The RV industry in a county is on the verge of a recession at the turning point

Recreational vehicle shipments to dealers have decreased by about 20% since the beginning of the year, following a 4.1% drop last year, according to data from the RV Industry Association. Deliveries over several years preceded the last three recessions.

"The recreational vehicle industry is more apt to call a recession than economists," said Michael Hicks, an economist at Ball State University in Muncie, Indiana. According to Hicks, the slowdown in consumer demand for motorhomes and rising vehicle prices due to tariffs is either in recession or on the verge of recession.

The Dow Jones Industrial Average recorded its largest year-over-year decline last Wednesday, when yields on 10-year Treasuries fell short of those of two-year bonds for the first time. times since 2007. This phenomenon is often perceived indicative of a recession.

Elkhart has a long-standing economic base – with captain's seats and bathrooms on board.

In the United States, about 65% of recreational vehicles are manufactured in the Elkhart area, as well as many of the tires, wheels, appliances and furniture that make up them. Elkhart ships its recreational vehicles to dealerships, who make sure they do not have too much inventory and withdraw their orders when they feel the cool desire of a luxury product like a recreational vehicle.

Declining consumer demand may affect Elkhart. The unemployment rate in Elkhart County, which has a population of 200,000, was 3% in June, which is lower than the national rate of 3.6%, according to federal data. But it is up from the 2.1% recorded in April 2018. The weekly hours worked fell by 0.5% in June.

During the last recession, Elkhart's unemployment rate peaked at 20% in 2009.

Giant of the manufacture of recreational vehicles

Thor Industries
Inc.

based in Elkhart, stated that it was reducing the production of recreational vehicles and moving its staff to a four-day work week.

LCI Industries
,

Another Elkhart manufacturer has regrouped some of its facilities to cope with the slowdown.

Baird analyst Craig Kennison said he estimates, based on proprietary data, that retail sales of recreational vehicles this year had dropped to a medium to high number and expected a similar drop next year.

Many manufacturers attribute this slowdown to over-consumption due to increased demand in 2017. When demand began to slow in 2018, dealers ended up with too many RVs and began ordering fewer vehicles.

Nevertheless, shipments remain historically strong. Leaders say they expect stocks to be balanced by the end of the year. The RV Industry Association expects a 2.5% increase in deliveries to dealers by 2020.

Bill Murnane,

The managing director of LazyDays Holdings Inc., a national distributor based in Tampa, Florida, does not think the year 2020 will bring relief anticipated by some manufacturers. He said consumer demand began to weaken last fall and he would not have seen it recover quickly.

"You need food, clothes but you do not need a camper," he said. "When people start having less confidence in their 401 (k) job prospects, the economy as a whole, they will have less confidence in buying a recreational vehicle. And that's what you see right now. "

RV prices can range from about $ 12,000 for a $ 212,000 collapsible trailer for a luxury motorhome, based on average retail prices reported by the RV Industry Association.

Prices were sensitive to United States tariffs on certain Chinese products. The industry estimates that tariffs could affect up to 523 items ranging from toilet seat covers for RV bathrooms and cowhides for leather furniture to aluminum or aluminum. steel used in vehicles.

Divya Brown, president of TAXA Outdoors, a small Houston-based manufacturer of RVs, said her company bought most of her pieces from Elkhart. Its suppliers are increasing their prices to account for the impact of imported products such as aluminum and steel. Mrs Brown said the company had recorded a 22% increase in the cost of steel and 9% in the cost of aluminum.

"When our suppliers experience price increases, we see price increases," she said.

Marc and Julie Bennett, who have been living on the road for three and a half years, said that they had decided to buy an old RV for $ 25,000 and rehabilitate it for $ 12,000. , having estimated that something similar on the lots would have cost them nearly $ 350,000. The Bennett say they think the economy is about to slow down and they do not want to be stuck with a rapidly depreciating asset, such as a camping car, whose owners are victims during the recession of 2008.

"We can not justify that money, even if it's a full-time home, on a depreciating asset," Bennett said.

Write to Shayndi Raice at [email protected]