WAKARUSA -- Circling around the Monaco Coach Corp. production facility each day on his way home, Mike Martin has noticed more motorhomes than usual parked at the company's dispatch center.
The long line of Class A motor coaches that the sales representative from DeMartini RV Sales has seen illustrates the current woes in the recreational vehicle industry: too much product and too few buyers.
When Monaco Coach handed pink slips to about 200 workers Friday afternoon, it was the second RV maker in Wakarusa in three days to make cutbacks because of slowing consumer demand.
Other RV manufacturers could follow as worries about the national economy cause buyers to refrain from making major purchases.
The downturn is not unexpected. During the 45th Annual National RV Trade Show in Louisville, Ky., in November, Richard Coon, president of Recreation Vehicle Industry Association, told manufacturers and dealers the number of shipments would fall in 2008 to about 334,200, the lowest shipment total since 2003.
At Monaco, the layoffs were made to cut production and, therefore, control inventory. With the reduced work force, production of RVs is expected to fall 10 percent to 20 percent, said Monaco spokesman Craig Wanichek.
"The change was made so the units we are producing don't end up as finished goods at the end of the first quarter," Wanichek said, explaining that the manufacturer could be forced to discount the cost to dealers if too many towables and motorhomes are sitting at the factory in March. "It's a difficult decision but we thought it was prudent right now."
A "vast majority," Wanichek said, of the employees laid off were production workers from the Wakarusa plant.
Two days before Monaco downsized, neighbor Travel Supreme Inc. stopped production and closed its front office. The company was back in business Monday but about 25 of the 230 workers were let go, said Glenn Troyer, chief executive officer and president of Travel Supreme.
RVs are not essential, Troyer said, and with high fuel prices, the credit crunch and the financial mess in the housing market, consumers are not confident to buy large-ticket items.
"We were slow," Troyer said of the three-day shutdown. "We were evaluating what we are going to do."
Despite the talk of recession, Dennis Harney does not believe the RV industry is heading to anything like the downturn of the 1970s. Harney is executive director of the Indiana Manufactured Housing Association-Recreation Vehicle Indiana Council in Indianapolis.
In fact, sales of RVs could increase with recent cuts in interest rates and if the economic stimulus package coming from Washington works, Harney said. Conversely, the slump could continue if fuel prices rise dramatically or if unemployment climbs.
"I don't see anything hugely unusual going on right now," Harney said. "It's not unusual for orders to be slow from time to time and layoffs to occur."
Town Manager Tom Roeder has watched the RV industry cycle through good times and bad. He acknowledged the loss of paychecks will impact families as well as the shops and restaurants in Wakarusa but he advised patience, believing Monaco will rebound.
The DeMartini dealership sells Winnebago's Itasca motorhome and Monaco's Holiday Rambler, which come with price tags between $30,000 and $550,000. Although sales have slowed in recent weeks, Martin shares Harney's and Roeder's outlook.
"There are always people who are going to have the money to buy these things," he said. "I try not to worry too much."