n normal times, the streets, parking lots, vacant fields and many RV production facilities across Elkhart County, Indiana, would be awash in towable and motorized RVs in late September as manufacturers, suppliers — and, most critically, dealers — came together for the annual Elkhart County Open House. Begun in 2008 during the Great Recession by Forest River CEO Pete Liegl as a way to celebrate and cement the company’s relationships with its dealer network at a time when RV sales were in the toilet, the event snowballed as more and more RV builders joined the fray, ultimately transforming it into the largest RV show in North America.
These, though, are not normal times. For the second consecutive year, September’s event was cancelled out of an abundance of caution due to the COVID-19 pandemic, leaving OEMs to host individual showings for those dealers who still wanted to visit the RV-building Mecca and tour 2022 models.
While Open House is a trade show and isn’t open to the public, it’s also where the media gets its first glimpse of new models and innovations. RV Enthusiast visited a number of manufacturers during the September 27-30 event, speaking with RV company presidents, general managers and product managers — and we came away impressed. While 2022 models were expected to feature naught but simple upgrades for the most part as the industry works to chip away at backlogs that, for some manufacturers, extend out for a year or more, many OEMs nonetheless debuted new models and unique floorplans that are sure to command the public’s attention when they hit dealer lots in the coming months. While some can be found in the 2022 New Model Year Guide produced through a partnership between RVBusiness and RV Enthusiast magazines (go to https://rventhusiast.com and scroll through the top frames to locate it), RV builders historically hold back truly eye-opening units to debut at Open House. These will be showcased within the pages of RV Enthusiast magazine in the coming months.
While speaking with the various product managers about these and other new-model-year RVs, however, we also learned how difficult it was in the current environment for OEMs to simply build RVs while trying to hold the line on price points. I live in Elkhart, so I’m familiar with the impact certain product shortages is having on the industry — manufacturer campuses across the county are filled with units awaiting specific components. However, the problems go far beyond an inability to receive enough air-conditioners or TVs. And, again, it can probably be traced back to the pandemic.
Why? Because American households have taken to the Internet in droves to order everything online from electronics to paper towels. Plus, the government’s additional unemployment benefits meant that many households under quarantine had more money than before — and with nowhere to go, it was being spent online. According to Reuters, households accumulated at least $2.5 trillion in excess savings during the pandemic — and consumer spending grew at a robust 12% rate in the second quarter. And most of the products being ordered are made overseas.
This has created a double-edged problem. First, space aboard container ships from Asia is now at a premium — allowing shippers to dramatically raise rates. According to one GM we spoke with, the same 40-foot shipping container that cost $3,500 two years ago to ship from overseas to American ports currently costs as much as $35,000. Secondly, those shipments — and all those Internet deliveries to your homes — have revealed a headache the trucking industry has grappled with for years: a shortage of drivers. Consider what’s currently happening at the Port of Los Angeles/Long Beach, California, the largest port in North America. Normally, six or seven container ships would be moored outside the port awaiting unloading; in mid-September, that number grew to a record 72 ships.
And that’s when OEMs can even get the necessary product. Sometimes those containers aren’t headed to Elkhart.
“Just chasing material has become a full-time job,” another GM told us. “In the past, labor was the number one concern that we faced as an industry. Today, it’s material procurement — and that also creates labor challenges as we are continually having to catch up on units in the yard or invest in longer hours or on the weekends. It affects everything.”
And, while most of us tend to associate product shortages with things like refrigerators and washing machines, many of these products in short supply are the actual building blocks of RVs.
“Most of the products we build have full-body paint, so it gives us the ability to diversify,” said another company executive when speaking to the dearth of available exterior fiberglass paneling. “If it’s white glass, tan glass, gray glass… if its gelcoat, we’re going to take it, because we’re going to paint over it. The problem comes when you don’t paint the glass and you have to have that same color. Then we’re in a different world.”
The lack of fiberglass was perplexing to yet another GM. In this instance, he spoke of an inability to procure an adequate amount of fiberglass insulation. As is often the case with products that are the same whether used in a traditional home or an RV, it’s not uncommon for a builder to augment its supply chain with products found on the shelves of local home-improvement stores — but that’s a short-term solution. Rather than allow the insulation shortage to curtail production, this GM discovered a company with a product similar in concept to the spray-on insulation used in houses. To his credit, the GM was able to locate a new supplier with a readily available product equal to or exceeding the performance of what was already in use — but that’s not always the case.
Even when it is, the consequences of having to change suppliers include the time lost while training the workforce to install the new product and the additional cost these replacements often demand. No RV OEM wants to “devalue” a popular product line by swapping an unavailable component with a cheaper one that’s more readily accessible. Unfortunately, neither can a builder always absorb all the costs of an unforeseen upgrade; some are, out of necessity, passed on to the consumer.
I can’t imagine the frustration level of an RV general manager or product manager trying to keep a handle on costs in today’s environment. Their jobs might seem straightforward enough — design and build (with your team) the best product imaginable at price points that are attainable and stable — but right now, it’s about as easy as an 8-second bull ride. The next product to be in short supply in Elkhart County may very well be stomach antacid.
Keep this in mind when you’re shopping for your next RV.