Hi.

I'm Jeff Rea, your host for Economic Outlook.

Welcome to our program.

We're back in the studio today for another great show.

We hope you'll make plans each week to join us as we discuss the region's most important economic development initiatives with a panel of experts.

2021 was a record year for the RV industry, and 2022 is on pace to be the second or third best year on record for RV shipments.

We're taking a deep dive in the RV industry and talking about why it's such a critical driver for the local economy.

Coming up on Economic Outlook.

The RV industry's $140 billion industry with a large part of that happening right here in northern Indiana.

Next year, some 65 million Americans planning to go RVing as the industry has grown significantly over the last 20 years.

On our show today, we'll learn more about what's happening in the RV space and take a closer look at some of the major advances in the industry with Chris Steger, the president and CEO of the Economic Development Corporation of Elkhart County.

And Gregg Fore, a partner at RV Business magazine and Woodall is campground management magazine and past chairman of the Recreational Vehicle Industry Association.

Gentlemen, thanks.

Appreciate you being here.

Thank you.

Good to be here.

Yeah, well, we've wanted to talk RV for a while.

Obviously, it's a tremendous economic impact in the area.

Chris, maybe we'll start with you.

Talk a little.

So we talked about Elkhart being the RV capital of the world.

Talk about the economic impact of of an industry like the RV industry.

Well, you know, nationally, I believe that the industry has continued to grow.

The impact now is 140 billion annually.

And so what started out as a cottage industry 50 years ago here in Elkhart County has grown to be super big business.

Yeah.

Gregg, let me come your way because I'm curious, like, I'm not sure I understand the origins a little bit.

So how how does this industry get founded in Elkhart County and emerge and grow into the economic powerhouse that it is today?

Well, you know, historically and a little bit older than but historically it began, as Chris said, as a cottage industry, but it began in pockets around the nation as as those pockets grew.

We went through periods of economic uncertainty and so on, and the business was up and down and there was consolidation.

As the consolidations continued over time, they always came back to manufacturing centers, which for the longest period of time was Southern California and Elkhart.

And what the business environment in Southern California being what it is, which is not great.

Most 80% now is in Elkhart.

So it's really a transition of consolidation and economic uncertainty over time.

Chris, talk a little bit about the conditions that made the business climate here in Elkhart help the RV industry thrive over the years?

Well, I think it's a combination of a number of elements.

First, the entrepreneurial spirit that a lot of the company owners had coming out of the gate.

Second secondarily, I think that our labor forces, you know, stack them up against anybody relative to their work ethic, in their ability to produce this product.

So that and, you know, logistically, we're in an ideal place nationally where we can touch a lot of the country within 24 hours.

So it's a it's a great place to produce service.

So great.

We talk about the RV capital of the world.

Why why did we why did we get that moniker?

Where did that come from?

Well, I think it came for a lot of reasons.

One, you know, we used to have the world's largest RV show here.

And, you know, for years it started back in the fifties in Elkhart with an RV and mobile home show, was primarily a mobile home show and it transcend that into an RV show over time.

But the large percentage of units that are built here, the entrepreneurs that grew up and expanded from here.

So in the supplier base that grew in the same general geographic area.

So if you're going to build RV's, you had to be involved in Elkhart in some manner.

You were either building them here, buying parts here, getting talented management from here.

So it became, in fact, the RV capital of the world.

And what either one of you what percentage of RVs that are made would you say are made here in northern Indiana?

80% are made in the greater Elkhart area.

Lagrange.

Elkhart, you know, Goshen.

Great.

So, Chris, talk to me briefly about that, the geography a little bit, because this is sort of the communities that the RV industry benefits in Elkhart County and around, both from the making RV's and suppliers.

What's the geography look like and the communities that are involved in this space?

Well, you know, if you think about, you know, when RV started, where our proximity to Detroit was very important because of the technologies that are utilized.

You know, I think right now in Elkhart County, we have about 684 companies that are affiliated with the production of an RV unit.

So there's a lot of people making a large variety of products here.

Some of which go to the automotive space, some of which go to the boating space.

So it was a natural for us to be very good at this.

So Gregg we're going to come back your way and let's talk about the consumer side for a little bit.

So so when I look at it sounds like in particular the last 20 years have been a a real boom, some 60% more owners now than than before.

Tell us a little bit about what's happening on the consumer space and consumers sort of interest in this product being made right here.

Yeah, it's it's a number of things, Jeff.

One is the continue to evolve evolving of the RV product, while in some ways it's the same as it was 30 or 40 years ago.

In many ways, the product features the product types have evolved to attract a different buyer type as society has changed.

So I think it continues to look for ways to attract new people to the products to meet the needs of these different demographics.

We have today over 10% of the households in America on our RVs.

That continues to climb and to grow.

It's not a fast growth.

It's a pretty slow growth, but it continues to climb.

That's the important part.

The other important part is that over 20% of the ownership is in ages 18 to 34, which is a big change from is short ago or, you know 20 years ago were that were the demographics are moving to younger people.

That also forces changes in the product to keep them involved and to keep them excited about the RV product.

They all they all like the outdoors.

They all like leisure activities.

They all like taking their kids.

They all like those things.

How do they do it?

There's a lot of ways you can do it.

RVs is one, and it's probably the most popular one.

If you add all the other ones together.

Gregg we're going to stick with for a second.

So we've talked on the show many times just in the last couple of years about pandemic and pandemic's impact on different kinds of industry.

What kind of impact of the pandemic have on the RV industry?

Well, we thought it was going to be a death knell going in, but many industries thought the same thing.

What it turned out to be was a panacea, unmatched in the history of the RV industry, where vehicle shipments and vehicle retail registrations went to levels which we may not see again for quite some time as people bought and used RVs to get away from the pandemic issues of being not being able to go to work, not being able to go to school, not being able to attend large events.

So so they turned to RVs to experience life outside their home because everything else was taken away.

So it ended up being a boom for the RV industry.

And shipments were up over 600,000 units in our greatest year in retail registations were almost the same.

Now that sugar high okay.

Is now over.

All right.

So we're going to decline back to more normal levels.

Sure.

Great.

Guys, we to take a quick break here.

We're going to go out into the field.

We were at the RV show last month.

George Lepeniotis My co-host is out for an inside look at RVs.

George, let me toss it to you.

Thanks, Jeff.

I'm in Elkhart, Indiana, the home of the RV industry.

And I'm joined today by national transportation expert Mike Caudill.

Thanks for having me on, Mike.

Thanks for taking time out of your busy schedule here today.

We're at an RV show here in Elkhart at the Hall of Fame.

But before we get to that part, tell our viewers a little bit about yourself.

Even though they probably know who you are.

Yes, I'm a national transportation expert.

I get to cover I'm like I'm like a two year old kid.

Right.

Like I get to cover Matchbox cars.

So I love the RV industry.

I love cars.

And I've been covering them my whole life.

So as you continue progressing in life, you start to learn more and more about the engineering side, the mechanical side.

And to be honest, I'm just happy to be here in Elkhart talking about RVs, which is a passion of mine.

Right.

So, you know, we're both car guys, but as an extension, you get into the RV industry and we are, as I said, in the home of the RV industry.

Yeah.

Tell me a little bit about this show and the state of affairs.

Like you said before, we went on air, you'd wowed me with some number.

Yeah, I'm going to argue with some numbers.

So most people look at economic impact in relation to an industry and that's how they base the financial responsibility of that industry where they at.

So the RV industry as a whole is $140 billion annual industry.

There are a million in RVs in the last two years that have been made right here in Elkhart, Indiana.

So as we were talking, you know, Elkhart May to some seem small, but Elkhart in the world of economic impact is massive as far as the RV industry goes.

Yeah.

And you know, I think our viewers being local and regional here in the Michigan, a region, as we call it, based in and around Elkhart, have long understood that Elkhart is a big economic driver of our region.

What is it that you see on the horizon as a product guy, as a consumer product guy, what do you see on the horizon in the RV industry that's going to make that next step, take them to the next level?

Yeah.

You know, if there's one thing we learned with the pandemic is that people wanted to pause.

You know, it was a shift in the world where some industries struggled, but not the RV industry.

So what we've learned is that the average median age of an RV buyer is gone from 53 to 33.

That's a 20 year swing in age.

So what does that mean?

Trends.

People want to have offices built in RVs, and I've had a chance to look at some of them.

Right.

So, you know, you got an office in your RV, you enjoy the adventure, and you can also be a part of getting your work done because many people are working from the road.

Yeah.

Yeah.

And then, you know, and in the past, as, as as the economy has gone up or gone down and cost of of energy prices has fluctuated, the RV industry can sometimes be affected by that.

We know there's an electric car revolution going on.

Do you think that's going to affect this space?

You know, the RV industry is incredibly nimble and mobile.

You know, you have travel trailers that are you know what, you pull behind a vehicle, you have what are called class A's and class B's.

Those are drivable units.

There's a lot of diversification in the industry.

So you're asking about electric.

Electric will impact the RV market.

But what I'm finding here in Elkhart for this show is that everyone's integrating in modern technology.

So having solar panels on top so that you can be off grid, right?

Things that make it easier to camp while you're thinking about the environment, you're not consuming energy by simply something like a power top, you know, with with solar on top.

That's awesome.

Yeah.

And as you talk about some of those innovations that we've seen in broader sectors of the market as they hit the RV industry, is is there is there a part of that?

Or is there something that you're most excited about, something that you see?

I mean, we're standing behind a 50 year old camper.

Yeah.

What's that next thing that you really feel like?

That's that's something that I think is going to drive market share.

Yeah.

You know what?

I really do like electric vehicles, and I know that there is like this, like, should we go electric or should we not?

And in the world of RV, I think you can have your cake and eat it, too.

You can start you're going to start seeing mild hybrids integrated into the industry.

You're going to start to see plug in hybrids integrated into the industry.

And in some instances, you're going to have RV makers that are building electric vehicles into the industry.

Electric vehicles themselves are amazing.

It's the infrastructure that's struggling.

And here's a great example.

Callaway Campgrounds of America, they now have more than 40 locations out of their 538 that have all electric power stations for your RV.

So they're forward thinking.

We're going to see that integrate into the RV industry as well.

That's awesome.

Now we talk about the product.

We talk about that lifestyle, that off grid lifestyle.

Is that is that something that you're actually seeing?

Are these RVs being used off grid?

Is it is that part of the allure?

I have seen more travel trailers here and RVs here that are meant to go off road.

I mean, every single RV maker is showcasing something that goes off road.

I mean, you and I were laughing.

You're in the suit and I'm in the RV gear, right?

I'm normally in the suit, but you have to you have to live live it.

Right.

The lifestyle, you have to embody it.

And you're going to see more people that want to get off the road, off grid, off road and get a chance to like just look up and see stars.

Yeah, that's awesome.

Well, you know, as a final question for you, you've been a lot of places covering a lot of things.

What is it about Elkhart, Indiana, you think that makes this such a vibrant part of this industry and really established?

I mean, there's just no rival to it, is there?

Yeah.

I will tell you that being patriotic is part of this.

America is part of this.

The RV industry is still one of the most American made industries in the United States.

I've been to the Keystone manufacturing facility.

They turn out 36 Montana 5th wheels a day.

I think that this this part of the country, it just screams America.

And it makes me feel proud to be an American, to be in Elkhart.

I come up here a couple of times a year.

The people are great.

The food is great.

I just it's exciting to be a part of something that still feels like a little bit of what our past was.

Right?

We're all friends.

You walked right and we greeted each other.

It's a warm community.

Thank you, Mike.

Thanks for being with us today.

And by the way, thanks for showing me how it's done professionally.

Jeff, you know, it's a great day here for those of our viewers that maybe haven't seen the RV show in the past at the RV Hall of Fame, Mike's right.

It is a slice of Americana and probably nothing more homegrown than an Elkhart great George.

Thank you.

Appreciate it.

Glad to get a chance to go Elkhart see some of what was happening over there.

Chris, we talked with George a little bit about just sort of technological advances.

I would call it the end user side.

RVs are consumers are demanding more, as Gregg was saying earlier, especially as they're becoming younger.

But let's think about the production.

This is a big employer for you over there.

The production of RV's was historically pretty labor intensive.

Talk about what's happening on the on the technology side on producing RV these days and the developing the workforce.

One of the things that we're seeing in all the projects across even the supply chain and the OEM manufacturers is a really large increase in the utilization of automation and and training culture.

I think it's also been changing in the companies where you largely in the past had a production level employee.

Now we see OEMs upskilling production level employees, creating better career pathways for those employees over time, we're seeing the implementation of a lot of the digital technologies of that 18 to 35 group really loves, you know, the integration of Bluetooth into operational systems and better lighting and better materials and just in how those things are constructed, right.

It neat to see some of that's happening.

Appreciate chatting about that.

So Gregg going to come back your way.

We kind of said we're all about kind of jobs, economy, impact.

We talk about, you know, this is is one of the bigger industries, obviously one of the probably the biggest in our region, one of the biggest in the state.

Talk a little bit about the economic impact of that.

We feel you know, we talked about national impact.

You guys talked about a number in the state of Indiana and there's numbers available if to get it down to the county.

But I don't have those.

But in the state, the direct impact, not counting any indirect which economic studies do this is just the direct impact.

There's a it's a $22 billion impact in the state of Indiana.

It employs 60,000 people in the state of Indiana, $4 billion in wages in the state of Indiana.

So when you remember that, that's almost all in three or four counties in the state of Indiana, the impact here is of, you know, we'd be in we'd be in a bad place without that.

And it's it's developed over time and replaced other industries.

The employees have.

So it continues to grow in its impact.

I don't think it's going anywhere, but Chris makes a good point about the technology, the computerization and heavy equipment and heavy machinery coming into the supply base.

They need people that are trained on that.

Ivy Tech just opened up a robotics center which is being used to train people on heavy machinery.

And and boy, did we ever need that.

We need people trained.

There's still a talent shortage.

So let's build on that for a quick second.

Chris, come your way.

So make the elevator pitch.

Somebody who's who is unsure about what they want to do career wise.

Why would they why should they come to Elkhart County and consider a job in the RV industry?

Well, you know, for 20 years in this country, I think our schools focused on college education.

And they didn't think about trades.

Well, that's left us in a kind of a bad situation now where we don't have the tradesmen that we need anything that you want to do or any education that you get in college, you can either be an engineer or an accountant.

All those people are employed in an RV facility.

You could be a marketing person.

We have all those jobs.

So really, you know, they're not as dusty in dirty factories issues as you might want to might once thought they were.

And there's plenty of opportunities and great ability to earn a really, really world class wage and stay in an area that's where you grew up in which you loved.

Right.

And some some great things happening.

Just being downtown Elkhart recently.

I think you've got a lot great happening there.

But let's talk briefly just about just sort of where production is now.

So, so for example, when I'm reading 2021 was a phenomenal year.

2022 is going to be one of the top years ever.

Probably second or third maybe, I think is is what I was seeing beyond.

I think people are starting to worry, oh, you know, this RV or is this indicator.

Tell us a little bit more about like looking into the future.

Yeah, good.

Jeff.

Certainly when people do a comparative analysis, it's no different than when we went from 400,000 units three or four years ago to 600,000 units last year.

The comparative analysis was, wow, 50% increase in like three years.

Well, we're going to have a 50% decrease in three years only.

It's not going to be 50, but it's going to it's going to go from 600,000 back to 400,000 probably by next year, 2023.

That's what the official forecast is, right at 400,000.

That all depends on retail registrations to a great extent.

Right now for the fourth straight month in September, the retail registrations have been higher than wholesale shipments.

So even though sales have slowed, we are still retailing more units that are wholesaling.

So the but at the beginning of this year, we were building at a rate of 700,000 units a year.

Okay.

So we replaced inventories in four months.

Well, now the dealers are going back trying to right size their inventory, right size their product mix because they didn't buy all the right stuff.

Okay.

Because, you know, you don't know.

And the buyer's changing.

All right.

So we're selling off inventory in the field.

So it's going to stabilize production, but it's not going to stabilize until the first of the year.

It's going to be a tough couple of months here.

So that's the reality.

But the future looks a lot better than they before.

Yeah, I'd say even some of those numbers you're talking about are back to sort of still part of it as big production years.

I think that's great, Chris.

And our last is we're starting to wind down a little bit.

So just a quick supply chain question.

So so we hear in automotive the shortage of microchips, the shortage of materials.

Has the RV industry wrestled with some of the same things?

Is it been hard to make RVs because they couldn't get pieces of the supply?

Very, very challenging across the board.

And we probably recognize it before other places in the country, recognize it.

And coming out of it, we're still, you know, still trying to recover from that.

But, you know, all the raw materials, you know, that are used, aluminum and things like that, you know, all industries are struggling to get those things right now.

Yeah.

Chris, I'm going to stay with you.

So as we're wrapping up in our last 3 minutes or so, the tagline, you say more corn in Indiana, there's more than RVs.

And in Elkhart County, talk to us.

So although RV is a critical driver, talk to us about a couple of other quick things that are happening in Elkhart county that we should be aware of.

Well, we've got, you know, great.

Recently, you know, the READI grants were awarded in in the state of Indiana.

We've got quite a few different new projects coming.

As you can see, we've got a construction boom going on.

It's been going on for 4 to 5 years and we don't see that slowing down in the future.

We have a lot of great projects.

If you reference the downtown area, if you've not been downtown, we invite you to come down and and see Elkhart.

It's quite, quite a different time.

And it was even five years ago.

Gregg as we're wrapping up our RV discussion, so talk about resources.

So so you're involved in a couple of different things.

The the RV business magazine, the campground management magazine.

Talk about some resources out there for folks who who maybe are unfamiliar or just we pick their interest today and to think in about an RV, help them understand where they plug in.

To learn more about RVs.

Probably the best place to go is a starting point is GoRVing.com It is a pretty complete website that talks about all types of RVs, talks about what you can do with your RV.

It talks about the dealer, the the dealer distribution system.

It talks about all those things and it'll lead you to other places.

But that's a really, really good starting point.

That's where I would know that.

Let's start briefly.

So gas prices have jumped.

Obviously, we saw the impact years ago with SUVs and stuff.

But what's happening in the fuel efficiency side on on on the RV space?

Let me address that real quick.

Oh one, there's two different aspects of that.

There's total RVs and motorized RVs on the motorized side, the chip problem that you brought up is has curtailed production for longer than it has on the Non-Motorized side.

So today the motorized backlogs are still pretty good.

Plus the move to what we call class B conversions.

Class B vans with living quarters and living systems have become much more popular.

They are much more fuel efficient.

You know, there are gas mileage in the teens and they're in their traditional products and so there are products you can buy.

They become more fuel efficient.

And I have to wrap it there.

Gregg, I'm sorry.

We're out of time, guys.

Thank you for our discussion.

Great stuff happening.

That's it for our show today.

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