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RV maker Fleetwood files for bankruptcy

The Riverside recreational vehicle maker files for Chapter 11 bankruptcy protection and says it is in talks to sell itself as it battles to survive a prolonged sales slump.

March 11, 2009|Martin Zimmerman

For Fleetwood Enterprises Inc., the national housing crisis has been a double whammy.

The Riverside company, which filed for Chapter 11 bankruptcy protection Tuesday, is grappling with sharp declines in demand for its two key products: manufactured houses and the big homes-on-wheels it makes for the recreational vehicle market.

The dual hit has forced Fleetwood to drastically cut its workforce, adding to the economic woes in Riverside County. There is little prospect of a quick turnaround, especially in Fleetwood's flagship RV business.

The bankruptcy filing is a sad turn for a company that has been making recreational vehicles since 1965 and was known for having one of the more colorful chief executives in the industry -- John C. Crean, Fleetwood's founder and sometime TV cooking show host, who died two years ago.

Fleetwood said Tuesday that it was in talks with potential buyers for all or part of its business, and that it would continue to operate while in bankruptcy proceedings.

"The vast majority of our suppliers and dealers should see no disruption in our business," Chief Executive Elden L. Smith said in a statement.

Fleetwood said it was exiting the travel trailer business. As part of that process, it will close three factories and two service centers and eliminate 675 jobs, including 12 at its soon-to-be-shuttered Rialto plant. An additional 65 corporate jobs will be cut, most of them at the company's headquarters, where employment will fall to about 200 people.

The layoffs will reduce Fleetwood's payroll to just more than 3,000 people nationwide -- down 70% from three years ago.

In its filing in U.S. Bankruptcy Court in Riverside, Fleetwood listed total assets of $559.7 million and total liabilities of $623.6 million. Its largest unsecured creditor is Bank of America Corp. Fleetwood had $23 million in cash as of Jan. 25 and said it was in talks with its lenders to secure additional financing.

Fleetwood, along with other RV makers, has been hit by a severe slump in sales caused by several years of high gasoline prices and worsened by the current recession. In addition, the credit crisis has made it tough for Fleetwood customers to get loans. High-end models that cost hundreds of thousands of dollars are gathering dust on dealers' lots.

Industrywide sales of motor homes, trailers and other RVs totaled 237,000 in 2008, down 33% from 2007. The industry is projecting 2009 sales of 130,100 units, which would be the lowest annual sales since 1980.

"In the current recession, consumer confidence levels have retreated to new lows, and RV shipments have cratered as a result," analyst Kathryn Thompson of Avondale Partners wrote in an assessment.

Contrary to industry claims, high gas prices have affected sales, Thompson wrote, particularly for the largest models whose gas mileage is typically 8 to 10 miles per gallon. When prices soared past $4 a gallon last summer, Thompson wrote, sales of RVs "hit a wall."

Fleetwood, the nation's No. 3 RV builder, has suffered even more than its rivals. Revenue fell from almost $3.8 billion in fiscal 2000 to just under $1.7 billion in the fiscal year that ended in April 2008.

RV sales accounted for 56% of Fleetwood's revenue in fiscal 2009's first half, which ended Oct. 26. That was down 57% from the year before and helped fuel an almost $86-million first-half loss.

The collapse of the housing industry has also taken a toll on Fleetwood, although its manufactured housing unit saw its sales fall by a less-fearsome 24% in the first half of the current fiscal year.

Trading in Fleetwood's shares was suspended by the New York Stock Exchange in December after they lost 98% of their value during the year.

The industry downturn, and Fleetwood's problems in particular, have slammed Riverside County, where unemployment stands at 12.2%.

"The entire recreational vehicle industry and the manufactured housing industry are, and have been for a long time, major employers in the county of Riverside," said Tom Freeman, spokesman for the Riverside County Economic Development Agency. "Their financial problems, their closures, their layoffs, all have impacted our communities extremely hard."

Weekend Warrior Trailers Inc., which in 2005 employed 1,000 people in the Inland Empire, shuttered its operations in September. National RV closed its doors in late 2007. Several smaller RV makers have also gone under, Freeman said.

Fleetwood still has an RV plant in Riverside employing 316 people, as well as a manufactured housing operation in Jurupa that employs almost 100. Overall, the company has 15 plants in 10 states.

Fleetwood got a boost in September 2005 when the Federal Emergency Management Agency ordered 7,500 travel trailers and 3,000 prefabricated homes to provide temporary housing for Hurricane Katrina victims. But that bonanza was short-lived.

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