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Is Amazon about to become a giant headache for RV manufacturers?

Could the day come when you buy an Amazon.com-branded RV? We don’t read tea leaves, and we’ll leave that answer to the future. Nevertheless, RV manufacturers in Elkhart, Indiana, are wary. Elkhart is the manufacturing center of the RV world. RV manufacturers aren’t worried about Amazon becoming a sales competitor—rather, an employee competitor. And they may have good reason for such fears. Next year, Amazon will open a new warehouse and distribution center in Elkhart. The mega-retailer says it will need 1,000 warm bodies to fill jobs then. Will it affect RV manufacturers?

Tight labor market

“I’m not 100% clear on the thinking of putting another 1,000 jobs in this tight labor market,” said Bob Martin. He’s the chief executive of Thor Industries, the RV industry’s “Big Gorilla.” Martin made his comments in an interview with news agency, Reuters. “Tight labor market,” indeed. The U.S. Bureau of Labor Statistics indicated that Elkhart county showed only a 1.7% unemployment rate in February.

If Amazon plans on drawing 1,000 new employees from the local area, what industries would see the competition for workers? The city of Elkhart has a population of about 52,000—and far fewer “employable” bodies in that number. In the U.S., on average, 8% of workers are employed in factories and manufacturing. In Elkhart, that percentage is a whopping 52%. It’s not a stretch to imagine that RV manufacturers could be in serious trouble if Amazon fights—and wins—to populate its new facilities with largely local labor.

Amazon says it will pay an average $18 per hour for incoming workers. That’s barely more than fast-food workers are getting paid. And Amazon has a certain negative reputation to overcome. Working conditions for the average “warehouse drone” are said by some to be abysmal.

Pay could dry up for RV line-workers

On the other hand, while working conditions at RV factories aren’t posh, there is money to be made. While RV manufacturing line workers are paid a fairly low hourly rate, incentive pay for cranking out faster and faster can drive the final hourly rate up to as much as $50. With all that in mind, should RV manufacturers be wary of the Amazon siren call? Probably not as long as sales continue at a frantic pace. But should sales drop off, that incentive pay is likely to drop off along with it.

What could cause a slowdown in new RV sales? A major hiccup in the economy—say another recession. “We no longer see the Fed achieving a soft landing. Instead, we anticipate that a more aggressive tightening of monetary policy will push the economy into a recession.” Those sobering words came from Deutsche Bank economists in a report the financial whizzes released just this week. Be wary, indeed.

Even now, high fuel prices are causing many RVers to rethink their approach to the lifestyle. Fewer miles driven and hanging on to the “old rig” could put the brakes on the RV industry’s headlong rush. A slowdown in sales could easily drop incentive pay to workers, and cause some to think an Amazon job might just be a better meal ticket.

Other stories by Russ and Tiña De Maris

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Steve
2 months ago

Most of the comments about quality don’t understand how quality items are built. You do not inspect quality into a product. You build quality into a product. The comment about low unemployment in Elkhart my be true but it is the turn-over at RV plants that is the problem- no consistency! When RV mfg’s begins to see and learn what US auto makers finally saw 30 years ago, we will see better RV’s coming out of US mfg’s. Quality (as well as consistency) is built into products by quality engineering/design. Standardization of processes, in-process control to ensure processes are done correctly and then continuous improvements to make a quality product every time. Either the current RV mfg’s learn, or Amazon or off-shore mfg’s, will do it.

Steve
2 months ago
Reply to  Steve

My comment kind of side stepped the point of the article, but It still points at the issues with the RV industry, and Amazon will pull workers as it is steady work with bennies.

Jack
2 months ago
Reply to  Steve

Well said. Another issue that arises is the fact that people just keep buying RV’s instead of forcing manufacturers to improve. Customers believe there are policies and laws that protect them, but there really isn’t. If you have an issue, you have no choice but give the manufacturer a chance to fix it and with how behind service centers and manufacturers are right now with service, you could go months without your RV. That time spent waiting for your RV to be repaired, could be during prime camping season. So the RV you bought in February for camping has an issue on your first trip in March and gets sent to a service center, or back to the OEM, depending on the issue, and is now parked on a holding lot somewhere waiting for repairs for what could be months! Then the whole summer, you are thinking, “It would be great to be able to use my RV this weekend!” Makes sense, right? Then you call the OEM or the service center for an update and get mad and threaten with a lawyer. That doesn’t work because they are protected by the OEM so then you call the OEM to complain and then that also escalates to threatening them with a lawyer, which they are threatened with 1,000 times a week, and they know you can’t do anything because the laws and everything are really on their side. I’ve seen this same scenario so many times and laws and policies NEVER change.
There’s no consequences for RV OEM’s to stop business as usual because people keep buying them, blinded by false hope with ‘It won’t happen to me’ idea and a warranty written in a way that will make you feel good until you realize what the warranty actually says.
Bottom line, what I am trying to say is that there has been nothing but growth in the RV industry, with a record number of units produced, and people continuing to buy them… why would anything in the RV industry change and why would people expect it to?

Last edited 2 months ago by Jack
Homer
2 months ago

Personally, I’d rather build something instead of picking and packing orders. Different jobs for different types of people. I’m sure the RV builders will find folks who like to build and Amazon will attract warehouse workers.

West
2 months ago

“incentive pay for cranking out faster and faster can drive the final hourly rate up to as much as $50.”

Could that have anything to do with quality? RVs are very difficult to inspect once they’re stapled and glued together.

Kennagh
2 months ago
Reply to  West

Boom!

Donald N Wright
2 months ago

Looks like a “win-win” situation to me. RV manufacturers can stop blaming the supply chain issues for shoddy workmanship, Workcampers can have a new place to work, maybe the city will actually grow some, Amazon might even build an apartment complex for workers.

Rodney W. Dean
2 months ago

Having ran a Bob Evans Restaurant in Goshen in 1998-2000, I can tell you first hand that the finding difficultly in keeping good help due to the RV industry they set the model for hiring only seasonal/part -time help. I started my “back of the house” staff at $9 per hr. My servers went home with over $100 a day in tips. But the RV industry would hire them away for $1.00 an hr more. But then lay them off before they could get any benefits whereas they received Medical, Vacation & Sick Days, and a Retirement Package after 60 days . That went on the entire time I ran the restaurant. So maybe with a Big competitor for labor they will be forced to treat their employees better and fairly. As to the piece work pay system, you are correct in that “quality control” is non existent. They work 12 hrs a day to make it happen, I understand there needs to be some form of “motivation” to work steady and be very productive, but this system rewards quantity over quality.

Clayton
2 months ago
Reply to  Rodney W. Dean

I have never heard of people getting laid off before getting benefits, (Christmas and 4th of july shut down). This ain’t Walmart. Newmar pays 61 an hr…does Bob evens come close? My wife makes 32.50…ain’t no B.E.s paying that.

Paul
2 months ago
Reply to  Clayton

Which planet u consign from???

Stew
2 months ago
Reply to  Clayton

Newmar at 61.00 hr. What planet are you from?

Ken
2 months ago

Up to $50.00 per hour for faster assembly work!
You could write a book on the RV industry and not explain more about how RV defects occur.

Charles Yaker
2 months ago

Mary Chapin Carpenter sings a song about this but gets the words wrong she sings”somedays your the windshield and somedays your the bug” IN the USA Workers and regular people are always the BUG

Jack
2 months ago

Amazon is a $400 billion company… they know what they’re doing. If they really wanted to disrupt the RV industry, they would buy the whole thing out and start having people order RV’s, boats, or even houses online. I’m sure they have an army of economists you know when the Rv, manufactured housing, and boating industry are having their ‘slow’ times (Christmas, New Year’s, etc.), those are Amazon’s busiest times of the year and they know that workers want to make money no matter it be at a RV company or Amazon warehouse. So they get an influx of workers when they need them the most.

Ron T.
2 months ago
Reply to  Jack

You might be on to something here Jack. Both industries treat employees as so many identical cogs in their machinery. So workers being able to go from one to the other on their own volition as the lean times come and go will allow those employees a somewhat steadier income and thus less financial disruption of their family life. The employers and state would see a decline in unemployment costs. So it may be less a competitive environment and more of a symbiotic environment. BTW there is an Amazon facility about 3miles from our home that opened two years ago. Two of our grandchildren have worked there, one inside and one driving. The one inside had enough after only a few weeks and the other was let go along with eight others by their contract employer. Now we see none of that employers vehicles anymore. So we’re happy for them to be moving on from Amazon. Percentage-wise there’s about a zero chance of advancement there anyway.

Eric Ramey
2 months ago

This is a smart move by Andy Jassy (ceo of Amazon since 2021).

Elkhart, Indiana is located on I-90 less than 2-hours from Chicago, 3-hours from Detroit, and 4-hours from Cincinnati or Columbus.
I-90 is already a heavily trafficked route by trucks so no need for extra investment to update the roads (unless the state makes it a condition of approval). Since the route currently heavily trafficked by trucks there is an endless supply of drivers/trucks/trailers that are looking for a back haul opportunities as opposed to dead heading.

Eric Ramey
2 months ago
Reply to  Eric Ramey

One other point…As far as the workers go.
1-If the warehouse is automated and the current skills of the local employees don’t meet it. Amazon will bring people in or they will train and retain whoever they need to in order to keep the goods flowing.
2-Hopefully this is a wake up call to RV manufacturers that they need to treat their employees better or someone else will.

Daycruiser
2 months ago

This should be interesting for Amazon given that many workers in the area are Amish, is Amazon going to close up shop at 2PM when the Amish go home to work their farms? Some RV manufacturers may have to consider relocating plants to other parts of the country to acquire a new workforce if Amazon is successful in poaching workers. It’s going to be a wait and see.

G13
2 months ago
Reply to  Daycruiser

That’s part of the hiring practice, candidate will be hired based on their subject availability for position. Wouldn’t that also affect the Amish who now work for the RV industry? Relocating would be costly for both the companies and employees. I also don’t consider this “poaching” when it’s the worker who’s applying for the job.

Jack
2 months ago
Reply to  G13

And it’s always fun to slap “Amish made” on these things… huge selling point that people go crazy over but honestly does carry a ton of weight when it comes down to it because an air nailer is an air nailers. I’m not sure religious beliefs equal better craftsmanship… but whatever helps OEM’s sell units! People just eat it up!

Last edited 2 months ago by Jack
Gary H.
2 months ago

I can’t believe how many jobs are available today. There needs to be competitive pay to retain those workers. The RV industry has reaped the rewards the last 2-3 years. Now it is time to show the workers you need them.

Tommy Molnar
2 months ago

I’m curious why Amazon is picking Elkhart for their location. You would think someplace closer to Indianapolis would offer a larger pool of employees. Does Bezos have something against someone in the RV world of Elkhart?

MattD
2 months ago
Reply to  Tommy Molnar

Bezos is no longer CEO of Amazon, and only retains 12% ownership, so he’s not the one to question.

Bryan
2 months ago

Now you know why RVs have issues from the factory. While RV manufacturing line workers are paid a fairly low hourly rate, incentive pay for cranking out faster and faster can drive the final hourly rate up to as much as $50.”

Pat
2 months ago
Reply to  Bryan

Agree Bryan. I’d much prefer incentives be paid on the rate of warranty $’s being paid out. Say average $s per units sold (from all dealers) within first 180 days. They simply have the wrong (albeit “historical”) KPI with which to award incentive compensation. If focus shifts from volume to quality, consumers will beat a path to the OEM’s brand(s). Be curious what mighty Bob would think about this as he commands “The Mighty Thor”!

Franz Petersen
2 months ago
Reply to  Pat

Bryan & Pat are so right.

Jesse Crouse
2 months ago
Reply to  Franz Petersen

I am in the Plumbing & Heating industry and when you pay by “piece work”- # of jobs completed for a fixed price you get a new house with “Garbage” quality installs. Always has been and always will be.

Edie Watson
2 months ago
Reply to  Jesse Crouse

So agree!

Jack
2 months ago
Reply to  Bryan

Not disagreeing with what you’re saying at all, but money will always win… it’s been shown time and time again with this industry. Top level managers, sales people, purchasing agents, production managers, etc are all given bonuses based on how much they can produce and how much money they can save on costs to build these things. And on top of all that, they have a limited time to do it because the market is only ‘hot’ for so long. People buy houses, cars, trucks, bigger TV’s, etc during these times like it’s never going to end and, because it’s a luxury item, it always does and it always will. Just how it is and people forget the down times on this industry. Then all those people working for OEM at all levels have to maintain the lifestyle they have created for themselves and here we are… it happens over and over again… self survival will always win. To beat record numbers, things will need to get cheaper, less expensive for OEM’s, but all with higher prices for dealer’s and customers, so with that, OEM’s can afford to produce lower quality units and will just pay out more in warranty work to service centers to fix them in the field, even with more issues occurring on the back end because margin and profits are at a record high and they can sacrifice quality to make sure to keep breaking records so the people can make more money and collecting growth bonuses. All these manufacturers want to see is “tail lights”. Always follow the money to see motivations…

Last edited 2 months ago by Jack
Skip Gimbrone
2 months ago
Reply to  Bryan

My exact same thought when I read this article. Does quality matter over speed when it comes to money. Look at your RV and you can answer that question.

Tommy Molnar
2 months ago
Reply to  Bryan

We toured our mfg’s factory while we were having some fix-it work done. It was explained that incentive pay was awarded for speedy completion, but, money was subtracted for every mistake or problem found in the QC follow up. However, there was no explanation of how thorough the QC inspection was. In fact, it was because of some bogus QC inspection on our “Friday build” that we were there in the FIRST place.

suzanne Ferris
2 months ago
Reply to  Tommy Molnar

This string of comments says so much about the industry that I would never want to buy a bedbox on wheels from Any American manufacturer. How sad.

Jill
2 months ago
Reply to  suzanne Ferris

Last year we bought one that was “HOT” on the market. It was great for the first 4 months, after that we couldn’t sell it fast enough, even made a few grand too.

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