Recreational Redemption: Elkhart RVs Boom After the Bust
Grand Design recently announced it will invest $10 million to build two new production facilities.
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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowThe recreational vehicle industry is posting impressive numbers: RV wholesale shipments through August are up 15 percent compared to the first eight months of 2016, says the RV Industry Association (RVIA). And that means booming business in Elkhart, where half of all RVs on the road are manufactured, say local leaders. The president of one manufacturer in the RV Capital of the World says 2017 “will set an all-time industry record in RV shipments.” It’s a tale of redemption for not only the industry, but three entrepreneurs who—after being told they were “insane” and had “terrible timing”—are enjoying the ride.
The ripple effects of the recession in 2008 and 2009 hit like tidal waves in Elkhart County, which gained national notoriety for having the highest unemployment rate in the nation when many RV factories shut down operations.
“It was painful. With such a heavily-concentrated employment base around the RV industry, this whole community and region felt it,” says Grand Design RV President and Chief Executive Officer Don Clark. “It brought us down to our knees. It was the most painful time ever in my 33 years in the business.”
In 2012, when the region was still trying to rebuild post-recession, Clark and brothers Ron and Bill Fenech left a major RV manufacturer to launch “another way of doing business” and formed Middlebury-based Grand Design in Elkhart County.
“Everyone thought we were insane, including my family, and said why in the world would we [start a RV company],” says Clark. “People thought our timing was absolutely terrible.”
Founded in 2013, Grand Design now employs more than 1,000 people at its Middlebury campus. The company is thriving in RV Capital of the World, where expansion announcements for manufacturers and suppliers are frequent.
In August, Grand Design announced it will invest $10 million to build two new production facilities. The same week, Middlebury-based RV manufacturer Jayco Inc. announced the construction of a new 237,000 square-foot production facility, citing “unprecedented growth in the RV industry.” The expansions reflect strong national numbers for the RV industry; RVIA reports monthly shipments for 2017 are consistently up double-digit percentage points compared to 2016.
Clark believes the healthy economy is fueling Elkhart’s RV rebirth. Because RV customers are typically spending discretionary money, he notes the sector is “directly and quickly affected by the economy.” He shies away from using the word “boom” to describe the recent success, because he believes it implies a temporary uptick.
“I don’t really see anything on the horizon short-term that will disrupt the growth of the RV industry,” says Clark. “Consumer confidence is there, as well as fuel pricing and fuel availability, and the economy is performing nicely and continues to grow. Outside of a black swan event that no one can predict, I’m really, really happy to be in the RV industry.”
Clark also points to a broadening customer base for fueling the strong sales; he says, once perceived as a product for retirees and snow birds, RVs are “becoming cool” to a broader demographic.
“[RVs] are attracting people from all walks of life, and we’re seeing a lot of younger people and first-time buyers come into our business,” says Clark. “And, oftentimes, once they get bit by the RV bug, they become repeat business as they stay in our industry for multiple units.”
From a startup with no shortage of skeptics, Grand Design says it’s now the third-largest producer of travel trailers and fifth wheels in the industry—just one company’s success story among the many that have helped rebuild Elkhart County.
The expansion announcements from Jayco and Grand Design could create 750 jobs in the Elkhart region, where the labor market is already tight, but Clark says this could also benefit the industry.
Clark says, in addition to the strong economy, Grand Design’s distinctive business model is fueling the company’s growth.