Fleetwood Enterprises, Inc.

3125 Myers Street
Riverside, California 92503-5527
U.S.A.
Telephone: (951) 351-3500
Fax: (951) 351-3312
Web site: http://www.fleetwood.com

Public Company
Incorporated: 1950 as Coach Specialties Company
Employees: 11,500
Sales: $2.43 billion (2006)
Stock Exchanges: New York
Ticker Symbol: FLE
NAIC: 321992 Prefabricated Wood Building Manufacturing; 336213 Motor Home Manufacturing; 336214 Travel Trailer and Camper Manufacturing

Fleetwood Enterprises, Inc., is one of the nation's largest makers of both recreational vehicles (including motor homes, travel trailers, and folding trailers) and manufactured housing. The company's line of motor homes are sold under various brands, including Jamboree, Tioga, Terra, Fiesta, Flair, Storm, Bounder, Southwind, Pace Arrow, Expedition, Discovery, Providence, Excursion, Revolution, American Tradition, American Eagle, and American Heritage. Fleetwood's travel trailers are marketed under the names Pioneer, Mallard, Wilderness, Prowler, Terry, Gearbox, Pegasus, Orbit, Pride, and Triumph. The company's folding trailer division, which leads that sector of the market, manufactures products under the Fleetwood name. As a whole, Fleetwood recreational vehicles (RVs) span the full range of the market, with their retail prices ranging from a few thousand dollars to more than $200,000; they are marketed through a network of approximately 1,300 independent dealers in 49 states and Canada. The company maintains more than a dozen plants in the United States and Ontario to handle its RV production. Manufactured housing is sold under the corporate name, Fleetwood, and is produced at 22 plants throughout the United States. Fleetwood housing is distributed through a network of more than 1,300 dealers in 46 states. Other company operations include two fiberglass manufacturing companies.

FROM WINDOW BLINDS TO MOBILE HOMES

Fleetwood was founded by John C. Crean in a greenhouse in southern California in 1950. Under the name Coach Specialties Company, he and his wife manufactured and sold a new and improved line of window blinds for travel trailers. At the same time, Crean built a travel trailer for his own use. One of his window blind customers, a trailer dealer, was so impressed by the trailer's construction that a deal was struck for Crean to assemble trailer units with materials supplied to him by the dealer. Production was to be in quantities large enough to make sure the dealer could keep pace with his seasonal orders. Around 1953 Crean changed the name of his company to Fleetwood Trailer Company, adopting the name from the Cadillac automobile line of General Motors Corporation (and leading to a lengthy dispute with the automaker, eventually resolved). Soon thereafter, however, Crean shifted his focus from trailers to mobile homes. Mobile homes, currently referred to as manufactured housing, provided a more stable market for growth because of increasing demand for inexpensive housing in southern California. By 1954 the company had outgrown its greenhouse to become a thriving enterprise with three production plants.

The growth of the manufactured home market was caused by the product's moderate price. The cost of a quality manufactured home runs about one-third that of an onsite constructed home, in each case excluding land. Offsite production eliminates the use of many different contractors, construction is not affected by weather, and less time is required for construction because every component arrives at the assembly point ready to use. Manufactured homes are trucked in sections to the homesite, where they are assembled in a matter of days, instead of the normal onsite construction times that can stretch into weeks and months.

EXPANDING INTO RVS

In 1957 the company changed its name and reincorporated as Fleetwood Enterprises, Inc. Having shifted headquarters from Compton to Paramount to Anaheim during its early years, the firm found more lasting roots in Riverside, California, in 1962. During the 1950s the manufactured housing industry had split into two distinct markets. Fleetwood had its feet firmly planted in the mobile home market, and because of its healthy growth had accumulated a large cash surplus. The other market, the recreational vehicle (RV) market, Crean saw offered good opportunities. In 1964 Fleet-wood acquired Terry Coach Industries, Inc., and Terry Coach Manufacturing, Inc., of El Monte, California. This was a time when an ever increasing number of U.S. outdoor enthusiasts wanted to travel. The company's line of travel trailers included sleeping, eating, and bathroom facilities. As the size and weight of these units grew, Fleetwood designed and built a line of fifth-wheel travel trailers, a model that is exclusively built to be towed by larger pickup trucks. As sales grew and the market expanded, the company continued to open new production plants to meet increasing sales. In 1965 Fleetwood became a public company. Its first public financial statement showed annual sales of $18.5 million.

As the RV market boomed, Fleetwood continued to diversify with the 1969 acquisition of Selgran, a motor home manufacturer based in Brea, California. Fleetwood subsequently rebranded this line under the Pace Arrow name. The acquisition was a logical extension of the company's travel trailer business. Motor homes are similar to travel trailers in construction and use. The interior looks the same as a travel trailer except that the motor home provides an area for the driver. The entire unit is constructed on a purchased truck chassis. The product line offers two types, both of which are self-contained. Type A motor homes are full-size units, with sleeping room for four to eight people and typically equipped with air conditioning, onboard power generators, and stereo systems. Type C units are smaller, built on cutaway van chassis, and usually accommodate fewer people. At a time when inexpensive gasoline and the U.S. public's wanderlust fueled the RV market, Fleet-wood was marketing a diverse product line, the prices of which accommodated a wide range of buyers' budgets. The company rounded out its product line with the acquisition, for cash, of Avion Coach Corporation in 1976. Based in Benton Harbor, Michigan, Avion augmented the company's line of trailers with its expensive, luxury class models. In 1977 the company incorporated in the state of Delaware, keeping the same name.

COMPANY PERSPECTIVES

Fleetwood will lead the Recreational Vehicle and Manufactured Housing industries in providing quality products, with a passion for customer-driven innovation. We will emphasize training, embrace diversity and provide growth opportunities for our associates and our dealers. We will lead our industries in the application of appropriate technologies. We will operate at the highest levels of ethics and compliance with a focus on exemplary corporate governance. We will deliver value to our shareholders through consistent, positive operating results and industry-leading earnings.

The 1970s was a period of rapid growth and expansion for Fleetwood. As the decade ended, the revolution in Iran, skyrocketing gasoline costs, and the buying public's fear of a recession, along with rising interest rates, created an across-the-board slump in sales. Two-thirds of Fleetwood's product line were vehicles that were intended for use on U.S. highways. Gasoline shortages, which in some states resulted in day-to-day rationing, along with the spiraling costs of fuel, shook the RV market to its foundations. Many manufacturers were forced out of business as RV retailers began closing their doors and defaulting on their bank-financed inventories. The ensuing recession brought with it escalating interest rates, making mortgages for all types of housing and for financing RVs prohibitive. The company, for the first time since the early 1950s, found itself in a situation calling for drastic cutbacks in production and staffing.

ENCOUNTERING VARIOUS TROUBLES

The year 1980 was difficult for Fleetwood. It was forced to close nine of its production plants. The cutbacks closed three travel trailer plants, three motor home facilities, and three manufactured housing plants. Fleet-wood had to consider massive worker layoffs.

Fleetwood was forced to take a close look at its entire structure during these hard times. It developed a tightly focused management policy, employing regionalized management within its housing group, which permitted the company to react more quickly to market trends. Housing design and development was spread to five areas: West Coast, central, Southeast, mid-Atlantic, and Florida. Each plant facility began operation as a separate profit center with day-to-day decisions made locally. Fleetwood slowly rode out the recession, and in 1982 Fleetwood's motor home division was projecting sales of 40,000 units in 1983.

The rapid growth and expansion Fleetwood had experienced in the 1980s had not been without legal and regulatory problems. The company is subject to provisions of the Housing and Community Development Act of 1974. These provisions, which are regulated by the U.S. Department of Housing and Urban Development (HUD), resulted in an action by the department against Fleetwood in 1985 claiming potential safety defects in 4,000 mobile homes made by the company during the years 1981 through 1984. Fleet-wood was ordered to notify the owners of the mobile homes in question about possible defects in the units' walls, floors, and beams. The problems did prompt HUD to initiate an investigation into engineering techniques used by other mobile home manufacturers.

The four-year-old dispute came to a head in February 1988, resulting in a U.S. Justice Department complaint filed against Fleetwood in Wilmington, Delaware, seeking civil penalties in excess of $20 million. The complaint alleged the existence of certain standards violations in manufactured homes produced by several of Fleetwood's subsidiaries. On February 9, 1989, Fleet-wood entered into a settlement agreement with HUD and the Justice Department. The settlement resulted in the dismissal of government charges against Fleetwood in exchange for a settlement payment.

Fleetwood, along with other companies in the manufactured housing industry, was the target of a class-action suit filed in Delaware in 1985. The complaint alleged that veterans who had purchased mobile homes had paid excessive prices and finance charges as a result of illegal rebates that were falsely certified to the Veterans Administration by the manufacturers. In 1990 the court certified a class of plaintiffs consisting of certain veterans who purchased mobile homes from Fleetwood dating back as far as April 1981. Two of the company's subsidiaries pleaded guilty to six counts of filing false certifications in 1987, resulting in approximately $650,000 in fines and civil settlements.

KEY DATES

1950:

John C. Crean forms Coach Specialties Company, which makes window blinds for travel trailers.

1953:

Crean begins making travel trailers, changes company name to Fleetwood Trailer Company, but then switches focus to manufactured housing.

1957:

Company is reincorporated as Fleetwood Enterprises, Inc.

1962:

Headquarters are established in Riverside, California.

1964:

Fleetwood reenters the recreational vehicle (RV) market by acquiring Terry Coach Industries, Inc., and Terry Coach Manufacturing, Inc.

1965:

Company goes public.

1969:

Fleetwood enters the motor home market through acquisition of Selgran, which is renamed Pace Arrow.

1989:

Company acquires the Coleman Company's folding trailer business.

1998:

Following dispute over the company's move into mobile-home retailing, Crean retires from the company.

2001:

Company weathers first of several consecutive years in the red.

2005:

Elden L. Smith, the new CEO, takes Fleet-wood out of mobile-home retailing.

Fleetwood Credit Corporation (FCC) was established in 1986. The finance company's objective was to become the major source of both wholesale and retail financing of Fleetwood's RV products on a nationwide basis. Using $25 million of its own funds, the company hired Robert B. Baker, former head of Nissan Motor Acceptance Corporation, to head the project. FCC began operations by servicing just 12 Orange County, California, dealers. By the early 1990s the company had lending operations in southern and northern California, Oregon, Indiana, Massachusetts, Georgia, New Jersey, and Texas. Fleetwood Credit showed a net income of $2.9 million in 1990, a 56 percent increase over the previous year.

In 1989 Fleetwood acquired the Coleman Company's folding trailer business. The Coleman product line ranged in retail price from $2,000 to $10,000, and in 1989 it accounted for more than 30 percent of the folding trailer market. With the acquisition of this line, Fleetwood had products for most consumers' budgets. The company also introduced new lower-priced trailer models in response to changing market conditions. That year, revenues surpassed the $1 billion mark for the first time.

UPS AND DOWNS

The 1990s were an up-and-down period for Fleetwood as its results were affected by the economic downturn early in the decade, the mid-1990s recovery, and increasing competition in the later years of the decade. Following the difficult years of 1990 and 1991, revenues and operating income increased each year, although the growth rate for both slowed considerably by fiscal 1996 and 1997, as competitors began to eat away at Fleet-wood's market share positions.

Fleetwood began the decade optimistic about the future, as evidenced by its 1990 $6.3 million purchase of a 75-acre parcel in southern California that it planned to develop as a site-built housing tract. This would have been the company's first foray into nonmanufactured housing, but after several years of preliminary work on the project, it decided in 1996 not to pursue the project. By that time the land was worth only $2.8 million, thanks to the collapse of the California real estate market.

Another attempt at expansion failed as well, when the company looked for growth outside the maturing U.S. motor home market. In September 1992 Fleet-wood acquired an 80 percent interest in Niesmann & Bischoff, a Koblenz, Germany-based manufacturer of luxury-priced ($150,000 to $300,000) motor homes under the brands Clou Liner and Clou Trend. Continued weakness in the German economy, however, led to slow sales following the purchase, even after Fleetwood introduced lower-priced models. In May 1996 Fleet-wood gave up on its European adventure, selling its stake in Niesmann & Bischoff and taking a $28 million charge for fiscal 1996 in the process.

May 1996 also saw another divestment, and a further focusing in on core operations, through the sale of Fleetwood Credit to Associates First Capital Corporation for $156.6 million, resulting in an after-tax gain of $33.9 million for fiscal 1997. In conjunction with the sale, Fleetwood and Associates First Capital signed a long-term operating agreement that assured financing continuity.

These divestments came at a time when Fleetwood needed to devote more attention to its domestic manufactured housing and RV units, both of which were losing ground to aggressive competitors. The company's share of the manufactured housing market reached a peak of 21.6 percent in 1994, then declined to 20.1 percent in 1995 and to 18.5 percent in 1996. On the rise was Auburn Hills, Michigan-based Champion Enterprises, Inc., which had grown rapidly in the mid-1990s through acquisitions, was undercutting Fleetwood's prices, and had attained 16.5 percent of the market by 1996. In the RV sector, Fleetwood's share of the motor home market, the most lucrative RV niche, fell from 34 percent in 1992 to 27.5 percent in 1996. Winnebago Industries, Inc., remained a fairly distant second at 16.7 percent, but Winnebago and other competitors had gained edges over Fleetwood by introducing popular space-increasing slideouts to their motor homes well before Fleetwood added them in fiscal 1996.

Like many an industry leader, Fleetwood had seemed to take its longstanding top positions for granted. The company began in 1996 and 1997 to become more customer-focused, for example by realigning its manufactured housing operations into three autonomous regional units, which brought decision-making closer to the customer level. Fiscal 1997 saw the establishment of 49 Fleetwood Home Centers, which were retail centers selling only Fleetwood homes and designed to offer improved customer service. In October 1997 the company entered into a joint venture (49 percent owned by Fleetwood) with Bloomfield Hills, Michigan-based Pulte Corporation to form Expression Homes Inc., a venture intended to establish a nationwide network of retail centers where manufactured homes would be sold and home financing and insurance would be offered. It intended to grow through acquisitions, including the purchase of some of Fleetwood's independent agents. Fleetwood saw Expression Homes as a way that its homes could be marketed in a more consistent and cohesive way.

PUSH INTO RETAILING, YEARS OF RED INK

The late 1990s were boom years for Fleetwood as the strong economy buoyed sales of both RVs and manufactured housing. Revenues climbed steadily, reaching $3.71 billion by the fiscal year ending in April 2000. Behind the scenes, however, trouble was brewing. Fleetwood's arch-rival on the manufactured housing side, Champion, had aggressively moved into retailing, by early 1998 acquiring dealers that had previously been responsible for one-quarter of Fleetwood's business. A group of executives at Fleetwood led by Glenn F. Kum-mer, the firm's president and chief operating officer since 1982, pushed for a major expansion into mobile-home retailing, but Crean disagreed, arguing that such a move would backfire by angering the firm's remaining independent distributors. Crean in February 1998 elected to accept a buyout of his remaining 14 percent stake in the company for $177 million and retired from the company. Kummer was named chairman and CEO, while Nelson W. Potter was promoted to president and COO.

The new leaders immediately embarked on an acquisition spree, spending some $350 million in the late 1990s acquiring manufactured housing retailers. The largest deal was the purchase of Houston-based HomeUSA, Inc., in 1998 for approximately $162 million. At the time, HomeUSA was the nation's largest independent mobile-home retailer, with annual revenues in excess of $200 million and more than 100 sales centers in Alabama, Colorado, Kentucky, Mississippi, Oklahoma, Tennessee, Texas, and Washington. Fleet-wood also bought out Pulte's stake in Expression Homes. By early 2000 the company had nearly 250 retail locations.

One price of this expansion was a greatly increased debt load. The acquisitions and the buyout of Crean's stock caused debt and preferred stock obligations to skyrocket from $55 million to $367 million. At the same time, sales of manufactured housing were collapsing following a late 1990s overexpansion, and the RV industry, which had enjoyed its best year in two decades in 1999, went into a decline in 2000 as the economy began to weaken. For Fleetwood, the combination of these factors spelled red ink. In August 2000 the company reported its first quarterly net loss in 20 years, and it began aggressively restructuring. During fiscal 2001, two motor home plants and ten manufactured housing plants were shut down, and 73 of the retail centers were either sold or closed. The workforce was reduced from 20,700 to 14,000. Revenues fell 33 percent, to just $2.53 billion, while restructuring charges pushed the net loss for the year to $284 million.

As Fleetwood's losses continued, the company board responded in February 2002 by ousting both Kummer, then serving as chairman, and Potter, who had been promoted to president and CEO. Hired on as CEO in August of that year was Edward R. Caudill, who had been an executive with PACCAR Inc., a manufacturer of heavy- and medium-duty trucks. Caudill appeared to make progress on a turnaround over the next two years. While continuing to suffer from the ongoing slump in the mobile-home market, Fleetwood was buoyed by an improvement in its RV operations, particularly with the introduction of such new products as the Revolution and Excursion diesel-powered motor homes. At this time, gas prices were on the rise, sparking a rise in popularity in diesel RVs, which were quieter, more fuel efficient, and able to haul more weight than gasoline-powered models. However, a $54.7 million loss in the third quarter of fiscal 2005 prompted the board of directors to conclude that new leadership was once again needed. Caudill was ousted in March 2005 and replaced by Elden L. Smith, who had retired from Fleetwood in 1997 after nearly 30 years at the company, having served as head of the RV division from 1972 until his retirement.

Smith returned Fleetwood to its core manufacturing operations. By August 2005 he had sold substantially all of the firm's manufactured housing retail operations and its entire loan portfolio to affiliates of Clayton Homes, Inc. Operationally, surging gas prices were hurting the sales of RVs, but Fleetwood received a boost by filling large orders from the Federal Emergency Management Agency (FEMA) for travel trailers and mobile homes designated as temporary housing for Gulf Coast residents displaced by Hurricanes Katrina and Rita. The FEMA orders totaled $129 million in the third quarter of fiscal 2006, enabling Fleetwood to eke out a small net profit that quarter. Although still headed for its sixth consecutive year in the red, Fleetwood under Smith's leadership finally appeared positioned to end its prolonged slump.

                                         William R. Grossman

                                Updated, David E. Salamie

PRINCIPAL SUBSIDIARIES

Fleetwood Homes of Arizona, Inc.; Fleetwood Homes of California, Inc.; Fleetwood Homes of Florida, Inc.; Fleetwood Homes of Georgia, Inc.; Fleetwood Homes of Idaho, Inc.; Fleetwood Homes of Indiana, Inc.; Fleet-wood Homes of Kentucky, Inc.; Fleetwood Homes of North Carolina, Inc.; Fleetwood Homes of Oregon, Inc.; Fleetwood Homes of Pennsylvania, Inc.; Fleetwood Homes of Tennessee, Inc.; Fleetwood Homes of Texas, LP; Fleetwood Homes of Virginia, Inc.; Fleetwood Homes of Washington, Inc.; Fleetwood Motor Homes of California, Inc.; Fleetwood Motor Homes of Indiana, Inc.; Fleetwood Motor Homes of Pennsylvania, Inc.; Fleetwood Travel Trailers of California, Inc.; Fleetwood Travel Trailers of Indiana, Inc.; Fleetwood Travel Trailers of Kentucky, Inc.; Fleetwood Travel Trailers of Maryland, Inc.; Fleetwood Travel Trailers of Ohio, Inc.; Fleetwood Travel Trailers of Oregon, Inc.; Fleetwood Travel Trailers of Texas, Inc.; Fleetwood Canada Ltd.; Fleetwood Folding Trailers, Inc.; Gold Shield, Inc.; Gold Shield of Indiana, Inc.; Continental Lumber Products, Inc.; Fleetwood Housing International, Inc.; Fleetwood International, Inc.; Fleetwood Vacation Club, Inc.; Gibralter Insurance Company, Ltd. (Bermuda).

PRINCIPAL COMPETITORS

Thor Industries, Inc.; Forest River Inc.; Jayco, Inc.; Coachman Industries, Inc.; Winnebago Industries, Inc.; Monarch Coach Corporation; Clayton Homes, Inc.; Champion Enterprises, Inc.

FURTHER READING

Ashley, Bob, "Smith: Fleetwood Poised to Rebound in Wake of Katrina, Management Reorganization," RV Business, October 2005, pp. 7+.

Brammer, Rhonda, "Built to Last," Barron's, April 17, 2000, pp. 28, 30, 32.

Clifford, Mark, "Business As Usual," Forbes, November 18, 1985, p. 62.

Crean, John, with Jim Washburn, The Wheel and I: My Life Driving Fleetwood Enterprises to the Top, Newport Beach, Calif.: J.C. Crean, 2000, 436 p.

Crider, Jeff, "Fleetwood Founder, CEO Retiring After 48 Years," Riverside (Calif.) Press-Enterprise, January 14, 1998, p. C1.

――――――, "Follow the Leader: Fleetwood Is Still the Dominant Company in the Manufactured Housing and RV Industries, but Competitors Have Been Gaining," Riverside (Calif.) Press-Enterprise, June 8, 1997, p. G1.

Flint, Jerry, "John Crean's Recipe for Success," Forbes, October 25, 1993, pp. 200, 204.

"A Glimpse of Fleetwood Enterprises, Inc.," Fleetwood Enterprises corporate typescript, 1987.

Goldenberg, Sherman, "Fleetwood Stresses '92 Economy, New Quality Program," RV Business, October 7, 1991, pp. 1, 11.

Granelli, James S., "Fleetwood, Pulte to Form Alliance," Los Angeles Times, October 9, 1997, pp. D2, D6.

――――――, "Fleetwood's Elden Smith: The View from the Top," RV Business, November 1993, pp. 32-33.

McCarthy, Tom, "Fleetwood Plans More European Acquisitions, Class C Production," RV Business, November 1992, pp. 11, 12.

Palmeri, Christopher, "Fleetwood: Not a Happy Camper Company," Business Week, October 9, 2000, pp. 88, 90.

Paris, Ellen, "Keeping Its Powder Dry," Forbes, October 11, 1982, p. 130.

Reingold, Jennifer, "Fleetwood Enterprises: Movin' on Up," Financial World, October 26, 1993, p. 22.

Rescigno, Richard, "Revved Up for Recovery: Recreational-Vehicle Makers Seem Ready to Roll Again," Barron's, June 17, 1991, pp. 14-15, 37-39.

Shikes, Jonathan, "Fleetwood Enterprises: Retired Officer Takes Wheel at RV Maker," Riverside (Calif.) Press-Enterprise, May 17, 2005, p. E1.

Wadley, Jared O., "No Fleeting Fancy: As It Celebrates Its 50th Year, Fleetwood Enterprises Is at a Critical Juncture," Riverside (Calif.) Press-Enterprise, June 4, 2000, p. A1.

――――――, "Two Top Officers Leave Fleetwood," Riverside (Calif.) Press-Enterprise, February 12, 2002, p. A1.

Witherall, Graham, "Just a Speed Bump?," Los Angeles Times, August 24, 1997, p. D1.

Fleetwood Enterprises, Inc.

3125 Myers Street
Post Office Box 7638
Riverside, California 92513-7638
U.S.A.
(909) 351-3500
Fax: (909) 351-3373
Web site: http://www.fleetwood.com

Public Company
Incorporated: 1950 as Coach Specialties Company
Employees: 18,000
Sales: $2.87 billion (1997)
Stock Exchanges: New York Pacific
SICs: 2451 Mobile Homes; 2452 Prefabricated Wood Buildings & Components; 3716 Motor Homes; 3792 Travel Trailers & Campers

Fleetwood Enterprises, Inc. is the nation’s largest maker of both manufactured housing and recreational vehicles (including motor homes, travel trailers, folding trailers, and truck campers). Manufactured housing is sold under the corporate name, Fleet-wood. The company’s line of motor homes are sold under various brands, including Jamboree, Bounder, Flair, Pace Arrow, Southwind, Tioga, Storm, and Discovery. Fleetwood’s travel trailers are marketed under the names Avion, Prowler, Terry, Wilderness, Mallard, Savanna, and Westport. The company’s folding trailer division, acquired in December 1989, manufactures products under the Coleman name. As a whole, Fleetwood recreational vehicles span the full range of the market, with their retail prices ranging from $3,000 to more than $200,000. Both housing and recreational vehicles are marketed through a network of more than 2,600 dealers in the United States and Canada. The company supplies its dealers from production facilities located in 18 states and in Canada. Fleetwood holds a 49 percent stake in Expression Homes, a joint venture with Pulte Corp. created in October 1997 that operates retail centers selling manufactured houses as well as offering home financing and insurance. Other company operations include two fiberglass manufacturing companies and a lumber milling unit.

From Window Blinds to Mobile Homes in the 1950s

Fleetwood was founded by the company’s current chairman and CEO John C. Crean in a greenhouse in southern California in 1950. Under the name Coach Specialties Company, he and his wife manufactured and sold a new and improved line of window blinds for travel trailers. At the same time, Crean built a travel trailer for his own use. One of his window blind customers, a trailer dealer, was so impressed by the trailer’s construction that a deal was struck for Crean to assemble trailer units with materials supplied to him by the dealer. Production was to be in quantities large enough to make sure the dealer could keep pace with his seasonal orders. As the summer travel trailer season came to a close, Crean continued his new enterprise but opted to build mobile homes instead of trailers. Mobile homes, currently referred to as manufactured housing, provided a more stable market for growth because of increasing demand for inexpensive housing in southern California. The name Fleet-wood was chosen from a line of automobiles. By 1954 the company had outgrown its greenhouse to become a thriving enterprise with three production plants.

The growth of the manufactured home market was caused by the product’s moderate price. The cost of a quality manufactured home runs about one-third that of an on-site constructed home, in each case excluding land. Off-site production eliminates the use of many different contractors, construction is not affected by weather, and less time is required for construction because every component arrives at the assembly point ready to use. Manufactured homes are trucked in sections to the home-site, where they are assembled in a matter of days, instead of the normal on-site construction times that can stretch into weeks and months.

Expanded into RVs in the 1960s and 1970s

In 1957 the company changed its name from Coach Specialties Company and reincorporated as Fleetwood Enterprises, Inc. During the 1950s the manufactured housing industry had split into two distinct markets. Fleetwood had its feet firmly planted in the mobile home market, and because of its healthy growth had accumulated a large cash surplus. The other market, the recreational vehicle (RV) market, Crean saw offered good opportunities. In 1964 Fleetwood acquired Terry Coach Industries, Inc. and Terry Coach Manufacturing, Inc. This was a time when an ever-increasing number of U.S. outdoor enthusiasts wanted to travel. The company’s line of travel trailers included sleeping, eating, and bathroom facilities. As the size and weight of these units grew, Fleetwood designed and built a line of fifth-wheel travel trailers, a model that is exclusively built to be towed by larger pickup trucks. As sales grew and the market expanded, the company continued to open new production plants to meet increasing sales. In 1965 Fleetwood became a public company. By 1990 the company operated 12 travel trailer plants in the United States and Canada.

As the RV market boomed, Fleetwood continued to diversify with the acquisition of Pace-Arrow, Inc., a motor home manufacturer. The acquisition was a logical extension of the company’s travel trailer business. Motor homes are similar to travel trailers in construction and use. The interior looks the same as a travel trailer except that the motor home provides an area for the driver. The entire unit is constructed on a purchased truck chassis. The product line offers two types, both of which are self-contained. Type A motor homes are full-size units, with sleeping room for four to eight people and typically equipped with air conditioning, on-board power generators, and stereo systems. Type C units are smaller, built on cut-away van chassis, and usually accommodate fewer people. At a time when inexpensive gasoline and the U.S. public’s wanderlust fueled the RV market, Fleetwood was marketing a diverse product line, the prices of which accommodated a wide range of buyers’ budgets. The company rounded out its product line with the acquisition, for cash, of Avion Coach Corporation in 1976. Avion augmented the company’s line of trailers with its expensive, luxury class models. In 1977 the company incorporated in the state of Delaware, keeping the same name.

The 1970s was a period of rapid growth and expansion for Fleetwood. As the decade ended, the revolution in Iran, skyrocketing gasoline costs, and the buying public’s fear of a recession, along with rising interest rates, created an across-the-board slump in sales. Two-thirds of Fleetwood’s product line were vehicles that were intended for use on U.S. highways. Gasoline shortages, which in some states resulted in day-to-day rationing, along with the spiraling costs of fuel, shook the RV market to its foundations. Many manufacturers were forced out of business as RV retailers began closing their doors and defaulting on their bank-financed inventories. The ensuing recession brought with it escalating interest rates, making mortgages for all types of housing and for financing RVs prohibitive. The company, for the first time since the early 1950s, found itself in a situation calling for drastic cutbacks in production and staffing.

Encountered Various Troubles in the 1980s

The year 1980 was difficult for Fleetwood. It was forced to close nine of its production plants. The cutbacks closed three travel trailer plants, three motor home facilities, and three manufactured housing plants. Fleetwood had to consider massive worker layoffs.

Fleetwood was forced to take a hard look at its entire structure during these hard times. It developed a tightly focused management policy, employing regionalized management within its housing group, which permitted the company to react more quickly to market trends. Housing design and development was spread to five areas: West Coast, central, southeast, mid-Atlantic, and Florida. Each plant facility began operation as a separate profit center with day-to-day decisions made locally. Fleetwood slowly rode out the recession, and in 1982 Fleetwood’s motor home division was projecting sales of 40,000 units in 1983.

The rapid growth and expansion Fleetwood had experienced in the 1980s had not been without legal and regulatory problems. The company is subject to provisions of the Housing and Community Development Act of 1974. These provisions, which are regulated by the U.S. Department of Housing and Urban Development (HUD), resulted in an action by the department against Fleetwood in 1985 claiming potential safety defects in 4,000 mobile homes made by the company during the years 1981 through 1984. Fleetwood was ordered to notify the owners of the mobile homes in question about possible defects in the units’ walls, floors, and beams. The problems did prompt HUD to initiate an investigation into engineering techniques used by other mobile home manufacturers.

The four-year-old dispute came to a head in February 1988, resulting in a U.S. Justice Department complaint filed against Fleetwood in Wilmington, Delaware, seeking civil penalties in excess of $20 million. The complaint alleged the existence of certain standards violations in manufactured homes produced by several of Fleetwood’s subsidiaries. On February 9, 1989, Fleetwood entered into a settlement agreement with HUD and the Justice Department. The settlement resulted in the dismissal of government charges against Fleetwood in exchange for a settlement payment.

Company Perspectives:

Fleetwood Enterprises, Inc., a Fortune 500 company listed on the New York Stock Exchange, is the nation’s leading producer of manufactured housing and recreational vehicles. Headquartered in Riverside, California, the company employs over 18,000 people in plants located in 18 states and Canada.

The dream of home ownership is alive and well in America, and Fleetwood made that dream a reality for more than 65,000 families in fiscal 1997. Fleetwood builds quality, factory-built homes, enabling families to enjoy comfortable housing at affordable prices.

Fleetwood manufactures a wide array of recreational vehicles, including motor homes, travel trailers, folding camping trailers, and slide-in truck campers. Fleetwood RVs are designed to make leisure-time activities more enjoyable and enhance today’s more active lifestyles.

Fleetwood, along with other companies in the manufactured housing industry, was the target of a class action suit filed in Delaware in 1985. The complaint alleged that veterans who had purchased mobile homes had paid excessive prices and finance charges as a result of illegal rebates that were falsely certified to the Veterans Administration by the manufacturers. In 1990 the court certified a class of plaintiffs consisting of certain veterans who purchased mobile homes from Fleetwood dating back as far as April 1981. Two of the company’s subsidiaries pleaded guilty to six counts of filing false certifications in 1987, resulting in approximately $650,000 in fines and civil settlements.

Fleetwood Credit Corporation (FCC) was established in 1986. The finance company’s objective was to become the major source of both wholesale and retail financing of Fleet-wood’s RV products on a nationwide basis. Using $25 million of its own funds, the company hired Robert B. Baker, former head of Nissan Motor Acceptance Corporation, to head the project. FCC began operations by servicing just 12 Orange County, California dealers. In the early 1990s the company had lending operations in southern and northern California, Oregon, Indiana, Massachusetts, Georgia, New Jersey, and Texas. Fleet-wood Credit showed a net income of $2.9 million in 1990, a 56 percent increase over the previous year.

In 1989 Fleetwood acquired the Coleman Company’s folding trailer business. The Coleman product line ranged in retail price from $2,000 to $10,000, and in 1989 it accounted for more than 30 percent of the folding trailer market. With the acquisition of this line, Fleetwood had products for most consumers’ budgets. The company also introduced new lower-priced trailer models in response to changing market conditions.

Ups and Downs Marked the 1990s

The 1990s were an up-and-down period for Fleetwood as its results were affected by the economic downturn early in the decade, the mid-1990s recovery, and increasing competition in the later years of the decade. Following the difficult years of 1990 and 1991, revenues and operating income increased each year, although the growth rate for both slowed considerably by fiscal 1996 and 1997, as competitors began to eat away at Fleetwood’s market share positions.

Fleetwood began the decade optimistic about the future, as evidenced by its 1990 $6.3 million purchase of a 75-acre parcel in southern California that it planned to develop as a site-built housing tract. This would have been the company’s first foray into nonmanufactured housing, but after several years of preliminary work on the project, it decided in 1996 not to pursue the project. By that time the land was worth only $2.8 million, thanks to the collapse of the California real estate market.

Another attempt at expansion failed as well, when the company looked for growth outside the maturing U.S. motor home market. In September 1992 Fleetwood acquired an 80 percent interest in Niesmann & Bischoff, a Koblenz, Germany-based manufacturer of luxury-priced ($150,000 to $300,000) motor homes under the brands Clou Liner and Clou Trend. Continued weakness in the German economy, however, led to slow sales following the purchase, even after Fleetwood introduced lower-priced models. In May 1996 Fleetwood gave up on its European adventure, selling its stake in Niesmann & Bischoff and taking a $28 million charge for fiscal 1996 in the process.

May 1996 also saw another divestment, and a further focusing in on core operations, through the sale of Fleetwood Credit to Associates First Capital Corporation for $156.6 million, resulting in an after-tax gain of $33.9 million for fiscal 1997. In conjunction with the sale, Fleetwood and Associates First Capital signed a long-term operating agreement that assured financing continuity.

These divestments came at a time when Fleetwood needed to devote more attention to its domestic manufactured housing and RV units, both of which were losing ground to aggressive competitors. The company’s share of the manufactured housing market reached a peak of 21.6 percent in 1994, then declined to 20.1 percent in 1995 and to 18.5 percent in 1996. On the rise was Auburn Hills, Michigan-based Champion Enterprises Inc., which had grown rapidly in the mid-1990s through acquisitions, was undercutting Fleetwood’s prices, and had attained 16.5 percent of the market by 1996. In the RV sector, Fleetwood’s share of the motor home market, the most lucrative RV niche, fell from 34 percent in 1992 to 27.5 percent in 1996. Winnebago remained a fairly distant second at 16.7 percent, but Winnebago and other competitors had gained edges over Fleetwood by introducing popular space-increasing slideouts to their motor homes well before Fleetwood added them in fiscal 1996.

Like many an industry leader, Fleetwood had seemed to take its longstanding top positions for granted. The company began in 1996 and 1997 to become more customer-focused, for example by realigning its manufactured housing operations into three autonomous regional units, which brought decision-making closer to the customer level. Fiscal 1997 saw the establishment of 49 Fleetwood Home Centers, which were retail centers selling only Fleetwood homes and designed to offer improved customer service. In October 1997 the company entered into a joint venture (49 percent owned by Fleetwood) with Bloomfield Hills, Michigan-based Pulte Corp. to form Expression Homes, a venture intended to establish a nationwide network of retail centers where manufactured homes would be sold and home financing and insurance would be offered. It intended to grow through acquisitions, including the purchase of some of Fleet-wood’s independent agents. Fleetwood saw Expression Homes as a way that its homes could be marketed in a more consistent and cohesive way. The question for Fleetwood was whether moves such as these would be enough for it to remain the number one maker of manufactured homes and RVs in the 21st century.

Principal Subsidiaries

Fleetwood Homes of Arizona, Inc.; Fleetwood Homes of California, Inc.; Fleetwood Homes of Florida, Inc.; Fleetwood Homes of Georgia, Inc.; Fleetwood Homes of Idaho, Inc.; Fleet-wood Homes of Indiana, Inc.; Fleetwood Homes of Mississippi, Inc.; Fleetwood Homes of North Carolina, Inc.; Fleetwood Homes of Oregon, Inc.; Fleetwood Homes of Pennsylvania, Inc.; Fleetwood Homes of Tennessee, Inc.; Fleetwood Homes of Texas, Inc.; Fleetwood Homes of Virginia, Inc.; Fleetwood Homes of Washington, Inc.; Fleetwood Motor Homes of California, Inc.; Fleetwood Motor Homes of Indiana, Inc.; Fleet-wood Motor Homes of Pennsylvania, Inc.; Fleetwood Travel Trailers of California, Inc.; Fleetwood Travel Trailers of Indiana, Inc.; Fleetwood Travel Trailers of Maryland, Inc.; Fleet-wood Travel Trailers of Nebraska, Inc.; Fleetwood Travel Trailers of Ohio, Inc.; Fleetwood Travel Trailers of Oregon, Inc.; Fleetwood Travel Trailers of Texas, Inc.; Fleetwood Travel Trailers of Virginia, Inc.; Fleetwood Folding Trailers, Inc.; Gold Shield, Inc.; Gold Shield of Indiana, Inc.; Hauser Lake Lumber Operation, Inc.; Buckingham Development Co.; Continental Lumber Products, Inc.; Fleetwood Foreign Sales Corp. (U.S. Virgin Islands); Fleetwood Holidays, Inc.; Fleetwood Insurance Services, Inc.; Fleetwood International, Inc.; Gibralter Insurance Company, Ltd. (Bermuda); Expression Homes (49%).

Further Reading

Clifford, Mark, “Business As Usual,” Forbes, November 18, 1985, p. 62.

Flint, Jerry, “John Crean’s Recipe for Success,” Forbes, October 25, 1993, pp. 200, 204.

“A Glimpse of Fleetwood Enterprises, Inc.,” Fleetwood Enterprises corporate typescript, 1987.

Goldenberg, Sherman, “Fleetwood Stresses ’92 Economy, New Quality Program,” RV Business, October 7, 1991, pp. 1, 11.

Granelli, James S., “Fleetwood, Pulte to Form Alliance,” Los Angeles Times, October 9, 1997, pp. D2, D6.

_____, “Fleetwood’s Elden Smith: The View from the Top,” RV Business, November 1993, pp. 32-33.

McCarthy, Tom, “Fleetwood Plans More European Acquisitions, Class C Production,” RV Business, November 1992, pp. 11, 12.

Paris, Ellen, “Keeping Its Powder Dry,” Forbes, October 11, 1982, p. 130.

Reingold, Jennifer, “Fleetwood Enterprises: Movin’ on Up,” Financial World, October 26, 1993, p. 22.

Rescigno, Richard, “Revved Up for Recovery: Recreational-Vehicle Makers Seem Ready to Roll Again,” Barron’s, June 17, 1991, pp.14_15, 37-39.

Witherall, Graham, “Just a Speed Bump?,” Los Angeles Times, August 24, 1997, p. Di.

—William R. Grossman

—updated by David E. Salamie

Fleetwood Enterprises, Inc.

3125 Myers Street
Riverside, California 92523
U.S.A.
(714) 351-3500
Fax: (714) 351-3931

Public Company
Incorporated: 1950 as Coach Specialties Company
Employees: 12,000
Sales: $1.55 billion
Stock Exchanges: New York Pacific

Fleetwood Enterprises is the world’s largest manufacturer of travel trailers, motor homes, folding trailers, and manufactured housing. The company’s travel trailers are currently marketed under the names Avion, Prowler, Terry, and Wilderness. Fleetwood’s line of motor homes are sold under the names Jamboree, Bounder, Flair, Pace Arrow, South wind, Tioga, and Limited. The company’s folding trailer division, acquired in December 1989, manufactures products under the Coleman name. Manufactured housing is sold under the corporate name, Fleetwood. All four product lines are marketed through a network of more than 3,600 dealers in the United States and Canada. Fleetwood offers financing to its recreational vehicle dealers and to their customers through Fleet-wood Credit Corporation. The company supplies its dealers from 45 production facilities located in 16 states in the United States and Canada.

Fleetwood was founded by the company’s current chairman and CEO John C. Crean in a greenhouse in southern California in 1950. Under the name Coach Specialties Company, he and his wife manufactured and sold a new and improved line of window blinds for travel trailers. At the same time, Crean built a travel trailer for his own use. One of his window-blind customers, a trailer dealer, was so impressed by the trailer’s construction that a deal was struck for Crean to assemble trailer units with materials supplied to him by the dealer. Production was to be in quantities large enough to make sure the dealer could keep pace with his seasonal orders. As the summer travel-trailer season came to a close, Crean continued his new enterprise but opted to build mobile homes instead of trailers. Mobile homes, currently referred to as manufactured housing, provided a more stable market for growth because of increasing demand for inexpensive housing in southern California. The name Fleetwood was chosen from a line of automobiles. By 1954 the company had outgrown its greenhouse to become a thriving enterprise with three production plants.

The growth of the manufactured home market was caused by the product’s moderate price. The cost of a quality manufactured home runs about one-third that of on-site constructed home, in each case excluding land. Off-site production eliminates the use of many different contractors, construction is not affected by weather, and less time is required for construction because every component arrives at the assembly point ready to use. Manufactured homes are trucked in sections to the homesite, where they are assembled in a matter of days, instead of the normal on-site construction times that can stretch into weeks and months.

In 1957 the company changed its name from Coach Specialties Company and reincorporated as Fleetwood Enterprises. During the 1950s the manufactured housing industry had split into two distinct markets. Fleetwood had its feet firmly planted in the mobile home market, and because of its healthy growth had accumulated a large cash surplus. The other market, the recreational vehicle (RV) market, John Crean saw offered good opportunities. In 1964 Fleetwood acquired Terry Coach Industries, Inc., and Terry Coach Manufacturing, Inc. This was a time when an ever-increasing number of U.S. outdoor enthusiasts wanted to travel. The company’s line of travel trailers included sleeping, eating, and bathroom facilities. As the size and weight of these units grew, Fleetwood designed and built a line of fifth-wheel travel trailers, a model that is exclusively built to be towed by larger pick-up trucks. As sales grew and the market expanded, the company continued to open new production plants to meet increasing sales. In 1965 Fleetwood became a public company. By 1990 the company operated 12 travel trailer plants in the United States and Canada.

As the RV market boomed, Fleetwood continued to diversify with the acquisition of Pace-Arrow, Inc., a motor home manufacturer. The acquisition was a logical extension of the company’s travel trailer business. Motor homes are similar to travel trailers in construction and use. The interior looks the same as a travel trailer except that the motor home provides an area for the driver. The entire unit is constructed on a purchased truck chassis. The product line offers two types, both of which are self-contained. Type A motor homes are full-size units, having sleeping room for four to eight people and are typically equipped with air conditioning, on-board power generators, and stereo systems. In 1990 Type A units typically sold for $50,000 to $80,000. Type C units are smaller, built on cut-away van chassis, and usually accommodate fewer people. In 1990 Type C units sold for $25,000 to $50,000. At a time when inexpensive gasoline and the U.S. public’s wanderlust fueled the RV market, Fleetwood was marketing a diverse product line, the prices of which accommodated a wide range of buyers’ budgets. The company rounded out its product line with the acquisition, for cash, of Avion Coach Corporation in 1976. Avion augmented the company’s line of trailers with its expensive, luxury class models. In 1977, the company incorporated in the state of Delaware keeping the same name.

The 1970s was a period of rapid growth and expansion for Fleetwood. As the decade ended, the revolution in Iran, skyrocketing gasoline costs, and the buying public’s fear of a recession, along with rising interest rates created an across-the-board slump in sales. Two-thirds of the Fleetwood’s product line were vehicles that were intended for use on U.S. highways. Gasoline shortages, which in some states resulted in day-to-day rationing along with the spiraling costs of fuel shook the RV market to its foundations. Many manufacturers were forced out of business as RV retailers began closing their doors and defaulting on their bank financed inventories. The ensuing recession brought with it escalating interest rates, making mortgages for all types of housing and for financing RVs prohibitive. The company, for the first time since the early 1950s, found itself in a situation calling for drastic cutbacks in production and staffing.

The year 1980 was difficult for Fleetwood. It was forced to close nine of its production plants. The cutbacks closed three travel trailer plants, three motor home facilities, and three manufactured housing plants. Fleetwood had to consider massive worker layoffs.

Fleetwood was forced to take a hard look at its entire structure during these hard times. It developed a tightly focused management policy, employing regionalized management within its housing group, which permitted the company to react more quickly to market trends. Housing design and development has been spread to five areas: west coast, central, southeast, mid-Atlantic, and Florida. Each plant facility began operation as a separate profit center with day-to-day decisions made locally. Fleetwood slowly rode out the recession, and in 1982 Fleetwood’s motor home division was projecting sales of 40,000 units in 1983.

The rapid growth and expansion Fleetwood had experienced in the 1980s had not been without legal and regulatory problems. The company is subject to provisions of the Housing and Community Development Act of 1974. These provisions, which are regulated by the U.S. Department of Housing and Urban Development (HUD), resulted in an action by the department against Fleetwood in 1985 claiming potential safety defects in 4,000 mobile homes made by the company during the years 1981 through 1984. Fleetwood was ordered to notify the owners of the mobile homes in question about possible defects in the units’ walls, floors, and beams. The problems did prompt HUD to initiate an investigation into engineering techniques used by other mobile home manufacturers.

The four-year-old dispute came to a head in February 1988, resulting in a U.S. Justice Department complaint filed against Fleetwood in Wilmington, Delaware, seeking civil penalties in excess of $20 million. The complaint alleged the existence of certain standards violations in manufactured homes produced by several of Fleetwood’s subsidiaries. On February 9, 1989, Fleetwood entered into a settlement agreement with HUD and the Justice Department. The settlement resulted in the dismissal of government charges against Fleet-wood in exchange for a settlement payment.

Fleetwood, along with other companies in the manufactured housing industry were the target of a class-action suit filed in Delaware in 1985. The complaint alleged that veterans who had purchased mobile homes had paid excessive prices and finance charges as a result of illegal rebates that were falsely certified to the Veterans Administration by the manufacturers. In 1990, the court certified a class of plaintiffs consisting of certain veterans who purchased mobile homes from Fleetwood dating back as far as April of 1981. Two of the company’s subsidiaries pleaded guilty to six counts of filing false certifications in 1987, resulting in approximately $650,000 in fines and civil settlements. In 1990, the company was still vigorously defending itself from further legal actions.

Fleetwood Credit Corporation (FCC) was established in 1986. The finance company’s objective was to become the major source of both wholesale and retail financing of Fleet-wood’s RV products on a nationwide basis. Using $25 million of its own funds, the company hired Robert B. Baker, former head of Nissan Motor Acceptance Corporation to head the project. FCC began operations by servicing just twelve Orange County, California, dealers. In the early 1990s the company had lending operations in southern and northern California, Oregon, Indiana, Massachusetts, Georgia, New Jersey, and Texas. Fleetwood Credit showed a net income of $2.9 million in 1990, a 56% increase over the previous year.

In 1989 Fleetwood acquired the Coleman Company’s folding trailer business. The Coleman product line ranged in retail price from $2,000 to $10,000, and in 1989 it accounted for more than 30% of the folding trailer market. With the acquisition of this line, Fleetwood had products for most consumers’ budgets. The company has also introduced new lower-priced trailer models in response to changing market conditions. Its eye on the future, the company in 1990 purchased a 75-acre parcel in southern California to develop as a site-built housing tract.

Principal Subsidiaries

Fleetwood Homes of California, Inc.; Fleetwood Homes of Florida, Inc.; Fleetwood Homes of Georgia, Inc.; Fleetwood Homes of Idaho, Inc.; Fleetwood Homes of Indiana, Inc.; Fleetwood Homes of Mississippi, Inc.; Fleetwood Homes of North Carolina, Inc.; Fleetwood Homes of Oregon, Inc.; Fleetwood Homes of Pennsylvania, Inc.; Fleetwood Homes of Tennessee, Inc.; Fleetwood Homes of Texas, Inc.; Fleetwood Homes of Virginia, Inc.; Fleet-wood Homes of Washington, Inc.; Westfield Manufactured Homes, Inc.; Fleetwood Travel Trailers of California, Inc.; Fleetwood Travel Trailers of Indiana, Inc.; Fleetwood Travel Trailers of Maryland, Inc.; Fleetwood Travel Trailers of Nebraska, Inc.; Fleetwood Travel Trailers of Ohio, Inc.; Fleet-wood Travel Trailers of Oregon, Inc.; Fleetwood Travel Trailers of Texas, Inc.; Fleetwood Travel Trailers of Virginia, Inc.; Fleetwood Motor Homes of California, Inc.; Fleetwood Motor Homes of Indiana, Inc.; Fleetwood Motor Homes of Pennsylvania, Inc.; Fleetwood Folding Trailers, Inc.; Buckingham Development Company; C.V. Aluminum, Inc.; Continental Lumber Products, Inc.; FEI Corp.; Fleetwood Credit Corp.; Fleetwood Foreign Sales Corp. (U.S. Virgin Islands); Fleetwood Holidays, Inc.; Fleetwood Insurance Services, Inc.; Fleetwood International, Inc.; Gibralter Insurance Company, Ltd. (Bermuda); Gold Shield Fiberglass, Inc.; Gold Shield Fiberglass of Indiana, Inc.; GSF Installation Company; Hauser Lake Lumber Operation, Inc.; Housing Supply, Inc.

Further Reading

“A Glimpse of Fleetwood Enterprises, Inc.” Fleetwood Enterprises corporate typescript, 1987.

—William R. Grossman

Fleetwood Enterprises, Inc.

founded: 1950 as coach specialties co.

Contact Information:

headquarters: 3125 myers street
riverside, ca 92503-5527 phone: (909)351-3500 fax: (909)351-3500 url: http://www.fleetwood.com

OVERVIEW

Based in California, Fleetwood Enterprises, Inc. is the largest maker of recreational vehicles, including motor homes, folding trailers, and travel trailers, in the United States. The Fortune 500 company is also the second largest maker of manufactured homes. Along with selling its products via 190 retail outlets, Fleetwood also uses roughly 2,600 independent dealers. Manufactured homes account for 56 percent of revenues while motor homes bring in 23 percent, travel trailers 16 percent, and folding trailers 4 percent.

COMPANY FINANCES

After three consecutive years of growth, sales in 2001 fell to $2.5 billion compared to nearly $3.8 billion the previous year. Net income fell from $108.5 million in 1998 to $107.1 million in 1999, and to $83.4 million in 2000. In 2001 Fleetwood posted a net loss of $283.9 million. Earnings per share dropped from $3.01 in 1998, to $2.94 in 1999, and to $2.41 in 2000. In 2001 losses per share totaled $8.67. Stock prices, which peaked in 1998 at a high of $48 per share, had fallen to a high of $16 per share by 2001.

ANALYSTS' OPINIONS

Despite a 35 percent drop in housing sales and a 37 percent drop in RV sales in 2001, due in large part to the North American economic recession, some analysts believed that Fleetwood stock was worth a second look. The firm's drastic cost cutting measures, which included the elimination of one-third of its workforce and the shuttering of 13 plants, was predicted to boost performance in early 2002. However, when Fleetwood's performance worsened during the first three months of 2002, Standard & Poor's downgraded its stock from "hold" to "sell." Some analysts criticized the firm for weak product development, as well as for failing to build strong relationships with dealers.

HISTORY

Fleetwood was established in 1950 as Coach Specialties Co. by John C. Crean. Initially, the new California-based firm sold window blinds for travel trailers. Early in the decade, Crean built his own personal travel trailer, and one of his window blind customers who happened to be a trailer dealer asked Crean to assemble trailer units for him during the busy summer months. When the summer travel trailer season ended, Crean began building mobile homes instead of trailers. Increased demand for inexpensive housing in southern California boosted sales of mobile homes, which typically cost one-third the price of traditional homes in the 1950s. By 1954 operations had grown to encompass three production plants. Three years later, Coach Specialties changed its name to Fleetwood Enterprises, Inc.

In 1964 Fleetwood diversified into recreational vehicles (RVs) with the purchase of Terry Coach Industries, Inc. and Terry Coach Manufacturing, Inc. The RV market was booming, thanks to the growing number of U.S. residents who had made traveling a hobby. Low gasoline prices also contributed to the industry's growth. Eventually, Fleetwood created a line of fifth-wheel travel trailers designed to be towed behind larger pickup trucks. The firm completed its initial public offering in 1965. Fleetwood continued to expand with the purchases of Pace-Arrow, Inc., a motor home manufacturer, and Avion Coach Corp., manufacturer of luxury class trailers.

Although the 1970s proved to be lucrative years for Fleetwood, the industry had begun to slow by the end of the decade. Soaring gasoline prices, public fears about a recession, and rising interest rates all contributed to a sales slowdown. Because nearly 66 percent of Fleetwood's products were reliant upon gasoline, fuel shortages (which prompted rationing in some states) battered the RV market. RV retailers began to shutter operations and many manufacturers saw their orders slow to a trickle. To stay afloat Fleetwood found itself having to slash both production and staffing. In 1980 Fleetwood shut down nine of its production factories: three travel trailer plants, three motor home facilities, and three manufactured housing plants.

Early in the 1980s, Fleetwood restructured its housing operations along regional lines. As the recession eased, RV sales began to recover. In fact, the firm achieved $1 billion in RV sales in 1989. However, this growth was not without problems. In 1985 the U.S. Department of Housing and Urban Development (HUD) began investigating Fleetwood for potential safety defects in 4,000 mobile homes manufactured in the early 1980s. The investigation resulted in a U.S. Justice Department complaint filed against Fleetwood in 1988. The Justice Department sought civil penalties in excess of $20 million, alleging the existence of standards violations in manufactured homes produced by Fleetwood. The following year, Fleetwood, HUD, and the Justice Department reached a settlement.

The firm's legal woes didn't end there, however. A class action lawsuit filed in Delaware in 1985 alleged that Fleetwood, among other manufactured housing makers, had charged excessive prices and finance fees to veterans by sending false certifications to the Veterans Administration. In 1990 two Fleetwood subsidiaries pled guilty to six counts of filing false certifications. As a result, Fleetwood paid $650,000 in fines.

Fleetwood diversified into financing in 1986 with the creation of Fleetwood Credit Corp. By the early 1990s, Fleetwood Credit had lending operations in California, Oregon, Indiana, Massachusetts, Georgia, New Jersey, and Texas. Growth continued with the purchase of the folding trailer assets of Coleman Co., which held a 30 percent share of the U.S. folding trailer market. The firm also introduced a line of less expensive trailer models.

In 1996 Fleetwood sold its credit arm to Associates First Capital Corp. for $156.6 million. The firm created 49 Fleetwood Home Centers, retail centers selling Fleetwood homes, in 1997. That year, Fleetwood also established a joint venture with Bloomfield Hills, Michigan-based Pulte Corp. to create a nationwide network of retail centers selling manufactured homes as well as home financing and insurance. Recessionary economic conditions undercut sales in 2000, prompting the firm to lay off 800 workers and shutter five plants. Another 13 plants were closed in 2001 as Fleetwood reduced one-third of its workforce.

STRATEGY

Forced to reexamine its structure during the recession of the late 1970s, Fleetwood drafted a management policy that divided its housing operations along regional lines. This strategic shift was designed to help the firm react more quickly to market trends. Housing design and development operations were divided into five units: West Coast, Central, Southeast, Mid-Atlantic, and Florida. Each plant facility operated autonomously and management decisions were made locally.

Strategic efforts during the mid-1990s centered around refocusing on domestic RV and manufactured housing operations. For example, Fleetwood divested Fleetwood Credit, which it had created in 1986, to Associates First Capital Corporation for $156.6 million in 1996. The firm also sold off real estate holdings and its German RV unit. Later in the decade, Fleetwood began to add retail operations to its holdings. Retail units acquired included HomeUSA, Better Homes, Central Homes, Jasper Homes, Classic City Homes, America's Best Homes, Viking Homes, JR's Mobile Homes, and D&D Homes. However, this strategy undermined the firm's performance in the early 2000s, when retail sales of manufactured homes plunged as interest rates rose and the economy deteriorated. In an effort to boost lagging RV sales, Fleetwood launched a "Rediscover America" advertising campaign that offered rebates of up to $15,000 to customers who purchased an RV in January 2002.

FAST FACTS: About Fleetwood Enterprises, Inc.

Ownership: Fleetwood Enterprises, Inc. is a public company traded on the New York Stock Exchange.

Ticker Symbol: FLE

Officers: Thomas B. Pitcher, Interim Chmn., 62; David S. Engelman, Interim Pres., CEO, and Dir., 63; Boyd R. Plowman, EVP Finance and CFO, 57; Charles A. Wilkinson, EVP Operations, 60; Forrest Theobald, SVP, Gen. Counsel, and Sec., 59

Employees: 14,000

Principal Subsidiary Companies: Fleetwood Enterprises, Inc. operates roughly 60 manufacturing plants and 190 retail outlets across the United States and Canada.

Chief Competitors: Fleetwood Enterprises competes with Champion Enterprises, Pioneer Housing, and other makers of manufactured homes, as well as with recreational vehicle manufacturers such as Winnebago.

INFLUENCES

Fleetwood's decision to refocus on its core manufactured housing and RV operations in the mid-1990s was partially the result of failed efforts to diversify into new markets. For example, hoping to move into traditional home development, Fleetwood had paid $6.3 million for 75 acres of land in southern California in the early 1990s. These plans failed to materialize, however, and the firm sold the land in 1996 for a mere $2.8 million, the lower price reflecting a sharp downturn in the California real estate market. This divestment underscored Fleetwood's need to refocus on its core domestic manufactured housing and RV units, both of which were losing market share to fierce rivals. After peaking at 21.6 percent in 1994, the firm's share of the manufactured housing market had declined to 20.1 percent in 1995. It fell further to 18.5 percent in 1996. Fleetwood's main competitor was the Auburn Hills, Michigan-based Champion Enterprises, Inc. By undercutting Fleetwood's prices, Champion had secured a 16.5 percent share of the manufactured home market by 1996. Similarly, Fleetwood's share of the motor home market, the most lucrative sector of the RV industry, dropped from 34 percent in 1992 to 27.5 percent in 1996. Although Winnebago held only a 16.7 percent share, it had gained ground on Fleetwood by adding popular "slide-out" features to increase space to its motor homes long before Fleetwood made this addition in 1996.

PRODUCTS

Fleetwood sells manufactured homes up to 2,340 square feet in size. Motor home brands include American Dream, American Eagle, American Heritage, Jamboree, Expedition, Bounder, Flair, Pace Arrow, Southwind, Tioga, Storm, and Discovery. Travel trailer brands include Avion, Prowler, Terry, Wilderness, Mallard, Savanna, and Westport. The folding trailer business markets its products under the Coleman name.

CHRONOLOGY: Key Dates for Fleetwood Enterprises, Inc.

1950:

Fleetwood is established as Coach Specialties Co.

1957:

Coach Specialties Co. changes its name to Fleetwood Enterprises, Inc.

1989:

Fleetwood achieves $1 billion in RV sales

1986:

The firm creates Fleetwood Credit Corp.

1996:

Associates First Capital Corp. buys Fleetwood Credit Corp.

2001:

Fleetwood lays off one-third of its workforce

FLEETWOOD USES INTERNET FOR PRODUCT LAUNCH

Rather than using a trade or retail show, Fleetwood decided to introduce its new all-terrain camper, dubbed the Outfitter ATC, via its Web site in 2002. The vehicle launch was the firm's first to take place solely on the Internet.

GLOBAL PRESENCE

In September 1992 Fleetwood purchased an 80 percent stake in Niesmann & Bischoff, a Koblenz, Germany-based manufacturer of luxury Clou Liner and Clou Trend motor homes. The deal marked Fleetwood's first overseas venture. However, a sluggish German economy resulted in slow sales despite Fleetwood's efforts to introduce less expensive models. In May 1996 Fleetwood sold its stake in Niesmann & Bischoff.

SOURCES OF INFORMATION

Bibliography

"Fleetwood Enterprises, Inc." International Directory of Company Histories. Detroit: Gale Group, 1997.

Fleetwood Enterprises, Inc. Home Page, 2002. Available at http://www.fleetwood.com.

"Fleetwood Lowered to Sell." Business Week, 1 March 2001. Available at http://wwwbusinessweek.com.

Kurowski, Jeff. "New Fleetwood Management Faces Job of Fixing a Giant." RV Business, January 2002.

For an annual report:

on the Internet at: http://199.230.26.96/fle/annrep/fleetwood_ar/default.htm

For additional industry research:

Investigate companies by their Standard Industrial Classification Codes, also known as SICs. Fleetwood Enterprises' primary SIC codes are:

2451 Mobile Homes

3716 Motor Homes

3792 Travel Trailers and Campers

6141 Personal Credit Institutions

Also investigate companies by their North American Industry Classification System Codes, also known as NAICS codes. Fleetwood Enterprises' primary NAICS codes are:

321991 Manufactured Home Manufacturing

336213 Motor Home Manufacturing

336214 Travel Trailer and Camper Manufacturing

522291 Consumer Lending