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Editor’s Note: The following is an article from IndustryWeek magazine on Thor Industries Inc., which earned a slot on the 2008 IW 50 Best Manufacturing Companies. To identify the top performing manufacturers, the IW formula factored in revenue growth and profit margin over the past three years with 2007 results weighted most heavily..
Maybe recreational vehicle and small bus manufacturer Thor Industries Inc. should adopt legendary The Who guitarist and songwriter Pete Townshend as its spokesman based on his 1971 classic “Going Mobile.” After all, the 2008 IW 50 Best Manufacturer could use all the help it can get after net income fell 87% in the first quarter from the previous year to $5.1 million and sales dropped 50%.
While Townshend sang the praises of hitting the open road in an RV, fewer people are buying into the dream of being “an air-conditioned gypsy” as the economy continues to struggle.
Industrywide RV shipments were down 24.6% through September 2008 from the previous year, according to the Recreational Vehicle Industry Association (RVIA). The downturn is expected to continue into 2009, with forecasted shipments of 186,800 units, about 25% lower than the expected total for 2008.
Among the factors Thor cited as contributing to the declines throughout the industry are overcapacity, products being sold at deep discounts, retail closings and tight lending. But the company has taken steps to reduce future downturns. They include the sale of its California Towable division, consolidating its Four Winds Class A motor home production, moving its Damon Motor Coach brand into a vacated Four Winds Class A plant, pressuring suppliers to reduce costs, investing in new product development, and voluntary pay reductions for senior management and board members.
Also, in November Thor began providing financing for its retail customers through its Thor Credit arm.
“Thor’s customers and dealers need to have retail credit, and Thor is working to fill this need,” said Thor Chairman Wade F.B. Thompson in a November statement.
One positive trend for the company is increasing bus ridership. The midsize bus market comprises 16% of company sales. Thor expects its 38% market share in the midsize bus market to rise as consumer habits change, said Thompson when 2008 third-quarter earnings were released.
“Declining consumer confidence coupled with high fuel prices have resulted in very soft retail recreation vehicle sales,” said Thompson in June when fuel prices hovered around $4 a gallon. “With record fuel prices, transit bus ridership is increasing as motorists change their driving habits. We expect this will be a long-term trend benefiting our leadership in the bus business.”
If not, more innovative ideas will be needed to get more “hippy gypsies” going mobile again.