RV manufacturers are still fighting through the perfect storm of broken supply chains, missing parts, hiring woes, and unprecedented consumer demand.
While supply chain issues conjure images of missing water heaters, air conditioners and refrigerators, the parts that are really gumming up the manufacturing process might surprise you.
“Lately, it’s been things like ladders,” said Josh Winters of Haylett RV in Coldwater, Michigan, when asked for an example of what he’s seeing from manufacturers. Since a missing rear ladder doesn’t affect the basic function of an RV, many factories are deleting those unavailable ladders from the invoice of supplied features and shipping the units to dealers “as is.” If a buyer still wants a ladder, they will have to either find it and install it themselves or work with their dealer. Either way, if you buy an RV without a ladder it likely won’t be coming later from the factory and won’t be included in a warranty as original equipment.
It’s much more than ladders
But missing ladders are only a small part of the total picture, and the long waits for finished RVs aren’t always the fault of offshore suppliers.
Remember that huge ice storm in Texas in February? The storm knocked out production from several chemical plants in the state and that led to an immediate shortage of foam for RV seats and furniture. This year, Hurricane Ida rolled through the South and shut down more chemical plants, causing a shortage of the specialized glue used to laminate RV walls and other features.
Since it takes months for chemical plants to come back to full production, RV manufacturers have been forced to compete with home builders for the dwindling supplies of glue. Most builders, including those in the RV industry, were forced to use a higher-grade glue.
That sounds like a plus for RV buyers, but the new demand for the good stuff has now forced a shortage of that product, driving glue prices through the roof.
You might have also noticed Winnebago’s announcement last week that it was switching to all Goodyear tires for its travel trailers. While the company positioned the move as a step in improving quality and using American-made products, another logical reason for using Goodyear tires is that they don’t require importing from China. Most “Made in China” tires are still bobbing around the Pacific off the coast of California. While using American-made tires is always laudable, buyers should likely expect a price increase from the move.
Now let’s talk about sheet metal. In the RV industry, sheet metal is what covers the outside of most towable trailers. It comes in big sheets and is installed in overlapping sections.
But, alas, rolled steel and aluminum are in short supply in the U.S., and that is causing prices to surge. Unfilled orders for steel in the third quarter of 2021 were at the highest levels in five years, while inventories were near a four-year low, according to the U.S. Census Bureau. The benchmark price for rolled metal is now at its highest level in 13 years.
“Our members have been reporting that they have never seen such chaos in the steel market,” said Paul Nathanson, executive director at Coalition of American Metal Manufacturers and Users.
This metal shortage leaves RV manufacturers in competition with everyone from the aerospace industry to washing machine makers. The end results are longer waits and higher prices.
“Think about it. Nearly all RVs use skirting metal,” said RV dealer Winters. “The glue and skirt metal issues have crippled production lines. These products – unlike ladders – are ‘must-have’ items that you can’t do without when you’re building RVs.”
Huge backlog of orders at RV manufacturers
Meanwhile, Thor Industries, the world’s largest manufacturer of recreational vehicles, is sitting on a record backlog of RV orders right now. Thor said they have more than $16 billion in orders that haven’t yet seen the front door of the manufacturing plant.
“Demand for our RV products remains very robust, continuing to exceed [maximum] production output,” Thor CEO Bob Martin said in a press release.
As rosy as that sounds for Thor, the future is even brighter over at Winnebago Industries, which is growing market share fast enough to leave Thor in the rear-view mirror. Winnebago sales have grown more than 140 percent this year, and they are also sitting on a massive order backlog that will take many months – or even years – to clear.
That’s all great news for investors looking for a “sure thing.” Stock prices for RV manufacturing companies are strong. Nothing will build a stock price quite like a long line of anxious customers willing to wait months for delivery.
There are, of course, a plethora of other issues impacting the pricing and manufacturing of RVs, and we’ll continue to cover them all in the coming weeks.
Josh Winters, the self-described “RV Nerd” quoted earlier in this story, is also a great resource. Winters will be talking about some of these same issues in-depth during his next YouTube video posting on November 1 at 2 p.m. Eastern. Just go to Youtube.com/HaylettRV to watch.