New less expensive Airstream

[OTRA15]

Originally Posted by switz

Glad we got one of the last of the 2015 23D International Serenity model. We were able to modify it to our custom needs that the Nest would never fulfill. When I mentally added the accessory parts prices to the Nest base price to make it somewhat comparable to our 23D, the price was considerably north of $40,000 or over half the list price of the newer 23D International models.

We feel similarly about our FC20, and it is SO much more well equipped than the Nest in our opinion.

And to repeat previous comments, if Airstream cannot raise the quality control over its products to a very consistent higher level, the Nest will not succeed IMO.

[Gene]

Originally Posted by 66Overlander

Do you have proof to back up this statement? It sounds like your opinion that design decisions are made by Thor and not Airstream. Everything I ever ever heard suggests that Thor is very "hands off" and allows each division to run itself. There is no way that Thor could be significantly involved in Airstream design decisions. Airstreams are just too different from any other Thor brand to have much crossover beyond using common appliances and other commodity parts. I am not sure there would be significant "economy of scale" cost benefits to purchasing such parts across multiple divisions, but there would be significant logistical and accounting nightmares from trying to do so.

The fact that Airstream is a separate corporation may be a historical accident. The Byam family sold the corporation to Beatrice and later when Thor was started, they bought Airstream. But if it is cheaper to consolidate purchasing, accounting, etc., in a central unit, I'm sure Thor would do it. The shell is different, but much of the materials and parts are not. With computers and the internet it is easier than ever to bring together various parts of a business at a central location. I'm sure you've been to Jackson Center. Were you surprised at how few executive offices there were for a business that should be bringing in a gross of more than $75,000,000 per year (Airstream's financials may be in Thor's annual report, but I'm not going to look it up)? Thor's gross was just over $1 B and Thor had 29% revenue growth, much fueled by Airstream's sales and profits. How Thor organizes purchasing, etc., may be in their annual report too, but my proof is based on observation and logic (and lack of time to read reports since I am doing spring Airstream maintenance which includes fixing broken—i.e., cheap—things and poor workmanship).

I doubt Thor sends Wheeler memos about everything, but I am sure he knows cutting costs every way possible is Thor's philosophy. He's been there 11 years now and if he didn't do what they wanted, he'd be somewhere else.

Gene

[switz]

We have spent a lot to upgrade our two Airstreams to the place they should have been given there very high starting price. And the prior post stating Airstream buys the bottom model of most components seems correct. Another $5 buys a transfer switch with a replaceable mechanical relay vs the solid state relay that fails regularly let alone the plastic drawer and door catches they sell as exact replacements for more than the proper brass ball catches.

We will keep what we have and hope for no major incidents because the replacement insurance would acquire, in my opinion, a lower quality built unit than what we have now.

[OTRA15]

FYI the Nest site does not have much detail on it at this point:

http://www.nestcaravans.com/

Hmmm . . .

[Florida 55]

Perhaps it would be helpful to provide some facts regarding Airstream's ownership from the corporation's SEC filings and other public documents.

First - Airstream has a corporate office which provides certain defined centralized functions and support decentralized operating units. In the company's most recent SEC Form 10Q filing (second quarter fiscal 2016, dated 3/5/16), purchasing is not listed as a central function: "Our business model includes decentralized operating units, and we compensate operating management with a combination of cash and restricted stock units, based primarily upon the profitability of the business unit which they manage. Our corporate staff provides financial management, insurance, legal, human resource, risk management and internal audit functions. Senior corporate management interacts regularly with operating management to assure that corporate objectives are understood and are monitored appropriately." Since purchasing is not listed as a central corporate function, it can be inferred the decentralized operating units make purchasing decisions independent of the corporate office. Most companies with centralized procurement make a point in financial filings of touting the savings realized from consolidated buying power.

Second -- Thor does not publicly state sales by brand so the importance of Airstream to the total business cannot be quantified. Thor does report sales by segments which it defines as "towables" and "motorized". With respect to sales, the Thor SEC Form 10K for the fiscal year ending July 15, 2015 attributes over half of its revenue growth to recent acquisitions: "Consolidated net sales for fiscal 2015 increased $481,363, or 13.7%, compared to fiscal 2014. The fiscal 2015 acquisitions of CRV/DRV and Postle, coupled with the fiscal 2014 acquisition of KZ, which had twelve months of operations in fiscal 2015 as compared to three months in fiscal 2014 from the date of acquisition, accounted for $258,885 of the $481,363 increase."

Looking at the more recent 3/5/2016 10Q filing with the SEC, Thor's statement about declining unit prices in the travel trailer segment suggests acquisitions and improved performance of lower to mid-priced products are contributing much more to its growth than premium priced brands such as Airstream: "The decrease in the overall net price per unit with in the travel trailer product lines of 3.3% is primarily due to product mix, as sales in the current period include a higher concentration of entry-level to mid-level product lines as compared to the prior year period, which is partially attributable to recent acquisitions."

There is a hint in the most recent 10Q report that Airstream's premium priced class B units are contributing to growth in the motorized segment: "Within the Class B product line, the increase in the overall net price per unit of 5.2% is due to a greater concentration of sales of higher priced models and net price increases." One can infer Airstream's Interstate line is a major contributor to Thor's higher priced Class B products since its price points are high relative to other Thor Class B offerings. However, Thor also mentions a shift in motorized unit sales in its other brands from diesel to lower price gas models as being a significant factor for its motorhome sales: "The decrease in the overall net price per unit within the Class A product line of 4.8% is primarily due to a shift in the concentration of sales from the generally larger and more expensive diesel units to the more moderately priced gas units compared to a year ago." Since Airstream does not market Class A motorhomes, the brand is not a factor in the growth of lower priced priced gasoline units.

One other hint about Thor's overall motorized segment sales growth appears in this statement by Thor CEO Bob Martin about a planned expansion of motorhome manufacturing capacity in a recent 3/21/16 press release: "With strong demand from dealers and consumers for Thor Motor Coach's Class C brands in particular, we have an immediate need for the additional production capacity." It is noteworthy Airstream does not currently manufacture Class C motorhomes so Airstream sales are not driving this manufacturing expansion.

While specific information about Airstream dollar sales volume is not released by Thor, occasionally there are news releases providing percentage increases in sales for the Airstream brand. A September 22, 2015 article in the Dayton Business Journal stated that Airstream sales for the fiscal year ending July 31, 2015 were "up 18.3% for the fourth quarter." An article in the March 13, 2015 issue of RV Business touted Airstream's Interstate becoming the #1 selling Class B motorhome: "In 2014, Airstream Interstate unit sales increased 30.2% over 2013, nearly 8% higher than the overall B-van segment growth which was up 22.8% year-over-year. The Interstate now has a 33.7% market share of the diesel class B segment."

Certainly remarks by Bob Wheeler and other Airstream executives suggest Airstream's business is enjoying record sales and sales of the Class B Interstate are particularly strong. The recent investment in expansion of the Airstream factory suggests Thor perceives Airstream's recent growth trajectory will continue for some time. It may or may not be noteworthy that Thor does not play up the sales of Airstream, or its other major brands, in its financial statements, press releases and presentations to the investment community.

It is also noteworthy that as of today (April 8, 2016) Thor has not issued a corporate press release, or SEC filing Form 8K, regarding the Nest acquisition by Airstream. The federal government requires "significant" financial events to be formally announced. The most recent (3/21/16) Form 8K SEC filing and press release (mentioned above) announced an expansion of motorhome manufacturing capacity. If the purchase of Nest Caravans were considered to have material impact on the operating results of the corporation, federal securities regulations require the filing of a Form 8-K. Recent filings (and absence of filings) suggest the Class C motorhome expansion is considered important by Thor corporate leaders. The Nest Caravans purchase is not.

At the corporate level Thor is managing a large portfolio of operating units and brands. While we owners of Airstreams think of the brand as the jewel of Thor's portfolio corporate management, in its public announcements, seems to have no favorites. It may be that Airstream, despite its recent strong growth, is a minor factor in a large corporation with annual sales of over $4 billion. Thor's public financial statements with their strong focus on growth from acquisitions and product segments in which Airstream does not compete suggest corporate leaders view factors other than the Airstream brand as the major contributors to the overall company's growth and profitability.

[AWCHIEF]

Ok latest rumor direct from Airstream marketing. I am currently in the Keys attending the Florida State Rally. This morning we had a visit and question and answer period with an Airstream marketing representative.
#1. The NEST might be a stand alone brand. Production will start in 1.5 to 2 years. Possibly to be marketed and branded as "NEST by Airstream".
#2. There is another new top secret model being officially announced in a couple months. He would answer no questions about it. Period, tight lipped after his one small teaser.

Just a little more information to feed the speculation rumor mill.

[mandolindave]

Most already have an aluminum model. The ( Two ? ) new models are not about what they have, like, want or think.

Consider the different type of folks that camp.

#1 Folks that their Airstream IS their hobby, who spend a lot of time in their camper while camping, and maybe even driveway camp.

#2 Folks that just go to campgrounds.

#3 Folks that road trip.

#4 Folks that park their camper in one spot all summer.

#5 Folks that boon dock.

#6 Folks that go to National and State parks.

#7 Folks that use the camper for events, festivals, races, or rodeos

#8 Folks that use it while doing outdoor activities, fishing, hunting, hiking

#9 Folks that want a dry warm place to camp, and don't want to deal with tents

#10 Folks that don't have a lot of money or a big tow vehicle.

#11 Folks that use it for some or all of the above.

So there is a reason Airstream doesn't just make your model, even though you are SO happy with it.( Obviously.) There is a reason why some of us own several campers. The traditional style Airstream is VERY cool, but it is old technology that Wally was familiar with……way back when.

My point is there is a market for small, light, and inexpensive trailers. Whether we think that is a REAL Airstream or not doesn't matter.

I have a 20' Argosy, and an open utility trailer. If I had the money, I would want a Basecamp, Scamp, and perhaps a 34 footer. I think it's cool that Airstream is diversifying. Problem is Airstream can't or won't make anything affordable to a younger market.

[jeff4506]

Originally Posted by mandolindave

I think it's cool that Airstream is diversifying. Problem is Airstream can't or won't make anything affordable to a younger market.

I totally agree. We got into the Airstream lifestyle in 2008. While I bought my 25' Safari 3 years old, I had the original sticker. Years later when I calculated an equivalent FC replacement at current prices, it seems to me the retail climbs about 5%+ per year. While the US economy has had its ups and downs since 2008, the average inflation rate (from one source I found) has been about 1.7%. On or about 2008 it seemed Airstream came out with the "Sport" which was supposed to be affordable. If I recall correctly, at the time the 16' could be had in the mid to high twenties. Look where it is now... mid to high 40's. Airstream's "affordability" is relative and only momentary if their pricing continues to out-pace inflation.

[Tomzstream]

The real deal, and no plywood! http://957thejet.iheart.com/onair/ma...bile-14582624/

[jayseejay]

Florida 55 - greatly appreciate your taking the time to research and interpret the publicly available information of Thor and Airstream, adding facts to this line of discussion. Best, Joe

[lewster]

THIS JUST IN………………….

http://www.rvbusiness.com/2016/04/ne...airstream-inc/

[Tincampers]

I'd buy an R Pod before that Nest.

[Gene]

Chuck, thanks for getting all that info about Thor and Airstream. Strange that there is no unified purchasing at Thor since many items are used across all sorts of RV's.

I'm wondering when the Nest purchase has (or will) occurred? Did the guy in Bend have problems raising money to go into production? Are there other problems we don't know about such as health, change in personal objectives, need to raise money fast, his manufacturer not being able to manufacture, design issues that he couldn't resolve? Is Airstream paying much for an idea, plans and a few prototypes? It doesn't look like the Nest is terribly different than other trailers. It would be interesting to see what Airstream is paying for what seems like not much in assets and innovation. If the Bend guy designed the Basecamp, there is a long relationship between the parties and that personal touch probably paid a big part in this deal.

Large companies are known for purchasing competitors when the large company is devoid of ideas and needs to get something different going. Usually a stultified company screws up the purchase and makes an innovative design old and tired.

Gene

[Denis4x4]

Originally Posted by lewster

THIS JUST IN………………….

http://www.rvbusiness.com/2016/04/ne...airstream-inc/

There's one more link in the story to the Bend newspaper where the founder says the marketing of the Nest was aimed at "the more affluent". I regret having sold my t@b (made by Thor) and can't help but wonder if this is an upscale replacement marketed through the AS system. Perhaps the Nest is to Airstream as a Ford is to Lincoln.

[switz]

In my opinion, there was a totally unjustified price increase from $97,000+ to $125,000+ between the 2014 Classic and the 2015 Classic. There have been around 5% price increases in the International models the last two years with little or no innovation or increase in the quality control.

In fact, reading the significant quality control issues some are reporting here (the tip of the ice berg), one would question where or what justifies the price increases.

From personal experience:

2013 25FB built July 2012 at 26 units per week - zero quality issues
2014 Classic built January 2014 at 41 units per week - too many QC issues to list quickly and significant damage in shipping unit to dealership
2015 23D built September 2014 at 51 units per week - no Airstream name on the back, plastic wall film wadded up beside bed, broken skylight shade, improperly adjusted pantry cabinet slide and inoperative pantry catch, insufficient grease in a wheel bearing destroying one bearing set and insufficient grease in other three wheel bearing sets to last until first suggested service, toilet not installed per drawings, door bumpers on wrong side of bathroom door and the list goes on....

So we see price increases and quality decreases. The speed of production is now 81 units per week. Quality control is decreasing and the factory is relying on their mediocre dealership network to find and fix issues. Not quite true, they hope the issues do not show until after the warranty expires.

That is a receipe that the shareholders would not be happy to see. The perceived lack of concern for quality control seems, in my experience, pervasive from top down to the lowest worker and even spreads to the dealerships I have experienced.

My Airstream dealership experiences taught me that a third party shop is the only answer to getting quality work done right the first time and the coach returned in as clean a condition as it was brought in, if not cleaner.

When one pays over $50K for a car or truck, we expect and receive a clean vehicle that is fully operational with systems checked. When paying Airstream and their authorized dealer twice that amount, it would seem entirely reasonable to expect the same treatment. Not my experience with dealer #2 and #3.

We make a big deal over the walk through. So there is a stove with an exhaust hood, refrigerator, furnace, air conditioner, water heater, television and sound system, a waste plumbing system and water supply and sometimes a version of microwave. These exist in most houses. Most home owners would know how to operate these basic appliances.

In addition there is a battery system with charger, a tongue jack and a brake system that could be considered something outside the typical home owner experience.

The walk throughs should perhaps concentrate on where Airstream "hides" the water filters and pumps, the location of all the shut off valves, the fuses for the propane detector, etc. Perhaps show where the potential problem areas are in that particular model so the owner knows where to inspect and what to look for if there are problems.

Yet we receive trailers with main doors with major gaps, broken cabinetry, inoperative systems, poor fit and finish that leads to leaks and the list goes on.

The thought of Airstream starting a completely new cheaper model with entirely different manufacturing processes before they have an 80 year old design coming out the door perfectly every time should give any potential purchaser pause to consider what they are getting into with this purchase.

[TheCabin]

switz,

The RV manufacturers must believe that they have a current customer base that evidently doesn't really care about quality or price. Why else does this continue?

[switz]

An old saying -

"Lower your expectations zero and you will never be disappointed!"

One could say that the likes of Walmart has conditioned the Americans that cheaper price = cheaper quality and that is okay.

The RV industry lobbyists have gotten legislation passed to preclude the lemon laws being applied to anything in the RV industry. It is not unheard of for a half million dollar RV to spend the first year sitting in the repair lot until the dealer "gets around" to fixing the unit.

The lemon laws would grab the attention of the manufacturers when the units were rolling back as fast as they rolled out with back charges equaling the original billing plus penalties and interest payable to the consumer. After all, the monthly payments are still due for the RV loan and insurance while the unit sits there disabled.

Until lemon laws are approved with real consumer protection, nothing will change. The quality issues will escalate during this current upswing in demand and the consumer will be paying the price for the poor quality and repair service which is endemic across so many industries.

How can replacing a failed cheap part with an exact duplicate cheap part do anything but shove the problem out a few weeks?

[Florida 55]

Originally Posted by Gene

Chuck, thanks for getting all that info about Thor and Airstream. Strange that there is no unified purchasing at Thor since many items are used across all sorts of RV's.

I'm wondering when the Nest purchase has (or will) occurred? Did the guy in Bend have problems raising money to go into production? Are there other problems we don't know about such as health, change in personal objectives, need to raise money fast, his manufacturer not being able to manufacture, design issues that he couldn't resolve? Is Airstream paying much for an idea, plans and a few prototypes? It doesn't look like the Nest is terribly different than other trailers. It would be interesting to see what Airstream is paying for what seems like not much in assets and innovation. If the Bend guy designed the Basecamp, there is a long relationship between the parties and that personal touch probably paid a big part in this deal.

Large companies are known for purchasing competitors when the large company is devoid of ideas and needs to get something different going. Usually a stultified company screws up the purchase and makes an innovative design old and tired.

Gene

Gene -

I worked for decentralized corporations through most of my business career. The primary reason corporations don't adopt central purchasing is they determine the savings from leveraging the buying scale the total organization is more than offset by higher costs from a loss of operating effectiveness (i.e. speed with which decisions can be made and actions taken).

Let me give you a hypothetical example using Thor. Let's say Thor centralizes purchasing. The central purchasing department issues an edict stating all trailer batteries will adhere to a specification determined by the corporate office. It then engages in competitive bidding for a battery meeting that specification and chooses the lowest cost supplier. To achieve the lowest price Thor commits to buy batteries exclusively from Supplier A for 3 years and agrees to minimum annual purchases of batteries. In addition the negotiated contract provides for a significant financial penalty if Thor cancels the contract or misses its contracted volume commitment.

Six months later another supplier visits Thor's corporate purchasing director for a confidential meeting. Supplier B shows the purchasing head a new battery technology. The new battery is half the size and weight of the Thor specified battery and has four times the charging capacity. Since Thor is the largest manufacturer of RV's, Supplier B offers Thor exclusivity for the new battery technology in the RV industry for 2 years and a price only 10% above the price Thor is paying Supplier A for the larger old technology batteries.

In almost all situations of this nature I've seen the corporate purchasing head will not consider the potential strategic benefit for the corporation to be the first to introduce a new technology and to have exclusive rights to the technology. Instead the typical purchasing director will focus on the higher cost of the new product, the company's volume commitments to the current supplier, the penalty to exit the current supply contract, and the difficulty of starting up new supply relationships. Inertia at the corporate level will be to preserve status quo, even though the new technology could result in a competitive advantage for Thor's products. In all likelihood, the division heads would not be consulted before the offer from Supplier B was rejected. Even if a division head became aware of the opportunity, he would have to use considerable time and political capital to fight a powerful corporate officer. For most division heads trying to deal with all of the daily operating issues a fight with the corporate office is a waste of time and could be a career limiting move.

Under the current decentralized operating model, Supplier B meets with the division purchasing head who immediately talks to the head of product development if not the division president. If the division CEO perceives the technology as offering his company an opportunity in the marketplace, she does not have to seek corporate approval to move forward. A decision is made to adopt the new component and the company puts in place the programs to take full advantage of the opportunity.

Likewise, if a division develops a new trailer for which an existing component does not work, the division can move forward with a different component part and/or new supplier. There is no need to work through a lengthy corporate process to change specifications and work through existing contracts.

In many decentralized corporations there may be little cost savings to be realized from central purchasing. In large organizations there is typically a high degree of information sharing between the purchasing departments and other operations departments of the divisions (manufacturing, engineering, IT). Often with major suppliers (Dometic for example) the purchasing heads of the divisions will formally or informally group together to leverage their combined purchasing power for common items. In any event, suppliers know the purchasing heads share information and behave accordingly when quoting prices. It may be in this industry Thor already realizes close to "best price" through internal information sharing and collaboration.

[vintageracer]

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I guaranty you that the owner's of the rig in this photo are NOT part of the "Fat 55 & Up" Airstream crowd and it's a good possibility they never will be!

[vintageracer]

IF you are still interested in looking at Fiberglass trailer owners and their rigs attached below is a link to over 80 pages of Fiberglass campers and their "Tugs" as they are referred to here on "Airforums"!

http://www.fiberglassrv.com/forums/f...igs-26772.html