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MIDDLEBURY -- Jayco Inc. has added a couple hundred workers and is escalating production as dealers, encouraged by an incentive program, restock their showrooms in anticipation of strong spring sales.
The recreational vehicle manufacturer is increasing output to fulfill the largest backlog of orders it has had in more than two years. In a press release, company president and chief operating officer, Derald Bontrager, called the rising demand "the first tangible indication that the RV industry has turned the corner."
Not wanting its dealers to wait until 2010 to place orders for units, Jayco introduced special discounts to spur RV retailers to buy this fall, said Sid Johnson, marketing director. The incentive created a "very, very encouraging backlog."
Pointing to predictions that wholesale RV shipments will jump 27 percent in next year, Johnson said the company is optimistic the market is growing stronger and will be able to sustain Jayco's expansion after the units currently on order are finished.
Rick Couch, owner of Tradewinds RV in Ocala, Fla., said consumers are still skittish about buying big-ticket items like RVs but still he was relieved to learn Jayco will be building more towables. As sales slowed, Couch cut his inventory by about 75 units, stocking only about one model of the brands the dealership carries.
Jayco, and Keystone RV, Couch said, were taking 12 to 14 weeks to fill dealer orders.
The longer lead time hampered sales on dealers' lot, said Donavon Fredrickson, owner of Big Sky RV in Bozeman, Mont. Before the economic downturn, customers were happy to place an order and wait for the RV to arrive but now they want to see and touch the unit they are buying which has changed the way of doing business.
"If you don't have it as a dealer," Fredrickson said, "you don't sell it."
Big Sky, which sells Jayco exclusively, recorded nearly a 60 percent drop in sales in 2009 and cut inventory accordingly to survive, Fredrickson said. The dealership sold just over $5 million worth of RVs, compared to $12 million just a few years ago.
Jayco's incentive package convinced Fredrickson to purchase about 40 units for next year. He did not want to get caught short if more customers come to his lot although he is not certain how much the RV market will rebound next year.
"I have high hopes that this coming season won't go backward from the previous season," he said. "I don't think the industry can suffer too much more backward."
Other manufacturers have also been offering incentives, Couch said. He reviewed the different discounts but, this time, did not opt for Jayco's program.
Many dealers did place fall orders with Jayco because of the incentives, Johnson said, explaining the response did not surprise the company. The Middlebury RV maker has rolled out discount programs in the past and did so this year to make the expected 2010 upswing manageable.
Also to meet production goals, Jayco has recalled or hired more than 200 workers and the number of units being built is steadily increasing as the returning employees get used to the pace again. The company now has about 1,450 on its payroll.
"We believe the added workers will allow us to operate until early next year when we'll probably need to add more," Johnson said.
The expansion is a significant turn around for Jayco. In late 2008, it consolidated Starcraft RV operations in Topeka, cutting most of the 244 workers and then in February, it laid off another 250 from the Middlebury campus. Now the manufacturer has scrapped plans to shutdown for about a month during the holidays in favor of taking only five days off.
Both Fredrickson and Couch said Jayco's struggles had nothing to do with its products or its reputation.
"People have been loyal to Jayco for years," Couch said. "If you've got Jayco (RVs), you've got customers."