Category Archives: Forest River

Forest River Riding Wave of Record Industry-Wide RV Sales

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Berkshire Hathaway’s recreational vehicle maker Forest River is benefiting from industry-wide record sales for recreational vehicles.

After slumping during the Great Recession, sales are now hitting new highs as Millennials have embraced RVs as a popular vacation alternative to hotel and motel lodging.

According to the Recreational Vehicle Industry Association’s September survey of manufacturers, RV wholesale shipments finished at 43,598 units, an increase of 29.4% over the 33,704 units shipped last September. September 2017 shipments are the best September on comparable record.

RV wholesale shipments have climbed to 378,006 units through nine months of 2017, up 16.6% over the 324,286 units shipped during the same period last year.

All towable RVs, led by conventional travel trailers, totaled 38,543 units for the month, an increase of 31.8% compared to the 29,233 units shipped in September 2016. Year-to-date totals for towable RVs are up 17% to 330,673 units.

September motorhome shipments are up 13.1% to 5,055 units over last year; paced by solid gains in Type C motorhomes. Year-to-date motorhome shipments have reached 47,333 units on 13.8% growth over the 41,599 units shipped during the same time last year.

Forest River is working hard at increasing its capacity, with facility expansions at its plants in the Indiana cities of LaGrange and Butler.

The company will spend $2.9 million to build a 100,000-square-foot facility in Butler, and will employ 150 workers when it is completed.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Forest River Marine Joins the Marine Retailers Association of the Americas

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Berkshire Hathaway’s Forest River Marine, a division of Forest River, Inc., has become a platinum member of the Marine Retailers Association of the Americas.

The MRAA’s mission is to be the single voice of marine retailers, providing member services that include: fostering and uniting relationships; raising awareness and professionalism; protecting common interests and strengthening all members.

The association is comprised of boat dealers, marine parts and accessories vendors, marina operators, boatyards, marine service providers, and all those whose livelihood is affected by the marine industry.

“We believe in the importance of a strong and effective dealer body,” said Tom McCuddy, Forest River Marine general manager. “We are proud to have a strong network of dealers, and we believe that supporting the work of our industry’s dealer association is an important contributor to the overall health of our industry and our boating community.”

Forest River Marine is a leading manufacturer of pontoon boats under the Berkshire, South Bay, and Trifecta brands.

“The Forest River team has shown a great desire to strengthen its dealer network in support of their customers,” said MRAA President Matt Gruhn. “From their participation at our annual conference all the way through to their communications with the Forest River dealer network about programs and opportunities that our team here at MRAA has to offer them, they continue to invest in and lead the way with dealer development.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Forest River Heads Down the Road to Solve Labor Shortage

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While much has been written in the national press about the Midwest having been left behind by the economic recovery, Berkshire Hathaway’s Forest River Inc. is actually struggling to come up with enough employees in Elkhart, Indiana, and is moving some of the production of its XLR Boost toy hauler 73 miles down the road to Butler, Indiana.

Elkhart, which is Forest River’s headquarters, has an unemployment rate that is under 3.3 percent.

“We want to continue to keep our quality level high and increase the amount of production. But we can’t do that with the amount of workforce that we have here (in Elkhart). We need a separate facility for the Boost that can bring in good quality workers. All the good quality people are already working here in Elkhart right now,” Brent Stevens, Forest River’s general manager overseeing the XLR models, said in an article in RV Business magazine.

The company will build a 100,000-square-foot facility in Butler, and will employ 150 workers when it is completed.

The XLR Boost toy hauler comes as a 102” wide body travel trailer or fifth wheel that combines traditional trailer living space and cargo areas that have plenty of space as well as a zero gravity loading ramp door for hauling ATV’s, dirt bikes, snowmobiles, bicycles or any other outdoor toys.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Forest River Benefitting from Record Industry-Wide Sales

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Berkshire Hathaway’s RV manufacturer, Forest River, is riding high as a result of record industry-wide sales.

Since coming out of the Great Recession, the industry has been setting year-after-year sales records.

Sales are now at the highest level since the industry began tracking sales statistics in 1979.

Total 2016 RV shipments reached 430,961 total units, up a whopping 15.1% over 2015.

“The RV lifestyle has become ingrained in so many areas of this country and the incredibly strong U.S. shipment totals reflect that,” said Recreational Vehicle Industry Association (RVIA) President Frank Hugelmeyer. “What I’m particularly proud of is the way that our industry continues to stay a step ahead of the economic curve. Our strong numbers are increasingly being viewed as a bellwether of the economy, and the fact that they continued all the way to the end of December is a great signal for the coming year.”

According to the RVIA, Towable were the largest share of the cumulative total, with a record-busting total of 375,950 units shipped in 2016, up 15% from the previous year.

The annual motorhome shipment increase was nearly identical on a percentage basis, with 54,741 units shipped, a 15.7% increase over 2015 totals. Of those motorhomes, type C motorhomes and type B motorhomes were up 26.8% and 24.1% for the year, respectively.

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Forest River Enters Luxury Bus Market

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Ready to take a flight on your private jet? Well, you can’t just roll out on the tarmac in any old shuttle bus. You need a shuttle bus with oodles of fine leather, USB ports for every seat, and LED mood lighting.

Berkshire Hathaway’s RV and bus manufacturer, Forest River, has added a luxury bus product line to its existing buses. The move comes because of feedback from its dealers. Forest River is the largest shuttle bus manufacturer in the United States, but didn’t have a specific luxury division.

The new luxury shuttle bus division has been dubbed Berkshire Coach, and will operate separately from Forest River’s Elkhart Coach, Glaval Bus, Starcraft Bus, and Startrans bus companies.

Berkshire Coach is building its shuttle buses at its recently acquired facility in Elkhart, Indiana. Formerly the Ameritrans Bus facility, it was acquired by Forest River in July 2016. Berkshire Coach currently has 25 employees and is projecting an expansion to 75 employees by the end of 2017.

According to Berkshire Coach, what sets the new luxury buses a part from the competition is the wide range of standard features, including Ultra Lux seating, roof-mounted, center aisle, ducted heating and air conditioning system, individual USB ports, seat belts, overhead Hadley Swan premium luggage racks and mood-setting LED lighting. The luxury cabin is further enhanced by wood-look composite flooring, suede finishes, frameless windows, panoramic skyview front window and 19” LED monitors located in the front of the coach.

David Wright, Senior General Manager at Forest River, states, “When we decided to launch a brand new division almost a year ago, we made the commitment to build America’s best luxury bus. After months of research and development and spending extensive time with our dealers and their customers, we are proud to introduce the Berkshire Ultra. Berkshire Coach’s intelligent luxury offers a product and experience that is unparalleled in the industry today.”

Troy Snyder, General Manager of Berkshire Coach, added, “We simplified the process for our customers and their dealers by making all luxury options standard equipment and backing it all with the most complete warranty in the industry. From Ultra Lux seating to individual USB ports at each seat, and everything inbetwe en, it all comes standard and is covered with the industry’s most comprehensive 5-year/100,000 mile warranty.”

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Special Report: Surging RV Sales Sets Off Gold Rush for Indiana Manufacturing Facilities

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Back in 2008 the recreational vehicle market hit a wall, a big wall, with sales plunging a precipitous 30% that year, and the next year was just as bad.

For Forest River, which had the financial strength of Berkshire Hathaway behind it, it was a time pull in the belt, and also an opportunity to acquire a competitor in Coachman Industries.

In 2008, Coachman was just days from closing when it sold itself to Forest River for next to nothing.

“With this transaction, we secure the future for this proud brand, and the employees of our RV Group. This announcement will also end the speculation over whether Coachmen itself will survive these extraordinarily difficult times, and preserve the jobs of our employee base, in both our RV and Housing segments”, said Coachman’s CEO Richard Laver at the time.

Hitting Record Numbers

Now, RV sales are back to levels not seen since the 1980s. 2016 sales industry-wide surpassed already rosy projections with around 420,000 RVs sold, and next year is projected to be up another 5%.

The sales also mean profits. In 2008, Coachmen’s sales not only crashed 52%, but it lost money on every vehicle it built. Today, sales industry-wide are not only robust, but profitable. Another leading manufacturer, Thor industries, saw record first-quarter FY 2017 net income of $78.7 million.

Adding Capacity

The strong sales have set up a gold-rush-like hunt for new manufacturing sites as RV manufacturers work to boost capacity. The heart of the gold rush is in Indiana, where 111 of the U.S.’s 228 RV manufacturing plants are situated.

Berkshire Hathaway’s Forest River, competitor Thor Industries, and companies such as Drew Industries, a supplier of components for original equipment manufacturers of RVs and adjacent industries, are all scrambling to secure new production facilities.

The scramble for new facilities is filling plants that in some cases have been sitting idle for almost a decade.

New Plants, More Jobs

With the rush for more facilities comes more jobs.

In September 2016, Highland Ridge RV, a manufacturer of towable recreational vehicles, opened a new $5.7 million, 92,000-square-foot facility in Shipshewana that also added 65 jobs.

More recently, Forest River purchased a 100-acre-plus industrial site in the town of LaGrange. The move brings much needed activity to a facility that has been sitting empty for the past eight years, and jobs to the community of roughly 2,700 people. The plant will provide some 250 jobs in the first year, and as many as 450 by the end of 2018.

Forest River has not announced exactly what it will be building at the new facility, but part of its production line from its Topeka plant is expected to be relocated to the facility.

With Indiana’s unemployment rate at only 4.2% in November 2016, well below the national average of 4.6%, the RV renaissance is clearly having a positive impact on the state’s economy. And the heart of the RV manufacturing in the counties of Elkhart and LaGrange have unemployment rates of 3.3% and 3.2% respectively,

© 2017 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Forest River to Locate New Plant in LaGrange, Indiana

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RV manufacturer Forest River, a subsidiary of Berkshire Hathaway, has purchased a 100-acre-plus industrial site in the town of LaGrange, Indiana. The move brings much needed activity to a facility that has been sitting empty for the past eight years, and much needed jobs to the community of roughly 2,700 people.

The site is the location of the former Dutch Housing plant and a special public hearing will be held on Jan. 16, 2017, at the Town Hall to designate the former Dutch Housing plant an economic revitalization zone.

It is expected LaGrange officials will approve Forest River’s request for a proposed 10-year $1.7 million tax abatement on the property and equipment at that time.

The move by Forest River to locate a facility in LaGrange will be a boost for area employment, with as many as 250 jobs expected the first year, and as many as 450 by the end of 2018.

Forest River has not announced exactly what it will be building at the new facility, but part of its production line from its Topeka plant is expected to be relocated to the facility.

The RV business has been brisk in 2016, and according to the Recreational Vehicle Industry Association, 2017 should be the eighth consecutive year of growth with shipments predicted to reach 404,800 units.

The RVIA cites “continued gains in jobs, incomes and household wealth combined with relatively low levels of inflation, unemployment and interest rates,” as the reason for optimism.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Forest River has Recession in Rear View Mirror

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The Great Recession that began in 2008 had a crushing effect on RV manufacturers, as the recreational vehicle became something that many middle-class families and retirees could no longer afford. Sales plunged, and in some cases companies went belly up.

Fortunately, Forest River, a wholly-owned unit of Berkshire Hathaway, not only had Berkshire’s mountain of cash to weather the downturn, but was even able to pick up some key bolt-on acquisitions during the recession.

In 2008, Forest River acquired leading RV manufacturer Coachman RV for next to nothing when the company ran into severe cash flow problems.

Less than a decade later, Coachman RV is one of Forest River’s plum divisions that is helping it post the strongest sales numbers since before the recession.

Forest River’s sales have grown steadily since 2009, with six straight years of sales increases.

The great news is that Forest River’s sales have finally recovered to pre-recession levels.

Industry-wide, 2015’s recreational vehicle shipments reached 374,246 total units, and on a month-to-month comparison, November 2015 had a 3.9 percent increase above November 2014, and December 2015 achieved an even more impressive 4.8 percent growth as compared to December 2014.

The sales figures meant the strongest December total in ten years. Additionally, all months last year except May and July were up over the comparable months in 2014.

The increases are industry-wide, as manufacturers such as Thor Motor Coach and Fleetwood RV have seen similar increases, and the growth was across all classes of recreational vehicles.

Specifically, Class A motorhomes, which are the largest, most luxurious and expensive, grew modestly with a 0.2 percent increase over 2014. Class B RVs, which are camping van conversions or van campers, had a 9.8 percent increase, and Class C motorhomes, which are truck-chassis-mounted vehicles that are more modestly priced than Class A, achieved the biggest growth increase overall at 15.8 percent.

“We have erased the dip caused by the Great Recession with RV shipments nearing record levels,” said Frank Hugelmeyer. President of the RVIA – Recreation Vehicle Industry Association, at the industry’s National RV Trade Show. “Fueled by low interest rates, affordable gas and steady consumer confidence, RV shipments should reach 375,000 units next year. But beyond the strong short term outlook, we can all rejoice that RVs continue to gain popularity in the outdoor marketplace and are seen as ‘cool’ in traditional and social media.”

Total recreational vehicle sales industry-wide are projected to reach 375,000 units in 2016, according to the RVIA.

© 2016 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Commentary: Forest River Learns a Painful Lesson

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Unlike the world of automobile manufacturing, which has for decades been ruled by giant corporations such as Ford, GM, and Toyota, the world of RV manufacturing still is a relatively small business (at least as compared to automobile manufacturers), and has yet to adjust to the increased scrutiny all types of specialty vehicles receive in regards to reporting safety defects.

Not that major automobile manufacturers have done all that well lately, with Toyota having received the largest criminal penalty ever for a car manufacturer when in 2014 it was fined $1.2 Billion for concealing safety defects.

Putting the Hammer Down

In a move that underscores the seriousness of this reporting duty, Berkshire Hathaway’s Forest River, Inc., which manufactures RVs, shuttle buses and other recreational vehicles, has been fined $5 million, plus $30 million in deferred penalties by the National Highway Traffic Safety Administration (NHTSA).

According to the NHTSA, both RV maker Forest River Inc., and Spartan Motors Inc., which manufactures custom chassis for Class A motorhomes and specialty vehicles, have “each acknowledged failure to launch timely safety defect recalls as required by the Motor Vehicle Safety Act, and to report critical data such as technical service bulletins and Early Warning Report data.”

“Safety is a critical shared responsibility, and when manufacturers fail to meet their responsibility, the Department will enforce the law,” U.S. Transportation Secretary Anthony Foxx said on July 9, 2015. “Today’s action sends a message to these manufacturers and to others that withholding critical safety information is not an option.”

Also, according to the NHSTA, Forest River, “acknowledged it failed to report early warning data and failed to launch two safety recalls in a timely fashion. Forest River agreed as part of a consent order to pay a $35 million civil penalty, including a $5 million cash penalty and a $30 million deferred amount.”

$30 Million in Deferred Penalty

NHSTA is requiring the $30 million deferred penalty to insure compliance. Forest River is “also is required to retain an independent monitor to conduct periodic audits of the company’s safety practices. Failure to resolve any issues discovered in those audits will result in deferred portions of the civil penalty coming due — $3 million for a first violation, $7 million for a second and $20 million for a third. Forest River also is required to hire an in-house consultant to assist in meeting requirements of the consent order.”

As for Spartan Motors, the company “acknowledged that it failed to report service bulletins to NHTSA as required by law and that Spartan did not launch three previously-initiated safety recalls in a timely manner. Under a consent order, between NHTSA and Spartan, Spartan is required to launch recalls to remedy three additional safety defects that NHTSA identified in previously undisclosed service bulletins. Spartan also will pay a total civil penalty of $9 million, including a $1 million cash penalty. The company commits to spending $3 million on compliance with requirements of the consent order; the remaining $5 million will come due immediately if Spartan fails to comply with the consent order.”

The consent order requires Spartan to “undergo a third-party audit of its reporting practices; develop new written reporting procedures; and engage in an education and outreach campaign aimed at increasing awareness of reporting requirements in the medium and heavy-duty vehicle industry.”

“These companies face not just financial penalties, but increased oversight designed to ensure these safety lapses are not repeated,” said NHTSA Administrator Mark Rosekind. “NHTSA will continue to use its enforcement authority in innovative ways to protect public safety.”

Forest River has pointed fingers at its software vendor for its reporting troubles but the message from the NHSTA has been we don’t care.

As for its safety defects, Forest River announced a recall on July 6,2015, of 1,497 model year 2016 travel trailers citing concerns that a wheel might detach from the vehicle.

An Even Bigger Hammer in the Wings

Specialty vehicle manufacturers would be wise to spend money now to improve their systems and culture of compliance, as the Department of Transportation is seeking enhanced safety enforcement, including greatly raising the power of the department’s safety authority by increasing the statutory cap on NHTSA civil penalties from $35 million to $300 million.

© 2015 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.

Special Report: Working for Berkshire Hathaway: “I don’t want to work for a big corporation!”

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“I don’t want to work for a big corporation!” It’s popular sentiment among those with an entrepreneurial bent. What was surprising to me was those words were being spoken by one of the managers at Forest River Inc., a leading manufacturer of recreational vehicles, pontoon boats and buses that is owned by Berkshire Hathaway.

Corporate bureaucracy

Scott Adams, creator of the Dilbert cartoon strip, told USAToday, “Corporate bureaucracy ‘would be top on the list of sucking the life force out of [workers], making them feel helpless.”

Back to the manager I was speaking with. He had sold his company to Forest River a number of years back and at that time had several options. He could start another company, and face all the challenges of a new start-up; he could go to work for another corporation; or he could join Forest River as the manager of the division that had purchased his company. He chose the third option and became a general manager at Forest River, and by doing so he became one of the 335,245 employees of Berkshire Hathaway.

How big is a company that has 335,245 employees? By comparison, Exxon Mobil Corp. has only 75,000 employees.

About Forest River

Forest River itself is no small company. It has close to 6,000 employees that work at 71 manufacturing facilities. Its RV product lines include Forest River RV, Coachman RV, and Shasta RV; its boat division includes Berkshire Pontoons and Southbay Pontoons; and its bus division includes Glaval Bus, Elkhart Coach, and Starcraft Bus. In addition to RVs, boat and buses, the company also manufactures mobile offices, manufactured housing, park trailers and cargo trailers.

All combined, Forest River produced $3.3 billion in revenues in 2013, which was up 24% from 2012.

Back again to the manager who didn’t want to work for a big corporation. Over the time I have known him he has consistently described the operating climate at Forest River as anything but bureaucratic. It has more the entrepreneurial spirit of a smaller company. It’s a spirit that comes from the company head Peter Liegl.

Warren Buffett on Peter Liegl

Peter Liegl founded Forest River in 1996 and stayed on as its president when Berkshire Hathaway acquired it in 2005. In Berkshire’s 2005 Annual Report, Warren Buffett described Liegl.

“Pete is a remarkable entrepreneur. Some years back, he sold his business, then far smaller than today, to an LBO operator who promptly began telling him how to run the place. Before long, Pete left, and the business soon sunk into bankruptcy. Pete then repurchased it. You can be sure that I won’t be telling Pete how to manage his operation.”

Buffett has lived up to his word, keeping a hands-off approach to Forest River. At the 2014 annual meeting he noted that he had only called Liegl “three or four times over the past decade.”

Hands-Off Approach

Buffett’s hands-off approach is what has separated Berkshire Hathaway from the typical conglomerate’s top-down management structure. It is what has enabled Peter Leigel to grow Forest River through an entrepreneurial style that values and retains top managers.

And it is what has enabled one of Forest River’s managers to say proudly “I don’t want to work for a big corporation!”

© 2014 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results