Get out of caravans, Fleetwood told

Submitted: Wednesday, Mar 04, 2015 at 15:39
ThreadID: 116928 Views:3723 Replies:6 FollowUps:5
This Thread has been Archived

Brokerage Hartleys says Fleetwood should look at getting out of the 51-year-old caravan business behind its name.

Analyst Simon Andrew in a research note sent to clients last week said core parts of the company needed to be closed or sold so Fleetwood could generate enough cash to reduce debt.

That included the recreational vehicle business, which includes the Coromal and Windsor brands. "We struggle to see how Fleetwood can turn the business around in what is clearly becoming a more competitive market, both from local and foreign competition," Mr Andrew said.

"Fleetwood may even consider taking the same path as several players in the Australian automotive sector and take manufacturing offshore."

The RV business manufactures in Perth but has started importing campers and budget caravans from Asia.

It suffered a first-half earnings loss of $4 million.

The analyst said the company could shrink its Searipple worker accommodation village in Karratha. It struck a deal with Rio Tinto last week to occupy about 60 per cent of Searipple for at least three years.

Mr Andrew also sought certainty about the Osprey residential development in Port Hedland.

Fleetwood is in talks with the State Government to renegotiate a 15-year operating deal.

If the discussions break down, Fleetwood would be eligible to receive a capital payout from the Government.

Without restructuring, Mr Andrew said the market could expect no operational improvements and should brace for asset writedowns.

Hartleys has a reduce recommendation on the stock and a 12-month price target of $1.

Fleetwood shares yesterday closed up 2.5C# to $1.35.

They've certainly had a couple of dud financial years, do you think they will actually pull the pin on caravans? I doubt it.
Back Expand Un-Read 0 Moderator

Reply By: pop2jocem - Wednesday, Mar 04, 2015 at 16:35

Wednesday, Mar 04, 2015 at 16:35
Wow, what a wakeup call.

Many years ago their share price was up around the 9 or 10 and sometime more dollars.
They were also paying dividends with full franking of around 10% based on share price.

They had full tenancy of Searipple accommodation village in Karratha and the one in Port Hedland, the name of which escapes me at the moment. They were building temporary accommodation units (dongas) and shipping them out as fast as they could build them. The caravan and accessory business was booming as well.
I think they had diversified into aged housing communities as well, which are probably still doing ok.
Glad I sold and got out while the getting was good. The mining boom ending and the general economic downturn is really biting companies like this.
Maybe more job losses to cheaper overseas labour coming up too by the sounds of it.
Who would be a locally based manufacturing industry and be able to look to the future with any confidence.

AnswerID: 549423

Reply By: Geepeem - Thursday, Mar 05, 2015 at 10:48

Thursday, Mar 05, 2015 at 10:48
Yes pop the share price was up near $14 in early 2011, today its about $1.35.

While mining accommodation is always going to be cyclical their mainstay of recreational caravans is causing problems as well.

This is the result of poor management decisions. About 2 years ago they shifted all caravan production to WA from Victoria. Yet the bulk of new vans are sold to families and retirees in the eastern states. You would have rocks in your head to do that… manufacture a bulky item in WA with high labour costs (due to mining rates) and then high transport costs to eastern states to sell. No wonder they are not competitive. Also they have never built a true off road van where profits are higher. There are waiting lists of 6 months or more to get some off road makes.

They are competing with the likes of Jayco who have a very efficient economies of scale factory in Vic where a van comes off the production line every 20 minutes.

Have a look at post #104316 dated 14/9/2013 when this same topic was discussed just after they moved van production to WA. I predicted this would be their downfall. The chickens, it seems, have come home to roost.
AnswerID: 549450

Follow Up By: Road Warrior - Thursday, Mar 05, 2015 at 17:49

Thursday, Mar 05, 2015 at 17:49
Only production of Windsor vans was moved to WA; Coromal vans have always been made in WA since they started.

But yes, market access and all their vans just seem to be rehashes of older models with new paint schemes. There's no innovation.
FollowupID: 834859

Reply By: Brad R2 - Thursday, Mar 05, 2015 at 18:28

Thursday, Mar 05, 2015 at 18:28
It's really no wonder that their market share in the RV market has diminished, we have owned both a Windsor & Coromal in the past & when going to buy a new one last year we were suprised at how the overall build quality & finish had decreased since Fleetwood had taken over. We are not the only Windsor/Coromal owner who has reported shopping else where despite having been very happy with our pre 2010 units. A customer lost is far harder to re acquire, something the bean counters don't seem to realise.
AnswerID: 549468

Follow Up By: Member - mike g2 - Friday, Mar 06, 2015 at 11:43

Friday, Mar 06, 2015 at 11:43
Hi all, agree in my opinion that van quality seems to be suffering- generally overall build is good, but a fair few things seen and fixed under warranty for various Jayco that I have had over last 5 yrs or so. ? quality control at end of production line. EG: My motorhome had a screw someone in production line drilled into the wiring ( inside wall) line running from roof top solar to battery !- only noted after sale and delivery when I used it!. One of my vans had its shower walls come unglued within 6 mth of use, another-drawers broke and the main lounge seat caved in due to light weight construction within 2 mths .
( some say my fat bum!)

mining down turn will clearly affect donga makers, but I note many c/van parks moving towards putting in more 'cabins'.
Comes back to "Australian made" maybe.
Any one know?...Are they like Aust made cars and the base materials and major components are indeed made off shore , shipped in bulk ( flat pack) and put together here with windows, fittings and fixtures etc added . This idea makes sense as all the main parts are from different suppliers as to be expected anyrate- the a/c, heater, 3 way, M/Wave, toilet system..etc.
Are the base and A frames actually fully made here?
FollowupID: 834893

Reply By: TomH - Thursday, Mar 05, 2015 at 19:14

Thursday, Mar 05, 2015 at 19:14
Would be a good idea if they did We bought a Princeton 724 which was a 2008 build Was glad to see the back of it.

Wife bought it because she liked the layout.

FaultsSuspension was attached crooked and van crabbed down the road.
Cost Coromal $900 to have it rectified at a truck suspension specialist.
I reckon it never got to be 100% as distance from towhitch centre to front hanger was different on each side.
Chassis was far too light and caused the van to flex which could be seen across the top of the bed as it rubbed the surface off the molding under the overhead cupboards. Also under cupboards along side above table Replaced piece 3 times in a year. got some under warranty but had to fit it myself. Cupboard doors different sizes on a double front cupboard. Replaced under warranty.
Aircon fitted crooked and loose. Fixed under warranty. Door never fitted square due to flexing. Never could get it fixed.. Floor creaked and groaned when walking on it depending on how we were parked. Hot water controller circuit board hanging in mid air. Water pipe join blew apart within 2 months.

Coromal quote about 2% flex is Ok Is a long way in 24ft.

AnswerID: 549471

Follow Up By: Jarse - Thursday, Mar 05, 2015 at 20:16

Thursday, Mar 05, 2015 at 20:16
Not to mention Coromal lagging behind many other manufacturers with their design and lack of contemporary interior fittings and cabinet work.

Our last Coromal was a 2007 model, and there's been very little improvement or change since then.

I would not buy another.
FollowupID: 834866

Follow Up By: TomH - Thursday, Mar 05, 2015 at 21:44

Thursday, Mar 05, 2015 at 21:44
Cupboards all changed in 08 Was a 2007 in the yard and it had the framed doors Ours had the curved ones which I think they still have.
FollowupID: 834871

Follow Up By: Member - Bruce and Di T (SA) - Friday, Mar 06, 2015 at 14:33

Friday, Mar 06, 2015 at 14:33
We've owned two Coromals; our first and last.

FollowupID: 834908

Reply By: Road Warrior - Friday, Mar 06, 2015 at 16:15

Friday, Mar 06, 2015 at 16:15
I guess the old adage rings true: you've got to spend money to make money. Persisting with "old" van designs and offering little else but different colour schemes and fabric year on year is going to fail in such a competitive market full of van builders who offer innovative features with better quality. As well as decent off road versions and family friendly versions like the Expandas et. al. What happened to the Coromal Transforma range??
AnswerID: 549520

Reply By: Ron N - Saturday, Mar 07, 2015 at 19:45

Saturday, Mar 07, 2015 at 19:45
There's nothing surer than the fact that the caravan market is going to go through a huge shakeout over the next couple of years.

Fleetwood will more than likely abandon caravan manufacture - or go over to having many major components pre-fabbed overseas and then assembled here.

The RV market is maturing, the number of caravans available (new and used) and the number of caravan manufacturers has never been so large - and it's unsustainable in the current markets - both RV and mining/exploration/business sales.

A mate who is a machinery inspector just came back from Hedland and Karratha and he said every single yard in both towns is chock-a-block full of plant, equipment, machinery, vans, you name it.
It's all been stood down, there's very little new work on offer, and everything is for sale - if they can find buyers. The buyers are few and far between.

Middle nephew runs about 60 Cats, he reckons the mining and earthmoving business is tougher than it has been since the early 2000's.
Not only has the new work dried up, the companies now want everyone to work for nothing.

In the last few years, they rang up just desperately requesting machines. No argument about hourly or monthly hire rates, they just wanted to know if they could get a machine and then paid top prices. If something wore out or broke, the nephew just sent them an inflated bill for it, and they paid, no questions asked. Talk about a licence to print money.

Now they are ringing up and requesting the nephew meet a (low) hourly or monthly rate, which is generally around cost. He tells them to get stuffed, he won't work for the rates that many others are now working for. He's selecting other areas of work that are closer to home, and that pay reasonable rates. He's more worried about business bankruptcies than ever before, and thus is much harder on creditors.

In reality, we are just back to the regular economic conditions where the tough innovate, keep margins down, cut costs and survive, in a highly competitive environment.

Fleetwood have unfortunately forgotten what reality is like, they have had around 12 yrs of the biggest economic boom that Australia has had since the goldrush years of 1892-1914, when the State exploded with money and economic activity, in an identical manner to the boom we have just had.

It's times like the current situation that bring out the good managers and the well-run companies.
Anyone can make money when economic activity is at fever pitch and hirers and buyers don't care what they pay, as long as they can get it.

Cheers, Ron.
AnswerID: 549570

Sponsored Links