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.