LOUISVILLE, Ky. - Even though the motor home industry was setting sales records in 1999, Fleetwood Enterprises Inc. knew it had a problem.
'Our market share was softening and sinking in a number of our bread-and-butter product lines,' said Nelson Potter, COO of publicly held Fleetwood of Riverside, Calif. 'We were liquidating our equity in the marketplace. You can watch that only so long.'
Fleetwood's market share in its Class A and Class C gasoline-powered motor homes had dropped from just over 30 percent in 1996 to about 20 percent. Its processes were becoming unmanageable, Potter said. He wanted Fleetwood to operate like a small company.
Taking a page from the auto industry playbook, Potter started to overhaul Fleetwood's product development and sales organizations. The changes were geared toward speeding product development, and the RV Industry Association show here in November was Fleetwood's first chance to show the results of its 18-month renewal.
'We had a tendency to be a little more bureaucratic than we needed to be,' Potter said. 'The only way out of that was to have a cultural shock to the system.'
Product development woes
Potter focused on fixing Fleetwood's product development process.
The major problem was that individual departments were getting involved in the process at different times. Engineering, marketing and manufacturing were not working together, and marketing often was included too late.
Fleetwood studied the team approach used by automakers such as DaimlerChrysler and Honda Motor Co. used to develop products. Last summer it began working with consulting firm PRTM of Costa Mesa, Calif.
The new product development process lets Fleetwood speed the concept, creation, testing and building phases of bringing a new motor home to market.
'We wanted to push ourselves to the limit,' Potter said. 'Our goal was ... let's see how much we can really get out of this product development system.'
The process first was tested in Fleetwood's towable business. The Avion Platinum and Avion Vintage fifth-wheel products shown in Louisville were the first to use the company's new process.
However, it was more difficult to spark change in the motor home business.
Fleetwood's new 2002 Terra and Fiesta entry-level Class A motor homes used an accelerated version of the process. The motor homes were developed in two separate 90-day product development programs.
In the past, those projects would have taken 12 to 18 months each, said Carl Betcher, senior vice president of Fleetwood's RV group.
Potter also realized Fleetwood needed to react faster to retail sales.
The company sold 2,307 motor homes in its second quarter that ended Oct. 29. This represented a 42 percent decrease compared with the 3,954 sold during the second quarter of 1999. Motor home revenues in the quarter fell 38 percent to $192 million.
'We did a lot of inventory building in the January through April time frame, to the point where it was excessive,' Potter said.
In February, March and April interest rates went up, then gasoline prices. Retail sales of motor homes softened last spring, and Fleetwood had to dramatically reduce its production rate.
It now tracks retail activity weekly. 'We gauge our production schedule according to what's happening in retail,' said Potter. 'Heretofore, our normal inclination would be to set our production schedule and hope that the distribution chain would absorb that.'
Fleetwood also showed off its Nex-Gen motor home concept to dealers journalists at the RVIA show. The Nex-Gen is designed to appeal to active 30- to 45-year-olds.
The Nex-Gen, which has styling reminiscent of the Nissan's Xterra sport-utility, is a departure from the traditional materials and layouts used in most Class A motor homes.
Fleetwood has not determined if it will produce the Nex-Gen. The company conducted focus groups in Southern California, and will host similar events elsewhere.