Quality control problems this summer at the National RV Inc. manufacturing complex in Perris, Calif., are a big reason why its parent company, National RV Holdings Inc., will report a loss for the third quarter, according to Brad Albrechtsen, president and CEO of the holding company.
National RV Holdings will report a loss of around $3.4 million, or 35 cents a share, during its third quarter, which will end Sept. 30, the company revealed on Tuesday (Sept. 24).
National RV Inc., President Michael Jacques also resigned on Tuesday because “basic operational issues are where we fell down,” Albrechtsen said. “The (National RV Holdings) Board felt it was time to make drastic changes.”
Jacques was replaced by National RV Inc. co-founder Wayne Mertes, who also is a member of the parent company’s board.
The quality control problems arose when National RV Inc. ramped up production too fast early in the summer, and, as a result, “most of those units weren’t passing (final) inspection, so most of those units didn’t leave the (company’s) property” until after repairs were completed, Albrechtsen said.
The extra time required to fix units coming off the assembly line forced National RV Inc. to lower its production rate to keep its yard inventory from growing too large, Albrechtsen said.
Many of the units in the yard inventory had already been sold to dealers and some had already been sold by dealers to retail buyers, so it took too long to make deliveries, he added.
National RV Inc.’s current yard inventory is worth $10 million to $15 million and it “will be worked off by the end of October,” Albrechtsen said. “We have inventory that’s sale-able and will be converted to cash.”
The Country Coach Inc. subsidiary of National RV Holdings also will contribute a small amount to the parent company’s third quarter loss. Country Coach founder Bob Lee also agreed on Tuesday to return to day-to-day responsibilities at the Junction City, Ore.-based operation “to engineer some costs out,” Albrechtsen said.
However, Country Coach has basically finished clearing-out its excess inventory, so the price-discounting of Country Coach units “is over,” Albrechtsen said.
Country Coach will move forward with its plan to re-enter the bus conversion business, he added.