Tag Archive for: Tiffin

Another One Bites The Dust: THOR and Tiffin

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Oligopolies. I’m not a big fan of industry consolidation. And I’m not at all happy to see Tiffin acquired by THOR. With Newmar and Tiffin out of the market as independent companies, the RV industry in North America is basically being controlled by two companies, Thor and Forest River, with a wee bit of the market owned by Winnebago.

That level of concentration in the industry is not good news for consumers.

An oligopoly is a market state where there is limited competition. The market players can engage in collusion to ensure profits are maximized. They impose barriers to entry which can stifle innovation. There is little incentive to be efficient and an oligopoly can fix artificially high prices. Customers experience poor service. There is an appearance of choice with brand proliferation however the underlying product is really being manufactured by a small set of companies.

Well, let’s take a look at this sad tale shall we?

Tiffin was family owned and operated for almost 50 years. They generated $800 million in sales for the last fiscal year. They have about 2,000 employees.

The selling price of the company? $300 million. Winnebago purchased Newmar for about $340 million. The main difference is that Winnebago borrowed a lot of money to make the deal. Roughly $290 million.

THOR borrowed $165 million. They will fund the balance from existing cash on-hand.

THOR expects to “enhance” the operating efficiencies of Tiffin’s margins to be in line with THOR’s North American Motorized segment. No material impact to earnings is expected in the upcoming fiscal year.

Be prepared for cheaply made Tiffins in the not too distant future.

The new structure is presented as an independent company within the THOR family of companies with Tiffin’s existing management to remain in place.

I read through the lengthy Stock Purchase Agreement between THOR and Tiffin. If you have an interest — and a few hours to spare — you can download the pdf here.

Fairly typical of complex legal documents that describe the sale of a business.

Many of the social media posts on this acquisition will say that things will remain the same with Tiffin. And yet that is not the practice of large corporations operating in an oligopoly. The overall objective will be to maximize return to shareholders. Increase margin. The operating model of Tiffin will change.

THOR Shareholders will benefit as limited competition protects profits.

Oligopolies are great for investors.

For consumers? Not so great.

So long Tiffin.

Entegra Problems

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We almost purchased an Entegra. It was one of three manufacturers that we seriously considered for our new coach back in 2015. The other two? Newmar and Tiffin. We went with Newmar and, despite a number of issues, we are fine with our decision.

Entegra had a good reputation prior to being acquired by Thor. And there were concerns that the acquisition would have a negative impact on Entegra.

Thor’s stock has been on quite a roll lately.

Thor’s quarterly revenue fell over 21 percent from last year. The stock took a big tumble last week after Thor released poor fiscal first-quarter results. RV sales had a 24 percent drop.

I caught an interview that Thor’s CEO, Bob Martin, did with Jim Cramer where he blamed rising tariffs on Aluminum and Steel for the negative impact on earnings.

To counteract the rising costs of production, Martin intended to cut raw costs and de-content its higher end motorcoaches. De-content means taking ancillary products and features out of these coaches. Less is more.

So what does this mean for Entegra owners?

This thread on the IRV2 forum, Has Thor changed Entegra, highlights the dilemma facing buyers of new coaches. Good product? Good service?

I suspect for most buyers, a purchase that begins to close in on half a million, can influence your opinion in one of two ways: I made a good decision or I made a bad decision. And the reason is simple enough. All of these coaches will have issues. All of them. And when you have a lot of issues, you begin to question your decision.

I am of the view that anyone looking to purchase a coach from Entegra, Newmar or Tiffin, should expect to have issues and should expect to have mixed results in terms of how the issues get resolved. This is part of the ownership experience.

I follow Glenn and Julia over at Our Great Escape. And they posted their experience here. They have a pretty harsh bottom line:

Shame on you Entegra, Bontrager stood up in front of an audience of 100 people who were Entegra owners at the 2016 Springfest and told everyone that you had always been a family business and would always be a family business with family values bla bla bla and then 3 months down the road sold out to Thor Industries. You then through Tadd Jenkins (the then president of Entegra coach) tried to calm the worried owners and told us that there would be absolutely no change apart from the name above the door, everything else will remain the same, same management team etc etc. Tadd was then pushed out closely followed by Chuck Lasley who took over from Tadd and a few other key people. This is a direct quote from Derek Bontrager :

“The day we stop listening to our customers is the day our demise begins and no one understands that better than we do.”

JOKE!

Are they listening??? Do they lie to their owners? You answer the question. I know the answer!

This is their YouTube video that describes their experience picking up their coach after servicing. Sadly, their experience is not unique.

RVLove And A New Coach

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Not what I expected.

I’ve followed Marc and Julie for a few years now on their website RVLove and their YouTube channel. They had been full-timing in a 2012 Tiffin Allegro Open Road 35QBA.

They just sold that coach and I thought for sure that they would be buying a newer model diesel pusher.

I was wrong. They purchased a 20-year old Country Coach Intrigue diesel pusher. Still runs.

The video tour of their coach is interesting to watch. Definitely more space than their Allegro and a diesel pusher will be a better driving experience for them.

Looks like the renovation work will need a fair bit of RV Love though.

Window Shopping at the Hershey RV Show

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Our plan was to attend the Hershey RV show Friday and Saturday.

We arrived on Friday to a pretty quiet day at the show. We were there from 10am until about 7pm. Long day but we had a lot of fun.

I’ll spend a bit of time posting about our window shopping first. The Hershey RV was our opportunity to relook at a number of coaches and to see if we had any tinge of buyer’s remorse. The short answer? None whatsoever. Although there was one coach that was very tempting.

There are four coaches that compete very closely: Entegra, Tiffin, American Coach and Newmar. Sure, there are other coaches from Thor, Fleetwood and Winnebago, but realistically, those four coaches would be at the top of our shopping list if we were looking to buy this year.

Having lived in the Castaway since June and having run the coach on several long road trips, we have more than a bit of a feel for the Newmar product. We love it and if we were to make a purchase decision today, we would still go with the Newmar Dutch Star. It is a wonderful coach and the Newmar support has been terrific.

Entegra was a strong candidate for us last year. Going through the coaches at the show this year, I could see why. The Entegra products offer a lot for the dollar. Now, I could nitpick on a number of items with the Entegra coaches, which is true for all of these coaches as not one is perfect, but the main issue for us was the floorplan. We could not find a floorplan we really loved in a 40-foot coach in the Entegra line. I’m not sure what impact the Thor acquisition may have on the Entegra line. Most M&A activities are conducted to build scale and lower costs. I guess we will have to wait and see what, if anything, this acquisition might due to the Entegra customer base. What that acquisition concern us if we were buying this year? Hard to say.

For us, the Tiffin line was nice but not to our liking. Again primarily due to floorplans in a 40-foot coach. We had quickly ruled their products out of the running last year when we were going through our finalist list. The one and only dealer in Ontario, McPhail’s of Harriston, was a significant distance from our home. And then there was a lot of online feedback about required trips to Red Bay, Alabama to deal with warranty items.

As we went through the Entegra and Tiffin coaches, we were reassured in our decision to buy the Castaway from Newmar.

That said, the American Coach products were very impressive. We really liked the American Dream. Beautiful coach and a really nice floorplan albeit at 42 feet and just a wee bit more expensive than the Dutch Star. Okay, maybe a lot more expensive. Very nice coach.

Oh, and I did find my Basecamp at the show. Such a cool little travel trailer.

airstreambasecamp

Lots more to share about the Hershey RV show so stay tuned.