Fleetwood RV business struggles

Submitted: Saturday, Sep 14, 2013 at 10:22
ThreadID: 104316 Views:3668 Replies:8 FollowUps:8
This Thread has been Archived

Reduced sales of Windsor and Coromal caravans contribute to big drop in profits of West Australian owner

One of Australia’s biggest caravan manufacturers, Fleetwood Corporation, has partly blamed “a shift in buyer preference towards lower specification budget vehicles” for reduced sales within its Recreational Vehicles division for the 2012-13 financial year.

In a report listed on the ASX, Fleetwood’s RV business, which includes Windsor and Coromal caravans, Camec accessories and Flexiglass canopies, recorded annual revenue of $111.4.7 million (down 16 per cent).

That resulted in a loss of $4.7 million for the RV business, although it didn’t include the $6 million cost of shutting down the Melbourne-based Windsor factory in late-2012.

Fleetwood, which also supplies housing for the struggling resources sector, reported overall income of $333.9m (down 13 per cent), with profit before interest and tax down 69 per cent to $24.5 million.

Sales of Coromal and Windsor caravans have been in freefall since 2008-09, when the West Australia-based manufacturer was forced to cut its RV production by half following the effects of the Global Financial Crisis.

To help recapture market share and reduce costs, a recent restructure of Fleetwood’s RV division included moving all caravan production to its factory in Western Australia, and sourcing more products from Asia including a new, lower-cost Chinese camper trailer (pictured) introduced earlier this year.

Describing the full year results as “very disappointing”, Fleetwood also said RV production had reached “below break-even levels”. The Camec RV accessories business was also hit hard as the “market weakened further”.

Fleetwood said its expectations for its RV division remain “subdued” although it said it had a strong order book for caravans and Asian sourced campers.
Back Expand Un-Read 2 Moderator

Reply By: Thinkin - Saturday, Sep 14, 2013 at 13:00

Saturday, Sep 14, 2013 at 13:00
Hello, what's your point, what are you getting at.

The recreational vehicle industry hasn't crashed, might be a bit harder to sell, that's it.
AnswerID: 518125

Reply By: Nomadic Navara - Saturday, Sep 14, 2013 at 13:14

Saturday, Sep 14, 2013 at 13:14
Quote "Fleetwood Corporation, has partly blamed “a shift in buyer preference towards lower specification budget vehicles” for reduced sales within its Recreational Vehicles division"

Does this mean that the swing towards the large "gin palaces" has reversed and the smaller vans without full en-suites and pop-tops are becoming more popular again?
Retired radio and electronics technician

Lifetime Member
My Profile  Send Message

AnswerID: 518126

Reply By: Member - Andrew L (QLD) - Saturday, Sep 14, 2013 at 13:46

Saturday, Sep 14, 2013 at 13:46
1 word...JAYCO....judging by the amount of them out and about lately.
AnswerID: 518129

Reply By: Member - Wamuranman - Saturday, Sep 14, 2013 at 21:33

Saturday, Sep 14, 2013 at 21:33
Poor management decisions and not reading the market trends. There is strong demand for off-road models which fleetwood don't manufacture (we had to wait 5 months to get ours built last year). Why shift your caravan manufacturing to WA when the majority of "grey nomads" retiring are from NSW, Vic and Qld. Freighting new vans to the eastern states for sale must make them less competitive.
Also they were overgeared for the mining boom in prefabricated accommodtaion.
There is still a market out there for good quality vans but Fleetwood has made poor decisions and are now paying the price.
AnswerID: 518156

Reply By: mikehzz - Sunday, Sep 15, 2013 at 07:37

Sunday, Sep 15, 2013 at 07:37
The way I read it is they are like a lot of businesses these days suffering from poor margins. Their turnover of $111m was down 16% and they lose $4m? That means all their profit is in the last 10% of the money they are collecting. That's pretty common for a lot of businesses and they are going broke because the costs are fairly well fixed but the turnover isn't. It's fashionable to blame governments but I think the culprit is too much information and therefore too much competition. Every business is competing globally now because most people have a live product catalogue sitting in the house. Some people might say that they will pay the extra to support local business and that's great but the next 10 buyers will opt for the cheap import. Things are becoming throw away items so why pay a premium? The boom businesses lately are couriers delivering online purchases.
As an extra observation...has anyone noticed how much it now costs to go to the rubbish tip? It's starting to cost more to throw stuff away than it is to buy it.
AnswerID: 518164

Follow Up By: Lyn W3 - Sunday, Sep 15, 2013 at 08:29

Sunday, Sep 15, 2013 at 08:29
Unless Australia can control it's spiraling costs Australian manufacturing will continue to struggle.

I was having lunch in a Brisbane eatery the other day and picked up the SAXA Salt grinder with the words "Proudly Australian since 1911" then you turn it around and read, "made of 100% pure Australian salt, packaged in Italy"
FollowupID: 797908

Follow Up By: Bob Y. - Qld - Sunday, Sep 15, 2013 at 10:23

Sunday, Sep 15, 2013 at 10:23
Yeah, same thing here, Lyn.

Throwing away a Ryco air filter package this morning, and on the back: "Made in Bulgaria"

How cheap are they to make, if they can import them, and still sell at a competitive price?

Seen it all, Done it all.
Can't remember most of it.

Lifetime Member
My Profile  My Blog  My Position  Send Message

FollowupID: 797914

Follow Up By: olcoolone - Sunday, Sep 15, 2013 at 10:35

Sunday, Sep 15, 2013 at 10:35
Agree and with Australia's increasing operation costs unfortunately more respected long term Australia business will follow and eventually close their doors for good.

Our wages and workplace conditions don't follow world trend and we, employees, unions and governments want more and more but there is no more and more left.

We pay people too much and the work conditions are too high.

People are funny....... they want everything cheap but they also want high pay and conditions.

Look at how many buy overseas or from cheap ebay sellers....... these people who buy from these businesses would be the first to scream when they lose their own jobs.

All you have to do is look at how many on this forum talk about being ripped off and paying too much for something from a bricks and mortar Australian based business...... maybe these inconsiderate people should sit back and think and pay a bit more supporting Australian bricks and mortar businesses and help Australia's future and our survival.

It seems too many people only look out for NUMBER 1 and don't give a RATS #$$& about anyone else until it affects them....... and yes it will affect them sooner than they think.

Over the last 5 years we have personally started paying more for local products and produce in an effort to support their long term future of all involved.

IF we don't we are doomed...... doomed I say!

FollowupID: 797916

Follow Up By: pop2jocem - Sunday, Sep 15, 2013 at 13:48

Sunday, Sep 15, 2013 at 13:48
Spot on. As long as we want the option to buy cheap on line from other countries we better get use to the idea of getting put out of a job unless we want to migrate to PCR or wherever.
Exporting minerals, farm produce or some manufactured items (if we still do that) is fine. Start exporting our manufacturing industry and technology because it's too expensive to make locally we better start expanding our banana growing because being a banana republic is in our future.
I wonder how much it would cost to set up a beach front stall and learn to speak Mandarin.

FollowupID: 797933

Follow Up By: Lyn W3 - Sunday, Sep 15, 2013 at 14:12

Sunday, Sep 15, 2013 at 14:12
Landline today had a piece on Simplot (yes a US company who bought Edgells etc) they are saying that they are reaching a point where they will probably have to close their plants in Bathurst and possibly Davenport due to spiraling coasts. Once they go to full seven day production in packaging season they are paying upwards of $50/hr for workers whereas their plant in NZ pays only $20.00/hr. Electricity and water costs have increased by 250% also.
My bet is that they will pull the plug next year.

As for those people who think its a great idea to allow the Indonesian Gov to buy up northern cattle stations. Well you can go and ....... .........
FollowupID: 797939

Reply By: Ron N - Sunday, Sep 15, 2013 at 13:35

Sunday, Sep 15, 2013 at 13:35
Here's my take on the Fleetwood whine ....

1. The report is an ASX report - a statement from a public company designed to explain to shareholders why they can't pay them their 10% dividend this year - while the directors have just given themselves a 20% pay rise, and just bought a fleet of new company Beemers for every director and every senior executive.

2. The statement omits the fact that Fleetwood went into mining transportable construction in a big way in recent years. The mining industry has plateaued - nearly all the major projects have completed their "construction phase" and are settling into their "production phase".

The number of minesites that installed camps in the period from say 2004 to 2012 increased by about 10 times over normal expansion in that period. This period saw the biggest "boom" in mining since the 1890's. Added to that, was an explosion in natural gas project developments - some of which, cost upwards of $50 billion.

If you have a once-in-a-century boom, you're bound to have a bust following it. The decline in mining housing requirements has probably impacted Fleetwood more than the RV business.

3. Many people are probably coming to the realisation that buying an $80,000 4WD, plus a $90,000 caravan, adds up to a $170,000 "investment" that is actually two major liabilities that depreciate at an enormous rate.
They also need to be insured, registered, stored, and maintained - all at a very substantial annual cost.

With the trend to smaller blocks and more intensive "in-fill" housing developments, less and less people have room to store a big 'van.
Many people also now realise they can put the money they would otherwise spend on a 'van into a term deposit or shares - and get extra income - and they can hire vans or motorhomes, instead of owning them.
Most people only use 'vans for short periods - so the burden of owning one is a pretty hefty cost for a short annual holiday period.

The viability of owning a decent 4WD and big 'van is only justified if you're going to spend a long period of time on the road. This group of people do not make up the majority of caravanners. The majority race off on a holiday for 2-4 weeks and then have to go back to work!

Fleetwood merely have to "manage" their production back to a level of normal demand. The RV market has been increasing at a phenomenal rate in the last 10 years - and a return to normal production is something that is on the cards and which good managers plan for.
AnswerID: 518190

Reply By: The Bantam - Sunday, Sep 15, 2013 at 18:02

Sunday, Sep 15, 2013 at 18:02
Perhaps too people are realising it is unreasonable to have a caravan that has a higher level of luxury than most of us have in our homes YET STILL does not have a full sized queen bed.

In the past the caravan was a low cost working family man's way of having a holiday.

When the times get hard the low cost option thrives at the cost of luxury.

all those thousands of fairly well off people who lost a lot of money in the GFC aren't going to be buying top end luxury caravans are they now.

If they want to continue with their plans, ( many wont) they will reduce their expectation and oh yes play in the the lower priced, better value items.

AnswerID: 518202

Reply By: Jarse - Sunday, Sep 15, 2013 at 18:45

Sunday, Sep 15, 2013 at 18:45
I've owned a couple of new Coromal products, and on each occasion found the quality not to my expectations, in spite of paying a premium.

Also, I've found they are VERY slow to innovate and keep up with the other manufacturers in terms of modern inclusions.

I'm happy to pay a bit more for quality of manufacture, but sadly Coromal is not worth more than any other Australian manufacturer offering similar quality at a better price.

They can blame their loss of market on whatever they want. The reality is they charge a premium price for an average product.

That's why they're losing sales.
AnswerID: 518205

Follow Up By: Jarse - Sunday, Sep 15, 2013 at 19:25

Sunday, Sep 15, 2013 at 19:25
And, as The Bantam wrote - they don't have a queen size bed.

A double doesn't cut it.
FollowupID: 797955

Follow Up By: gelatr - Sunday, Sep 15, 2013 at 21:55

Sunday, Sep 15, 2013 at 21:55
I've had the one and only Coromal product I'll ever own. The worst bit was it cost me over $1000 to get the gas system on the van legal so I could sell it. According to the guy who upgraded the gas system to make it legal it was installed incorrectly when the van was manufactured. When I informed Coromal they couldn't care less. Not a great response for a 3 year old van. From my experience they don't seem to have a great model for repeat business.
FollowupID: 797967

Follow Up By: Jarse - Monday, Sep 16, 2013 at 12:31

Monday, Sep 16, 2013 at 12:31
I had a number of warrantable issues with my second Coromal. The dealer took little interest (and is no longer in business, surprise-surprise), and trying to get assistance from Coromal HQ was like playing cat-and-mouse.


I managed to get some issues rectified under warranty, but the diversionary tactics Coromal and the dealer employed to wear me down succeeded, and I just did the work (to a better standard) myself.

IMO, THIS is the prime reason their sales are dropping - the "I don't give a 'F' attitude that seems to prevail with some manufacturers. I would NEVER buy another Coromal based on my experience - no matter how well they're built OR the price point.

I now own a camper trailer built by a low volume builder in Bayswater, VIC. The attitude of the company owner is something to behold. He's genuinely proud of what he makes.

Ring him with a problem, and he can't do enough to help you out. The camper is built to a very high standard IMO, and the very few problems I've had have been due to faults with hardware manufactured externally, such as a water pump.

He keeps all that kind of stuff in stock, and ships the same day - no questions asked, no charge to me. He has never tried to brush me off or shirk his responsibilities regarding warranty.

Some of the big guys could take a leaf out of this bloke's book.
FollowupID: 798007

Sponsored Links