ELKHART — The concern for the RV industry is out touch with reality, RVBusiness magazine partner Gregg Fore said Monday.
Fore’s remarks came at an RV-themed Elkhart Rotary Club meeting on the first day of the Elkhart RV Dealer Open House.
Local Rotarians eager to understand what is going on in the bellwether of the local, if not national, economy gathered at the Matterhorn Conference Center to listen to Fore, who packs half a century of RV-related experience.
In addition to his role at RVBusiness, Fore is a partner at G&G Media, Woodalls Campground Management and Mill Race Partners. He is the retired president of Dicor Corp. and former chairman of the RV Industry Association.
RV shipments so far this year have been down 20.6 percent compared to 2018, which was down 4 percent from the record high in 2017 when the industry shipped 504,600 units. A recent report from RV industry analyst Richard Curtin, director of surveys of consumers at the University of Michigan, projected that the fall would be better than the rest of the year and that 401,200 units would be shipped for the year, down 17.1 percent rather than 20.6 percent.
Though Fore is generally optimistic on behalf of the industry, he thinks the fall won’t be that good.
“My personal opinion is it won’t be that high. I think it will be in the 390,000s somewhere, only because we’re eight months through the year in reports, and I don’t see how they’re going to get to 400,000,” Fore said. “But I could be wrong. I hope I am.”
According to RVIA, 244,625 RV units had been shipped through July.
Curtin’s projection for 2020 is 387,400 shipped units, meaning a continued decrease but also an ease in the decline from this year. If Curtin is right, 2020 would be down 3.4 percent from 2019.
“But if you look at these numbers, 387,400 ranks pretty well historically,” Fore said.
In fact, 2020 would be the sixth-best year in history when it comes to RV shipments, which says a lot about how good 2017, 2018 and 2019 have been, according to Fore.
In addition to the logic that most years won’t be record years, many in the RV industry have claimed that the reason for the decline in shipments since 2017 is that dealers are overstocked.
Fore said the number of units at RV dealerships in the U.S. went up by 75,000 over the course of 2017 and 2018.
That was partly because, for a time, dealers struggled to get RVs to their lots as fast as they could be sold. That led to dealers buying earlier in an attempt to anticipate demand. At the same time, transportation of units had been slow, sometimes taking six to eight weeks. As demand rose, manufacturers put up new plants, and transportation companies found solutions to their problems, and then suddenly dealers had too many units.
However, since June 2018, the number of units at dealerships has gone down by 100,000, Fore said.
“So we’re back 25,000 units below where we were before all that started,” he said. “But it still may be another five or six months before those inventories are in line and there’s some reasonable balance between retail and wholesale.”
The positive lesson from Fore is that the decline in RV shipments is not about retail customers no longer having the disposable income to buy a new RV, and so there is no need to worry that the worst is yet to come; the recent decline is just a correction within the industry itself. That would also mean that the speculation about the RV industry being a bellwether for the national economy would not be true this time around
Most of the 10 most important indicators of the RV industry’s health are leaning to the positive side, according to Fore. Interest rates, fuel availability, employment and wages are looking good for the industry, while gas prices, the general economy, inflation and the political situation are neither good nor bad. The two indicators currently pointing in a negative direction are housing starts and auto sales, he said.
The speculation in recent months that the RV industry’s decline in shipments might indicate an upcoming recession for the U.S. economy, as has been the case in the past, is not something Fore puts much faith in.
“They don’t dig into the numbers enough,” he said. “You can say, ‘Well, they’re off, so there’s a recession coming.’ I don’t believe that because, again, they’re off (but) it’s the sixth-best year in history. So let’s be careful with what we talk about.”
For instance, he said, people should look at the unemployment rate, which continues to be lower in Elkhart County than the country as a whole. The Elkhart County unemployment rate was 3.6 percent in July, according to the Bureau of Labor Statistics. Nationally it was 3.7 percent.
However, the unemployment rate can be misleading as it relates to how well the RV industry is doing since, when the industry is booming, employees tend to work overtime, whereas several companies have reported short work weeks this year. The people working those jobs count as one employed person either way.
“But they’re still employed. They’re employed at a better rate than they were in January,” Fore said.
Yet, one indicator that certainly is not positive for the local economy, is that Elkhart County saw the largest wage decrease in the nation from March 2018 to March 2019, according to an August report from the Bureau of Labor Statistics.
Average weekly wages in Elkhart County decreased by 7.6 percent in that period, from just above $1,000 to $930 per week. The country as a whole saw an increase of 2.8 percent.
The report showed even worse news for local manufacturing employees, who saw a decrease in wages of 12.7 percent.
So while people in Elkhart County are having an easy time finding and keeping a job, they are not bringing home the same paycheck they were before shipments went down.
But that is not enough that Elkhart County residents should be concerned for their most important industry, according to Fore.
“We’re not on the edge of anything,” he said.
Follow Rasmus S. Jorgensen on Twitter at @ReadRasmus