20,000 in cash, two pickup trucks and a prototype camper – and started Oregon-based Caribou Manufacturing Co.
As reported by the Register-Guard, Eugene, the company started out building campers of aluminum and wood that fit on the back of pickup trucks. A few years later, they bought a van chassis and built an integrated camper on the back, sold under a new brand: Monaco.
After one of the partners, Bob Lee, was ousted by the others, he formed his own company, which he dubbed Country Camper, the name lifted from a Barbie doll play set. He later changed the name to Country Coach Inc.
Such were the humble beginnings of Lane County’s recreational vehicle industry.
Over the ensuing decades, the builders of RVs became a powerhouse of the local economy, rivaled only by the wood products industry in terms of corporate employers. And Monaco Coach Corp. and Country Coach evolved into fierce rivals that spawned competitors and became national industry leaders known for building luxurious land yachts featuring all the amenities of home.
Now the two companies, battered by a withering economic downturn, find themselves at a crossroads with their very survival at stake.
Privately-held Country Coach notified employees last month that it would shut down for good at the end of February unless it can obtain additional financing. Publicly traded Monaco, its stock trading at historically low prices, finds itself bracing for what one analyst said could be a possibly hostile takeover bid by an Oklahoma hedge fund that bought up 15% of the company’s stock.
Other industry leaders, including Fleetwood Enterprises Inc., Thor Industries Inc. and Winnebago Industries Inc., are struggling as well. Coachman Industries Inc. quit the business last month, selling the assets of its RV business to Forest River, an RV company owned by Warren Buffett’s Berkshire Hathaway.
A handful companies, including Western RV, Bigfoot Industries, Alfa Leisure Inc, and National RV Holdings Inc. – the former parent of Country Coach – have gone out of business in the last two years.
The Register-Guard reported that the RV industry is historically, and notoriously, a cyclical business, and a classic bellwether of the economy. But it has never found itself in a ditch as deep and as long as the one it now finds itself in.
“We could get a wave of consolidation,” said Frank Magdlen, an RV industry analyst at The Robins Group in Portland. “They’re all on life support.”
The companies that survive this recession will be the ones that are willing to downsize their businesses to meet the decreased demand for motorhomes, Magdlen said. That means cutting production capacity and cutting staff, something all the companies have done, he said.
“You generally don’t cut fast enough,” he said. “The industry reacted quite quickly but the demand drop has been much quicker than anyone foresaw.”
Through September, RV shipments were off 25% from 2007, according to the Recreation Vehicle Industry Association (RVIA). The industry’s chief forecaster, Richard Curtin of the University of Michigan, said he expects shipments this year to be off another 25 percent from 2008.
Both Monaco and Country Coach made sharp cutbacks in 2008. Monaco closed three Indiana factories last summer, suspended its dividend, cut its production in half and laid off about 2,100 employees in a series of job cuts. The company has about 2,900 workers, including 2,200 in Oregon, most in Coburg and Harrisburg.
Country Coach made a series of layoffs in 2008, reducing its work force from about 1,200 to around 500.
According to the Register-Guard, employment by transportation equipment manufacturers – a segment of the economy dominated by RV makers – peaked in Lane County at 4,500 in 2005. As of November, the transportation segment employed about 3,400 workers, said Brian Rooney, regional labor economist with the state Employment Department. He said it’s not clear when that number may start growing again.
“We’re kind of looking for some sign the housing market will at least stabilize and there will be less bad mortgages out there and credit can solidify so people can buy big ticket items,” he said.
The Lane County RV industry has been through ups and downs in the past.
In the 1980s, after Country Camper became Country Coach and started building the large, bus-like coaches that it’s known for today, other companies soon sprouted up.
Tom Nestell, who had worked at Country Coach, founded Marathon Coach in 1983, specializing in converting commercial bus chassis to ultra-high-end luxury coaches. Marathon continues to occupy that niche today, employing about 300 workers in Coburg. Collins Campers started in Springfield in 1984. In 1986, Mathew Perlot, who had worked at both Country Coach and Monaco Coach, founded Safari Motor Coach in Harrisburg.
By 1990, RV makers employed 1,200 to 1,500 workers in Lane and Linn counties, and the industry was poised for a period of rapid growth and ambitious corporate plays.
Monaco Coach, led by CEO Kay Toolson, was the first local company to go public with an initial public offering of its stock in 1993. A year later, SMC Corp., formerly Safari, acquired the Bend-based Beaver Motor Coach Co., which had filed for bankruptcy, and then went public.
In 1996, Monaco, Safari and Country Coach got into the corporate acquisition game. Monaco bought the Holiday Rambler RV division from Harley-Davidson for $38 million. Safari bought Honorbuilt, maker of El Dorado RVs. Country Coach, meanwhile, was sold to National R.V. Holdings Inc. in Perris, Calif., for $9 million.
By 1999, Monaco Coach had 1,168 workers on payroll, emerging as Lane County’s largest for-profit employer, surpassing Weyerhaeuser Co.
The early 2000s saw the industry go through some contractions. Both Monaco and County Coach laid off workers. SMC, awash in debt and warranty claims, was bought by Monaco.
In the middle of the decade, Country Coach added jobs while Monaco cut back.
Early in 2007, Bob Lee made a triumphant comeback as part of a group of investors that bought Country Coach back from financially ailing National RV Holdings.
“We are back!” proclaimed the new owners as they took the company private. By the end of the year, National R.V. had filed for bankruptcy and shuttered its Perris plant — and Country Coach had started to lay off workers as the RV market began going south.
Last year brought nothing but bad news for the local RV industry.
Buffeted by a cratering economy, a stock market meltdown, dismal consumer confidence, tight credit and gas that rose as high as $4 per gallon, Monaco and Country Coach shed jobs. Monaco closed factories in Indiana, and breathed a short-lived sigh of relief when it was able to obtain a three-year, $119.3 million loan package late in the year – $10 million less than it had hoped for.
On New Year’s Eve, Country Coach told workers already on extended holiday furlough that the plant would not re-open unless the company got a cash infusion by the end of February.
Monaco, its stock selling at historically low prices, hired an investment fund to explore “strategic alternatives,” including joint ventures or mergers, after hedge fund Prescott Group Capital Management, its intentions unknown, took a 15 percent position in the company in the final days of 2008.