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Coachmen to sell RV division

by Jim Meenan
Publication: The South Bend Tribune

December 2, 2008


MIDDLEBURY Could there be stability ahead for the RV industry in Elkhart County?

Officials certainly hope so after Friday's announcement by Coachmen Industries Inc. that it has entered into an agreement with Forest River for that company to purchase Coachmen's recreational vehicle business.

The announcement also stated that Forest River has agreed to offer continued employment for almost 85 percent of Coachmen's RV group, which currently employs 600 people.

"It does show that there is still value in the industry, that it is an acquisition, not a closure," said Kyle Hannon, vice president of public policy for the Greater Elkhart Chamber of Commerce.

"Maybe some kind of realignments and combinations is what the industry has needed," Hannon said. "The fact that it is a combination, and the majority of people will still be employed, is a good sign that this industry as a whole is going to shake its way through this."

High fuel prices this summer along with the credit crunch and shaken consumer confidence have led to poor sales for RVs this year. That has resulted m about 2,500 jobs lost from that industry in Michiana, most in Elkhart County.

Industry shipments were down 42.5 percent in September compared with a year ago, according to the Recreational Vehicle Industry Association. It marked the 11th straight month where shipments were lower than the same month a year ago.

Matthew Cain, assistant professor of finance at the University of Notre Dame, believes Coachmen's announcement could be a good sign for the economy.

"I think, for one thing, it is interesting that we are seeing buying opportunities begin to materialize in this industry," Cain said, given "the outlook is fairly negative.

"Forest River is presumably able to access financing through the capital markets to complete the acquisition.

"I think that is good news for all of us. If banks are willing to provide financing to the RV industry, in the long run, that is a good sign." Officials from Forest River did not return calls Friday. Forest River is a subsidiary of Omaha, Neb. based Berkshire Hathaway Inc., whose chief executive is Warren Buffett.

Thomas Gem, Coachmen director of investor relations, said it's even possible no jobs will be lost.

"The remaining employees have a chance to interview for other jobs at Forest River or be employed at Coachmen's corporate or systems-built housing division," he said.
Coachmen will retain the housing division which employs 600 people, as well as its corporate side, which employs 100, Gehl said.

Coachmen, which will keep its headquarters in the Middlebury/Elkhart area, also will retain its specialty vehicle business, which includes the ARBOC Mobility bus.

Richard Lavers, chief executive of Coachmen, believes the deal, which is expected to be finalized in December, will result in Coachmen being "financially sound with sufficient cash liquidity to not just survive, but to build" the company.

Lavers said details of the transaction will be released later. The transaction is subject to shareholder approval, which the company plans to seek in December.

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