CENTREVILLE — As consumer demographics shift and the economy slows, smaller products have become a big consideration for recreational vehicle manufacturer Viking Products Inc.
The company, a division of Omaha, Neb.-based conglomerate Berkshire Hathaway Inc., last year released a small teardrop-shaped trailer in response to easing RV sales and the changing tastes of purchasers. The style, which was fashionable in the 1930s, caught on again among consumers.
“We’ve just turned the corner into a new evolution of what we believe will be the camping trailer,” said Tim Terlep, product and sales manager at the Viking plant in Centreville, about 30 miles south of Kalamazoo.
“I’m getting that surge of volume in orders at a point in time when the industry might be slugging a bit,” he said. “The creative, low-cost, lightweight products seem to be very nichey right now. They seem to be hitting a very strong spot.”
Since the 1960s, the “pop-up” or folding camping trailers that Viking became known for have been manufactured in Michigan. The company operates manufacturing plants in Centerville and White Pigeon in Southwest Michigan, where about 200 employees build all of the Viking and Coachmen Clipper brand camping trailers available on the market.
The camping trailers manufactured at Viking all start as raw frames. Then each one is built “from the ground up” on an assembly line. The completely finished RVs are then sold and shipped in loads of five to 10 units to dealers around the country.
The company’s sales of different models still vary widely from state-to-state — bigger units tend to do better in Texas — but Michigan is one of its best overall markets, Terlep said. The state accounts for about 10 percent of the roughly 6,500 units built annually in Michigan.
As smaller, less expensive models increase in popularity, so does the volume of total units Viking produces. However, the company has so far refrained from automation that might increase capacity — mainly because it may be cost-prohibitive, according to Terlep.
“If we were to automate the process, the product would become ungodly expensive,” he said.
The end price point also forces the company to keep a critical eye on deluxe added features.
“It’s always a constant battle to try and put the most features,” Terlep said. “My first boss told me you’ve just got to watch out for creeping elegance because before you know it, you’ve put so much in your trailer that you price yourself out of the game. One of the things that we try to watch and focus on is staying where we belong in the market, and trying to provide people with the product that supports that.”
More than 9 million households now own an RV — the highest level ever recorded — a 16-percent increase since 2001 and a 64-percent gain since 1980, according to data collected by the RV Industry Association.
Camping trailers are an affordable choice in the world of recreational vehicles, which can average in price $12,000 for a pop-up to $212,000 for a high-end motorhome.
Lower-cost towable RV shipments have increased by one-third in just the past three years and teardrop campers belong to the fastest-growing segment of the industry as a whole, according to the data.
At Viking, the teardrop model represents 27 percent of year-to-date shipments from its camping trailer division, according to Terlep. In the last eight years, sales for the division have grown tenfold from about $6 million to now more than $60 million, he said.
However, the growth has come at the expense of other types of RVs, including pop-up trailers.
In the first decline since 2010, shipments of new recreational vehicles industry-wide dipped 4 percent last year. Overall shipments of RVs to dealers have fallen about 20 percent so far this year, according to the RV Industry Association report. Although the association is forecasting a 2.5-percent increase in shipments to dealers for 2020, that still puts sales projections for next year at well below 2017 levels.
Waning consumer demand for luxury items, like recreational vehicles, could be the first sign of an economic downturn. Just before the recession of the early 1990s, RV sales dropped 8 percent. A fall of 14 percent preceded the economic downturn that lasted from March 2001 to November 2001. As well, sales of recreational vehicles plummeted more than 30 percent in both 2008 and 2009 leading up to the Great Recession.
“There’s always a fluctuation,” Terlep said. “We always need to be adjusting and making adjustments as the industry changes and as the economy changes as well.”
Today, smaller towable trailers are opening up RVing to a larger group of people with a more diverse range of vehicles, he said. Tiny camping trailers can even be towed with four-cylinder, fuel-efficient cars.
Viking Products also is part of the Michigan economy that supports and benefits from the state’s heritage of outdoor recreation.
To that end, Gov. Gretchen Whitmer touted the sector’s economic benefits this month during a stop in Grand Rapids, when she appointed Brad Garmon as director of the state’s Office of Outdoor Recreation Industry, as MiBiz reported.
Garmon, who previously served as interim CEO at the Michigan Environmental Council and as its director of conservation and emerging issues, said one of his top priorities will be diving into the manufacturing sector’s role in the outdoor recreation economy, helping to recruit and attract new companies.
“Michigan has several major outdoor vehicle, gear and apparel manufacturers headquartered right here that need workers, and lots of small or startup businesses in this space that are positioned to grow,” Garmon said. “This office will help make that recruitment and growth happen.”
That focus is welcome news for Viking Products, according to Terlep.
“We provide people with an outlet to just stay around Michigan and camp and enjoy their families,” he said. “We are building this product for the people of Michigan to use in Michigan.”