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Opinion: The more things change, expect them to stay the same

Opinion: The more things change, expect them to stay the same

I find it highly ironic that today, the official start of the Independence Day holiday weekend, that the largest independent RV manufacturer in the industry, Jayco, is swallowed up whole by the largest publicly-traded company in the industry, Thor Industries.

The good news is that 83 percent of RV manufacturing is now under the control of two people – Bob Martin, the CEO of Thor Industries, and Peter Liegl, the CEO of Forest River.

Wait, is that really good news?

The industry was screaming last fall when Keystone Automotive announced the acquisition of Coast Distribution to lock up 80 percent of the RV aftermarket with the formation of LKQ-KEYSTONE-NTP-STAG-COAST.

From what I’m reading today, Thor’s acquisition of Jayco isn’t considered good news at all, except by traditional industry cheerleaders, ie: my competitors. Consumers are concerned, suppliers are nervous and Jayco dealers have an “oh, crap” attitude.

The consolidation of power in the RV industry around a handful of people is a disaster in the making.

  • Manufacturing is controlled by Thor and Forest River
  • Dealerships are being consolidated by Camping World
  • Distribution is controlled by Keystone Automotive
  • Suppliers are being gobbled up by Lippert Components
  • RV insurance companies are being acquired by Brown and Brown

If just one of these big companies goes down in the next recession, the ripple effects through the industry will be mindboggling.  There are several companies in the RV industry that are literally too big to fail.

Their demise or even a significant falter will bring others down with them, like people trapped by the suction of a sinking ship.  The reason being, the RV industry has now placed way, way, way too many eggs in too few baskets.

I will address this in further detail starting next week with a series of editorials about the RV industry’s death spiral.

Consolidation stinks for small business

I’ll readily admit that I have never been a fan of big business.

  • It stifles innovation – Corporate bureaucracies simply move too slowly to implement needed change.
  • It wrecks havoc on customer service – Have you ever tried to call Google?
  • It lowers quality – If there is no competition, who really cares what customers think?
  • It demands obedience – If there are only one or two big players serving an industry, people and smaller businesses are forced to comply with inane rules, pricing games and competitive restrictions or risk being completely shut out of a market.
  • It confines entire industries — New companies have little chance to bring better products to market due to long-term and often exclusive contracts with big firms, and the monumental task of scaling huge barriers to entry.

Jayco and Winnebago were considered the last vestige of big independent manufacturing companies in the RV industry.  Keep in mind Winnebago is a public company, just as Coast Distribution was last year when it was gobbled up by a billion dollar behemoth of a public company.

There are a few others, like Pacific Coachworks, Adventurer RV, Lance, Augusta, Northwood, Omega and NeXus, but together they control a much smaller segment of the industry. Today, just one in six RVs are manufactured by independent companies.

While it presents the independents with decent opportunity to guerrilla market their way into the industry, do they really have a voice? When there are 20 players, each pretty much have equal power. When there are two voices, who makes the rules?

RVIA in a tough spot

Today’s merger puts the RV Industry Association into another precarious position. The association, and thus the industry, was led by Doug Gaeddert, the general manager of Forest River, from 2012 to 2014. Forest River controls 35.66 percent of the market.

Derald Bontrager, then the CEO of Jayco, replaced Gaeddert at the helm of RVIA. Wow, an independent company did have the ability to influence the industry!

Now, thanks to today’s acquisition, Thor Industries is technically in charge – and the firm now accounts for 47.1 percent of all RVs sold in America.

Two huge players in the RV industry enjoyed back-to-back opportunities for influencing the direction of the industry to their advantage, and who can stop them when they lead the association that governs the RV market?

Through sheer buying power alone, the juggernauts can keep suppliers and dealers in line by insisting on a “our way or the highway” approach. With Camping World enjoying sweetheart deals with Thor and Forest River, independent dealers are even more helpless today to maintain a competitive advantage.

If Bontrager steps down, and even If he completes his full term next year, who is likely to step into the position as RVIA chairman? Big Banking.

Bob Parish currently serves as first vice chairman and is next in line to the throne. He’s the vice president of national accounts for Wells Fargo, which consumed GE Commercial Distribution Finance earlier this year to become the largest source of floorplan financing for RV dealers.

I won’t ever let the industry forget what GE did to dealers in the great recession. If there is an economic downturn next year, few will be comforted by the fact that the big banker responsible for that mess is at the helm of the RV industry.

Lack of confidence?

One thing the sale of Jayco to Thor Industries suggests is that Jayco’s senior leadership had little confidence that the next generation or two of Bontragers would be able to lead the company.

Jayco’s tagline for years has been “Generations of Family Fun.” It’s a nod to the long-time family-owned business founded by Lloyd Bontrager in 1968 when he started making pop-up campers in a barn on his family farm.

After Lloyd Bontrager was killed in an airplane accident Easter Sunday in 1985, his wife, Bertha, assumed control of the company.  Eventually, their two sons, Derald and Wilbur, both took over key leadership positions in the firm.

Year after year at Jayco “homecoming” events, Bertha, Wilbur and Derald Bontrager assured dealers that their children were being groomed to take over the “independent” company as Jayco prepared to pass the mantle to the third generation.

But when a shakeup of leadership positions in April 2014 did not reflect any third-generation children in key functions, people wondered if that was really the case.

Today’s sale to Thor Industries obviously reflects a huge move away from the “generations of family fun” premise.  Look for plenty of tap dancing at Jayco’s homecoming event in Orlando when it begins one month from today.

Rumored for weeks

The merger of Jayco and Thor Industries had been heavily rumored for weeks. In fact, I posed that question to Bob Martin and Derald Bontrager June 22 and simply asked that they deny the rumor.  After all, denying a rumor is the surefire way to beat it down.

Martin was the first to respond when he emailed back this statement:

“There are always many rumors floating around in the RV industry.  It would be a full-time job to try to comment on all. So with that, and the fact that we are public, I can’t and don’t comment on rumors. I get calls every week on who we or many in the industry are buying or selling. Since we are public, we get news out as soon as we can. So you will know timely whenever there is real news through a press release and I will be happy to comment as always.”

Ashley Lehman, Jayco’s director of marketing and member of the company’s third generation, responded next by noting, “There have been rumors about Jayco in the past and there will be in the future. That’s the nature of our industry. Jayco has always taken the position of not responding to them and that practice remains the same today.”

That’s very good to know. Because of responses like this, these “non-denial denials” have forced a policy change at RV Daily Report. In the future, when seeking comment on a rumor, we will assume it is true unless a company official expressly denies it.

Watch out folks, there are storm clouds ahead.

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About Greg Gerber

Greg Gerber is a freelance writer and podcaster who has been writing about the RV industry since 2000. He is the former editor of RV Daily Report and can be reached at greg@rvdailyreport.com.

7 comments

  1. Entegra was known industry wide for their extremely excellent customer service. Even though Tadd Jenkins, Joyce , and the others are suppose to be staying at their current positions, I wonder what influence Thor will have in keeping these folks long term AND what Thor’s influence will have on Entegra’s customer service.

  2. Greg, I always enjoy your comments. I am a fulltime RVer, and I like to follow the industry to see where things are headed. Between your email postings and your podcast, I believe I am a better informed person about the issues. Since the builder of my 5th wheel trailer, DRV Luxury Suites, was previously acquired by Thor Industries (although after I purchased mine, thank goodness!), my next trailer will have to be an Augusta or even a New Horizons in order to get a decent, quality-built unit.

  3. I surely hope the Jayco Class (Precept, Alante) Sales and Service team remain.
    They have been tremendous assistance with many of the Precept owners…

  4. The merger of Jayco and Thor Industries had been heavily rumored for weeks.

    me & my co-workers have been joking about it for 2 Years.

  5. Donald E. L. Johnson

    There are several reasons small companies are selling out:
    1. Big Government requires employers who have the resources to lobby and comply with onerous regulations under ObamaCare, the EPA, the NRLB, the IRS, EEOC, the DOJ and the Consumer Protection Agency. We’re France.
    2. Families want to take the capital gains before President Hillary Clinton and a Democrat-controlled Congress enact sharply more punitive capital gains and inheritance taxes and regulations.
    3. Not everyone in a family wants to be in the family business. Trustee kids are very busy.
    4. Some in a family are happy owning the company’s stock, some want to sell their stock and invest elsewhere.
    5. Executives of small companies are finding it difficult to deal with consolidated suppliers, dealers and distributors. They want to sell while they still can get decent prices. Stocks are over valued and so are profitable companies. It’s a good time to sell.
    6. Consumers will be well served or will go elsewhere. We don’t have to own RVs.

    I don’t own any of these stocks.

    • Donald E. L. Johnson

      I just went to SeekingAlpha.Com to read the press release announcing the Thor acquisition of Jayco for $576 million in cash and to check out the profitability and valuation of THO and Winnebago (WGO).

      1. Jayco owners sold the company for cash, not stock. The family has done some estate planning and clearly doesn’t see much opportunity for capital gains owning THO stock
      2. Jayco will be operated as a wholly-owned subsidiary of THO by Jayco’s current managers. Clearly, the Jayco folks are confident that they will be allowed to run their business and thrive as it grows. THO is decentralized and like Berkshire Hathaway buys strong companies with strong owners who want to stay with their companies. That probably allows THO to buy good companies for good prices.
      3. The profitability of THO and WGO is dismal. They’re valued pretty much the same as slow growth, relatively unprofitable businesses despite this year’s surge in RV sales. Clearly, no one has monopoly pricing power in the RV industry, yet.
      4. Camping World has filed for an initial public offering of its stock. It will be valued as a retailer and possibly as a growth stock especially if it is raising money to add stores and services. Will be fun to watch.

      I don’t buy IPOs and I don’t own these stocks. 2013 Winnebago Reyo/Via (T). Almost 40k miles in four years.

  6. A sad day for the aftermarket repairmen. Worked with them since 1982. Jayco has always been on of the best companies to deal with. They actually answer the phones & respond to emails. All too often, the big companies could care less about service and more about the bottom line!

    The Bontragers are some of the nicest people you will ever meet. I hope they stay around for a while and continue to run the company as everyone should…with honesty, and integrity.

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