Last week Winnebago reported terrible fourth-quarter earnings. Not surprisingly, the news wasn’t just bad for stockholders. Now the company has announced layoffs of some workers in its Forest City, Iowa, manufacturing plants.
Winnebago layoffs—”ongoing efforts to adapt”
The big motorhome company made the layoffs formal in an announcement to the state’s Worker Adjustment and Retraining Notification (WARN) site. It followed up with a public statement on the matter.
In it, Winnebago said this: “As part of our ongoing efforts to adapt to current market conditions and ensure the long-term viability of our business, we made the difficult decision to eliminate several roles across the Winnebago brand business.
“As we move forward, we are focused on realigning our resources to better position the company for future success,” it said. “We believe that by taking these steps now, we can create a stronger foundation for growth and innovation in the years to come. We are proud of our strong legacy and roots in Northern Iowa and continue to build RVs with unsurpassed quality.”
Winnebago layoffs hit 33 with pink slips—tip of the iceberg?
While compared to the company’s total workforce of more than 6,000, pink slips for the affected 33 workers seems rather small. But no doubt it’s a big deal to 33 families who now will have to scramble to make up for the financial hardship. Winnebago says it is softening the blow for these by handing out severance packages, career counseling, and assistance in finding new job opportunities.
Wholesale movements of motorhomes from manufacturers like Winnebago to RV dealers across the country are way off when compared to shipments last year. This layoff could just be the tip of the iceberg for RV factory workers.
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Likely just the first of many. Those big Indiana motorhome factories will probably follow Winnebago’s lead before long, depending on when their fiscal year ends. And maybe the price will even come down on some of those $200,000 Class B vans!
It never ceases to amaze me how they can come up with a price that it cost that much to produce that vehicle
Always an unwelcomed adjustment. I’m confident that in the future Winnebago will recoup as it has in the past.
This is certainly an unfortunate consequence of the high interest rates which are mostly caused by the inflationary pressures and in turn, is limiting the number potential customers for Winnebago and moreover, all manufacturers. Less customers = lower unit volume = higher prices in order to maintain consistent YOY profits which Winnebago is not…. so, Layoffs plus higher pricing is a must in order to remain investor attractive or solvent.
IMO, the RV Industry has no clue how to do cost effective acquisitions. It’s well known that Thor, Forest River, and Winnebago acquire other brands, then let them continue to operate as independent units duplicating operational functions and costs.
Last spring I had a long talk with the factory Winnebago rep at a large RV show and discussed this. In development of their Journey MH, he mentioned they couldn’t get their flush-wall slides to not leak and had to go back to the old design. My reply was that Newmar has had flush-wall slides for decades…did they talk to their engineers? Nope. All kinds of $ spent to try to develop tech they already own!
Thank you, Mikal! Yikes! No talk, at all!?!
Here’s a bit more detail regarding the reduction of workforce.
A 26% decline in gross profit suggests their costs of goods sold increased at a rate greater than their selling price. Add a 16% increase in operating expenses and it amplifies the already strained GP.
Since all the OEM’s use the same chassis providers and Lippert for most of the bolt on stuff, it does beg where the increased costs came from and how the elimination of “roles” at the Forest City plant will offset them.
Missing the August earnings call by almost 70% is hardly a flattering testimony to leadership. Especially after they muffed the one before that by almost 14%. They were close on revenue but EPS…
It would seem revenue is almost flat but GP is down which tells me that price adjustment up should be even higher. The price point may be close to the top of where they think the consumer pain point exists.
I agree. They’re trying to hold to a predetermined price in a contracted market to remain competitive while paying a premium for building materials. Hopefully they turn to innovation and differentiation to bring glitter to their chrome than “buying cheaper”.
Thank you, Russ and Tina! Very sad, but not entirely unexpected, news. I do hope those let go find rewarding employment elsewhere soon. Have a great week and safe travels!