17/12/2019

17 December 2019
17 December 2019, Comments Comments Off on Bob Martin – Thor Industries
Bob Martin - Thor Industries

The American who discovered Europe

 
In the latest of its interviews with top executives in the caravan industry, AboutcampBtoB met one of the most significant – Bob Martin, the CEO of Thor Industries, which since its acquisition of the Erwin Hymer Group, is the world’s largest RV manufacturing group.

Words Antonio Mazzucchelli
photo Enrico Bona

With the responsibility of a huge, global group of RV brands, and the integration of the Erwin Hymer Group to manage, Bob Martin is a key figure in the RV industry, but by the information he gives in this interview, he seems to have an excellent insight of the RV industry on both sides of the Atlantic, and the experience, knowledge and managerial skills to continue to take Thor Industries to new levels of success over the coming years.

Aboutcamp BtoB: What are the most important points in your career, and how did you start?
Bob Martin: Upon graduating from University in 1993, I moved home and became a sales trainee at Coachmen RV. At the time it was one of the larger manufacturers that had trainees. I did that for about two years, then I became a salesman for Coachmen. After three years of that, I went to a small company called Keystone, and that was probably one of my biggest decisions ever, because I had to leave the civility of Coachmen RV, a very strong and stable company, to go to this little start-up.
Keystone ended up being the company that Thor ended up buying a number of years later, and that really elevated everything, and that’s how I came to Thor, after the acquisition off Keystone.
I’ve done everything from sales, product development, I was Chief Operating Officer at Keystone, and President. A lot of my experience comes from the early days at Keystone and Coachmen. When we had some changes at a corporate level five or six years ago, they offered me this opportunity and I decided it was a good adventure for me to try it. That’s the short version of how I got here.

Aboutcamp BtoB: The American RV market has contracted strongly. What are the real reasons for this, were you expecting it, and do you think it will continue to decline over the next two years?
Bob Martin: For us, the U.S. market has pulled back. A lot of that was an inventory build-up from two years ago, so the manufacturers have all pulled back their production, simply because inventories were too high on dealer lots.
Demand is still looking good. For us, this year we are looking at our fourth best year in the RV industry, even with the pull-back. For the long term, we see good potential growth with younger buyers coming in. It’s what you see at the Caravan Salon Düsseldorf. A lot of the demographics are the same from Europe to the U.S., and it’s simply watching the average demographic age drop, well below 50. For many years it was above 60, so now watching it drop, we’re not quite into millennials yet, but that’s a generation that’s coming up and we all have to talk to more through social media, ad campaigns, magazines, and everywhere. Everybody is more focused on that. The younger buyer is the future of our industry.
For the next couple of years, maybe next year, I think we will see us getting back to some normalised, modest growth, and after that it could be even better as more products come out – they’re smaller, lighter, built for that younger generation. We see some opportunities for some products out here (in Europe) that you don’t see in the States. As we are here looking around (at the Caravan Salon, Düsseldorf), we’ve seen some possibilities for products that are built in Europe that could make it to the US, so that interests us.
We look at this show – it’s packed, and there are a lot of families and a lot of younger people. We’re seeing the same thing in the United States, so I think, short term, it’s something that we had to deal with, just for the right sizing of inventory, but long term, that’s how we manage the company. We always look at the long term of the industry, and we feel good about it.

Aboutcamp BtoB: History shows that when RV sales in the US slow down, a recession comes. Do you think this will happen now?
Bob Martin: People will look at that as an indicator, just as the bond yield is an indicator. Right now, as I talk to big dealers and customers, it has slowed up a bit, but we’ve had two years of some strange weather issues, too. We’re not seeing credit issue. We’re not seeing the bigger issues that we faced in the big recession when we had aged inventory, people who had no credit, and banks wouldn’t lend money to retail or wholesale. We’re not seeing any of those signs, and for me, also, when we look at your lead indicators as a company for a recession, for us, it’s usually our higher-end products, like our Airstream products, typically slow down ahead of something big that’s coming, but we’re seeing the opposite. Airstream is probably as strong as it’s ever been, and we’re actually building a new factory for Airstream which will be done by later this year and we even have a waiting list for dealers to become Airstream dealers in the US.
So, we’re not seeing the big signs of recession. A slowdown, yes, and in my 25 years, I’ve had many ups and downs. A little dip is something you have to manage through. I think we’ve done a good job with our dealers at managing their inventory, helping them move their inventory, and we’ve had some good shows.
We’ve slowed down our production, which is why the shipments are down. We could probably have pushed it a little bit harder, and it’s healthy for the industry for the long term to slow down so the dealers have an adequate inventory, but not too much.

Aboutcamp BtoB: What synergies are you planning between the Thor Group’s American and European manufacturers?
Bob Martin: Right now, we’re in the middle of identifying those synergies. There are a lot of meetings going forth. It’s synergies of technology and of product. We have different projects going on in the U.S. and different projects in Europe, and now we’re getting our groups together and sharing ideas. A lot of it is technology-based. We use a lot of technology around batteries and around energy usage. We have a lot of great engineers in Europe and the United States. They have been meeting already, and they will continue for the history of our company to work together to create better products and more and more synergies.
The first thing we worry about when integrating a company in to a public company is usually the financial controls, and then after that, we start looking at the products that we share, and things such as that. There will be more to come, and we will have a little bit more on our synergies after our quarter results come out and we talk it through with our investors later this Fall.

Aboutcamp BtoB: Criticism against diesel engines and pollution has created many challenges and changes for the RV industry in Europe. Can we expect some synergies between the Hymer Group in the E-mobility sector?
Bob Martin: Some of Erwin Hymer Group brands in Europe are definitely developing solutions in that field, such as Dethleffs.
In the United States, we use less diesel, so in general there are more gasoline engines. The fuel additive they’ve just added here in Europe, we have had in the U.S. for probably 10 years. There is a higher percentage of vehicles which are gasoline versus diesel, but we’re always looking for new opportunities just for the environment. There are hybrid motorhomes which are very intriguing to us, and there are things we can learn here (in Europe), which will resonate in the US over time.
Also, vehicles are getting smaller, more fuel economic. If you look in the United States, the number one tow vehicle was the Ford F-150. One of the concerns from the industry standpoint was that because of fuel economy and emissions, the tow rigs would go down in size, however the car companies in the U.S. have adapted simply by changing their engines, like the F-150 now has a V6 with an ECO-Boost engine and more gears, and by adding more gears they’ve added more torque, and with more torque comes more pulling power. They were able to do all this to enhance fuel economy, and when they’re not towing it’s even more fuel efficient, so there have been many advancements over the years. A lot of it will come with our partnerships with Ford, Mercedes and Fiat, working with them to achieve a lot of these changes. That’s how it will happen.

 

 

Aboutcamp BtoB: Can you give more details of the group synergies with your historic suppliers that in your press conference at the Caravan Salon Düsseldorf you said would become even stronger?
Bob Martin: We operate in the US and Europe with the likes of Dometic and Lippert, who are suppliers who are already operating in both continents, and many of them want to grow more. For these vendors, it can be just about introducing someone new to the environment which gives people another option or another feature.
For some of the larger vendors, there are things that we can sit down and look at, such as window sizes, and try to work together to be more efficient; or refrigerator sizes, as between our collective size we use a lot of different sizes.
If we can do things like work with the vendors, it can be a win-win for both as it helps them with efficiency, their volume and consistency.
That’s how we’ve really started to look at synergies. We’ve met with most of the vendors, and it’s all been positive. They’re excited to see us grow over here (in Europe), and it goes back and forth.
There are some we have better relationship with in the States, and some have better relationships here, but they may want to have more of a presence in the States, so having the groups together can help them to expand which is good for us, the vendors and good for the consumers.

Aboutcamp BtoB: We know the differences between the US and German RV products, but in your opinion, what are the differences between the Germans and the Americans on work processes, teamwork and how they approach work – who learns from whom?
Bob Martin: We all learn from each other, but it’s very different. The production at the German facilities is amazing. They are more automated than a U.S. facility, but it’s different – we have more factories, they have fewer but bigger factories. We will probably learn a lot more from our German partners, and as they go over we can learn automation, precision, and a high level of quality.
The one thing we do in the United States is develop the products with more speed. Sometimes it can take years to develop products in the automobile industry. Here (in Germany) it takes them a little bit longer at Hymer. There is a happy medium. We don’t want to compromise quality, but at the end of the day, when consumers’ needs are changing very quickly, in the U.S. and Europe, it helps to learn; when you see a different way of doing it, it opens peoples’ minds just to see that, for example, Airstream is able to rejuvenate a product in less than two years. It’s good for the Hymer people to see, and a lot of questions come up on how to do that, and that’s where it all comes together.
We have a lot of things we will learn from each other. There’s already been a lot going back and forth. The businesses are different, and their cultures are different, but I can say it’s not been really one-sided. It’s been good for both of us.

Aboutcamp BtoB: Is Thor planning any further large investments in the near future?
Bob Martin: Right now, we have debt which is our focus to pay down the debt from taking out the loan to buy the company. We are being diligent on paying down our debt. When that gets paid down we will look at opportunities. We’ve grown in the United States through acquisition, and there are definitely opportunities here (in Europe), but we need some time to integrate a large company as well. It will take some time to do that.
As we look to the future, Europe is an opportunity. We have a nice history that even Erwin Hymer did it here, growing by acquisitions of some very good companies, and I think if this acquisition continues to go well, and people are happy, and dealers are happy, I think further acquisition would be invited. Many people, if they were going to sell their company, for whatever reason, they would simply talk and see if there is a fit. There are more companies that we don’t buy just because of a fit, so who they are and what they are, I have no idea, but there could be good things in the future.

Aboutcamp BtoB: So far, motorhome manufacturers have relied on using the existing chassis available on the market, but are new developments, such as a mechanical base specifically for motorhomes, still a dream, or is this now possible for a mega-group like Thor?
Bob Martin: It’s possible for sure, but right now the automobile companies are our partners, and those are our plans for now. Some people have tried it in the past and failed. For us, it works much better if we focus on the caravan side. We have the chassis suppliers who focus on the chassis and the automotive side. They are different worlds. That’s not to say it couldn’t happen someday, but right now we have our hands full trying to digest this acquisition and getting everybody on the same page. I don’t see that happening any time soon.

Aboutcamp BtoB: What is your relationship with China? How does the commercial war going on with China affect your production?
Bob Martin: In the States, we don’t buy anything directly from China. Our vendors do, so it’s been more the talk of tariffs that has probably had more of an effect. We deal with commodity prices, up and down, but the tariffs have not been thousands of Dollars as some would have thought. In certain units, it could be hundreds, so there is some effect, but it’s not been the massive effect that some people were worried about.
For us, it changes every day, so you have to be willing to adapt, and we’re doing a good job of that with our companies and product developers. If there is a product that, for whatever reason, commodities or tariffs, the product price is creeping up, we would find ways – you look at features, look at options, ask ‘does it need this?’ – to keep pricing competitive to the market for the customer without it getting out of control. For now, we’ve been managing it, but it could change by tomorrow though. That’s always an unknown.

Aboutcamp BtoB: Are you interested in expanding the Chinese market and do you think there will be an acceleration of the market in the short term?
Bob Martin: I doubt it in the short term. The Hymer Group has a presence there and has a relationship and looking at a partnership to build some product there, but it’s still very early. We have had partnerships with some of the core companies as well, but China still doesn’t quite have the infrastructure. They are building campgrounds, and it really makes sense as they have the land and populated cities, so that does make sense over the long term. That’s why we’re really trying to do our homework and see if there is a market there as we want to be the first in there. It’s not ready yet. They’re still working on laws to tow, and things such as that, so we’re watching it and we’re involved, but I think it will be more five years down the road when it could be something significant that we’re talking about. In the near term, I don’t see it yet because of infrastructure issues over there.

Aboutcamp BtoB: Why do you think ‘RVX- The Experience’ didn’t work, and in your opinion is it important to have an official RVIA trade show, or is the Elkhart Open House enough?
Bob Martin: We are a little biased because we put our emphasis in to the Elkhart Open House where they have dealer meetings with all of our companies and we have all our dealers in one place for a week, so it’s very efficient. It’s in September, so it’s a good time for dealers to look at product and to buy.
In the past, the Louisville show got to be at a time of the year, in December, when dealers and manufacturers just didn’t need it.
They tried to reinvigorate the show to be more of an automobile concept type of show. In part it was good. I enjoyed it. There was some new innovation and there were some companies that really pushed it, but at the end of the day, it was expensive and most did not see the value in shipping units out to Salt Lake City, and flying people out, and then they were looking at San Antonio (in Texas), so from an RVIA standpoint, the majority questioned the overall value of RVX.
I’m glad they tried something different which was ‘out of the box’, but our dealers didn’t see the value, and not many dealers came, which was probably the hardest thing for all of us.
This is a different show (the Caravan Salon Düsseldorf – Ed.). They are showing product and they have a dealer day on the front end and dealers do show up, but it’s a big retail show. We still have huge retail shows in the US. There’s one in Hershey, Pennsylvania, one in California, Tampa in the spring, plus Cleveland, Minneapolis, which are huge retail shows, but as far as a wholesale manufacturing show for us, the Open House is really what we need.
We are part of RVIA, and I am on the board, so we supported whatever efforts we thought would work for the industry.
We’re a non-franchised industry in the U.S. and here in Europe, so the dealers speak by showing up, and there weren’t enough of them there, and many that came said they probably wouldn’t go back, so as we talked to our customers, we decided it probably wasn’t a good use of our money.
Something could come up in the next few years. I know it’s a big thing trying to decide what the right thing is for the RV industry. There are a lot of things that could be interesting, but right now, we’re happy with our Open House. We will see what happens, and as the years go down, if something intriguing comes up we will start looking again, but for now we have got one which is our main focus.

Aboutcamp BtoB: What has been your best motorhome vacation, and which motorhome do you own?
Bob Martin: I own a Thor 44 MT Tuscany. It is painted black and gold like my college colours. For me the short trips have been good, like to the Smokey Mountains down in Tennessee with the family, just to enjoy the mountains and the view, but all of my trips are short. I use it for football games. In the United States, we do something called “tailgating” – when you go early to your sporting events, having a party, you feed people, have fun, play games, etc. We do that a lot. My daughter’s at my university, so we go back there quite a bit still. Lately, I’ve been travelling to Europe a lot, so I haven’t been in my motorhome as much.