Forest River’s Gaeddert Sees Solid Post-Election RV Market – RVBusiness – Breaking RV Industry News
Forest River Inc.’s Doug Gaeddert, one of three senior managers who assumed new responsibilities in a recent corporate realignment announced by company founder and ongoing CEO Pete Liegl, paused recently for an RVBusiness interview that, among other things, sheds light on Forest River’s accelerating rate of change.
He also provided upbeat insights regarding last week’s (Nov. 12-15) 2024 RV Dealers Convention/Expo in Las Vegas.
“Yeah, I thought RVDA went great, especially coming as it did on the heels of the election, and I thought attendance was good,” said Gaeddert, a former divisional GM who managed much of Forest River’s towable business for 25-plus years and since August has assumed the title of President of Forest River’s RV Group – including both towable and motorized – for the Elkhart, Ind.-based division of Berkshire Hathaway Inc.
“And I can tell you that we had far and away the greatest attendance at a brand meeting there as we’ve ever had,” added Gaeddert. “Even though we had a large amount of space in the display area, they had to go get more chairs – and there still wasn’t enough room. People were standing. So, attendance was really good.”
Also taking on additional responsibilities in the recent senior management shift was David Wright, now responsible for Forest River’s Commercial Division, and former CFO Darrell Ritchie, who oversees Corporate Management.
And that, of course, is just a piece of the current evolution underway at 28-year-old, 14,000-employee Forest River, which also recently consolidated its cargo trailer production in Georgia and Indiana while closing California operations reportedly due to the elevated costs of doing business there.
RVBusiness: So, Doug, what’s the RV world look like from your perspective during the last quarter of 2024?
Gaeddert: I think it’s an excellent time to finish out the year and to roll into 2025, and I’m particularly referring to the election, which was decisive. I think it put a lot of peoples’ fears to rest to an extent because it was a decisive election.
There’s been an immediate impact on the markets in addition to settling people down, which we knew was going to be the first of the major things going on right now. There was a pretty incredible hike in net worth on paper that occurred immediately afterwards. So, it was also reassuring to people and a very positive outcome for retail consumers who have been wondering what’s going to happen next.
RVB: Was that calming influence, in your view, due to the simple fact that the elections were over or because of whom – Donald J. Trump – won the day?
Gaeddert: Well, I actually think it did have a lot to do with who won, Sherm, because of the go-forward policies on the table from an economic standpoint.
You know, looking at things a couple of months ago, we had several significant things to watch including the election coming up, which had the United States and really the globe in relative disarray. You had questions about what’s going to happen with the Fed, which everybody felt was going to lower the interest rate a quarter point and it did. And then we saw immediate responses on some hotspots around the globe – Russia-Ukraine, the Middle East and, to an extent, China and Taiwan.
So, I think there’s more of a sense of security that there will be some resolution to some of the global geopolitical situations that are going on with the odds going up that some of that gets resolved. I think all those things are affecting peoples’ overall outlook.
RVB: Closer to home, what’s the domestic RV market look like in general as well as for Forest River from your perspective?
Gaeddert: Well, as for the market, we’ve obviously been going through a little bit of a reset – a purging of the herd so to speak, right? And it happens cyclically, let’s just say every 10 years for a convenient number, keeping in mind that it varies somewhat over the years. But it’s somewhere in there.
So, we’re pretty close to being through that purge cycle when it comes to distribution in terms of both inventories and the number of dealers actually physically retailing RVs.I mean, there have been a lot of (dealer) defaults during the past couple of years.
RVB: Very interesting and an intriguing topic during times like these.
Gaeddert: Obviously the interest rates going down has been a positive. I just looked at two major dealers’ inventories and they’re in really good shape – in one case, in fact, right at 90% of their inventory was between zero and 270 days. And their inventory was about perfect going into November. I looked at a second one that was very similar – a little bit more aging, but otherwise probably close to what would have been the norm three years ago.
So, dealer inventories as a whole are pretty solid and manufacturing levels are in really good shape relative to retail.
As for Forest River, we’re on a nice roll right now when it comes to market share. The market’s down about 10% and I think we’re up right at 9% as far as market share gains this year with our total for RV’s posting almost a 7% gain, with nice pickups as well on the motorhome side in spite of the challenging market. And the world’s a little more stable than what it was a few weeks ago. So, I think it’s all good.
RVB: Taking everything into consideration, what’s your outlook for 2025?
Gaeddert: Well, I think we’ll see a continued drop at a measured pace in interest rates, which is obviously healthy. We’re going into ’25 in really good shape as far as the dealer inventories. And considering that we’re going into ’25 with some settling that’s occurred due to the election being over, I think 2025 looks really good.
Now, as far as how fast the market accelerates, I hope it’s not excessively fast. I hope it’s a nice manageable steady increase and that we just continually stay in sync as far as production rates and retail activity. Then take into account some of the long-term projects that we’ve got in the works thanks to Pete (Liegl) that maybe aren’t on the industry’s radar and aren’t in your trade magazines every day.
RVB: Long term projects like what?
Gaeddert: Well, for one thing, we’re working on a call center project. We’re working on a single part number across the company. We’re digging into the value of data analytics with our dealer partners. We’re communicating with the DMS (Dealer Management System) providers on best ways to integrate some data. We’ve enhanced our CRM (Customer Relationship Management) process with a marketing arm.
We’ve just finished a branding exercise that kind of culminated a little bit with the Expo (Forest River’s term for the Open House). And we’re enhancing tech training availability for our dealer body.
In addition, as you’re well aware, we made a decision to cease manufacturing in California and, at the same time, we made the commitment in California to really put together what I’m super excited about as far as a service center.
We’re working on a captive finance company, both wholesale and retail. We’re doing enhanced product testing on components, and appliances, etc. We’ve really kind of entered into a period where we do a 365 day-a-year product development program.
RVB: Those, frankly, are pretty impressive goals, most of which amount to news for the industry at large.
Gaeddert: And then the other thing is that we’ve got a fixed partner program that basically incentivizes dealers to sell product within 120 days and focus on turn and aging by reimbursing them interest if they participate in the program. They’ve got inventory levels that have to be maintained. But that’s really kind of caught another gear, too. And you can see the impacts on dealer inventory and aging as a result of that.
So, like I said, Pete’s got us in a position where we’ve got a lot of good things going that really are on the radar. And I probably shouldn’t have talked through all of them there, but for the list I did. But we’ve got a lot of great things going that bode well for customer experience, dealer performance, OEM performance and the industry as a whole.
RVB: Thanks. Doug, for working with us on this head-turning interview.
Gaeddert: I should add that while they’re not geared specifically towards it – and they’re not the sole reason – one of the major objectives that we’re working toward with these new initiatives is enhanced RECT – Repair Event Cycle Time – for an improved consumer experience, improved dealer performance, improved OEM performance and improved product performance. So, yeah, I’m totally juiced.
