I have promised an update on the scandal and disturbing news about financial irregularities swirling around Roadtrek motorhome’s corporate parent, the Erwin Hymer Group of North America. Here’s what we now know.

The blockbuster news is that the North American operation as of today has been excluded from Thor’s plan to purchase the Erwin Hymer Group (EHG), whose worldwide operations are headquartered in Germany. That is a huge development.

Here’s how this has unfolded.

EHG formed a separate North American division – Erwin Hymer Group North America (EHGNA) – that included Roadtrek when it purchased Roadtrek Motorhomes some three years ago. At the time, the company announced plans to expand in North America, with new Hymer-specific vans as well as European-styled travel trailers and perhaps even larger motorhomes.

Hymer vans like the Activ were introduced. The company added some other brands like en entry level priced van called the Carado. After a slow start, a line of ultra light weight towables – the Hymer Touring GT  – was introduced. EHYNA seemed to be exploding with new models, new technologies and massive growth.

Then, this fall, Thor Industries based in Elkhart, IN announced that it had reached an agreement to but the entire worldwide Erwin Hymer Group and all its operations, including the new North American division. The deal would make Thor the largest RV manufacturer in the world.

All seemed to be moving well with that, until earlier this month.

In preparing a financial audit of the North American operation for the sale, Hymer accountants discovered extremely serious financial “irregularities.” News reports unconfirmed by EHG but so far undisputed by the company allege that they involved false invoices paid to family members of key managers, falsified titles, inflated sales figures, inventory discrepancies and other problems totaling between $70 and $100 million.

As one company manager told me in confidence, “we thought we were working for a successful company that was selling units so fast we had to expand.”

Expand the company did, from just over 300 people when Roadtrek was sold to EHG three years ago to nearly 1,000 employes last week. Besides the new Hymer models and the towables, a new Jeep camper company was acquired.  A huge new factory in Cambridge was remodeled to supplement production from the aged Kitchener Roadtrek factory.

The company appeared to be booming with success, as repeatedly trumpeted by its charismatic, outspoken President and CEO, Jim Hammill. Second-in-command was Hammill’s longtime friend, Howard Stratton, who was named Chief Operations Officer. Stratton then appointed several of his relatives into key management positions.

Together, the two painted a rosy future for the Class B manufacturer. Hammill was always positive, always pointing to the rapid growth as a measure of EHGNA’s great success.

But the irregularities uncovered by the audit made that success seem like a wild pipe dream. Last week, nearly 100 of the newest company hires – those hired less than three months ago – were summarily fired and walked out of the company.

Word soon leaked out that the top managers had been immediately sacked, as well. 

Hammill was suspended. So was Stratton. Reports are that Stratton was physically escorted out of the building. Hammill, who was out of the office on sick leave was reportedly home at the time he was notified of the suspension.

In an internal statement sent to EHGNA employees this morning, signed by two EHG worldwide CEO Martin Brandt and CFO Stefan Junker,  the company confirmed “several managers” have been suspended as a result of the investigation but dd not specify who they were.

Here is more from that letter:

We wish to inform you about recent developments in our company. Erwin Hymer Group (EHG) is currently reviewing the business of Erwin Hymer Group North America (EHG NA). An initial investigation has shown irregularities in the company’s reporting. We have initiated a detailed audit procedure involving external auditors. Erwin Hymer Group is acting in accordance with its zero tolerance policy and is committed to a full and complete investigation.
While the matter is investigated, several managers have been suspended pending the outcome of the investigation.
As an immediate measure we assigned Robert Quine and Thomas Martin to support the ongoing operations of EHG NA and the external investigation.
Thor Industries has announced that it expects that the purchase of Erwin Hymer Group will be completed within the company’s fiscal third quarter ending April 30, 2019. Due to the ongoing investigation, Thor Industries and EHG’s selling shareholders are finalizing discussions to exclude EHG’s North American operations from Thor’s purchase of EHG.
We are fully aware that this news generates unease and raises concerns. It is our objective to keep uncertainty as low as possible and we expect to have a full assessment of the situation in the coming weeks. We will inform you on further developments. Please be assured that we are doing everything we can to minimize any potential impact of this situation on our customers, business partners and employees in North America.

Similarly today, Thor has also issued a statement of its pending acquisition of the Erwin Hymer Group that pointedly noted that their offer has been revised to exclude the North American division from its purchase. Thor is a huge, multi billion dollar RV company based in Elkhart, IN, with numerous brands and divisions. It’s America’s biggest RV maker. It said it hopes to complete the EHG purchase by the company’s fiscal third quarter, which ends April 30. “The revised terms are expected to include, among other things, both a reduction on the purchase price and a reduction in the obligations the Company would have otherwise assumed,” said the Thor statement.

A source at the factory told me today that employees are “shell shocked,” over the latest developments and that rumors and speculation are running wild, with nothing more coming from EHGNA leaders except the letter, which ended by saying: “As we are managing this situation, the best course of action for all of us is to remain focused on maintaining the consistently high standards of service our customers and partners have come to expect.”

This is a huge blow for Roadtrek and the EHGNA. I just returned from the Tampa RV Supershow, where both Roadtrek and EHGNA sales and support people were displaying and selling new models. The team there was tightlipped about discussing the scandal swirling around the company, but you could sense the tension and worry. They have families to support and mortgages to pay, yet they put those worries aside and were working very hard to sell the beautiful new vehicles they were displaying. It was doubly challenging for them because some of their competitors at the show were delighted to point out the company’s difficulties to shoppers.

Late on Friday, Greg Gerber, editor and publisher of RV Daily Report, broke the story of the scandal. That story instantly rippled across the Florida State Fairgrounds and was immediately seized upon as a perceived sales advantage by some sales people from competitors. It was very sad.

Neither Hymer nor Thor would return Gerber’s calls or issue any comment on the allegations, which only led to more speculation and more rumors. On Saturday, Gerber published a note he said he received from Hammill, the suspended CEO, who said: “I am astounded that you have written something that is fabricated like this. Absolutely astounded.”

Then, today, Monday Jan. 21, came the Thor press release and the EHGNA employee letter.

So…bottom line…. what does this mean for Roadtrek?

I honestly don’t know. I am sure there will be widespread industry speculation and more rumors. It would surely help if EHGNA would explain the situation better to its employees, customers, suppliers and those who have deposited money and are expecting new vans to be built. I am sure they have to be very careful about what they say while an investigation is underway. I get that. But I also know that with a lack of facts, rumors and speculation can make a bad situation much worse.

I am not an employee of EHG or Roadtrek. I have been an on-the-road ambassador for Roadtrek as we’ve traveled the country and reported on the RV Lifestyle and they have been one of our sponsors. They have had no editorial control over this blog or our social media reports and they have never interfered with anything I have reported. Their relationship with us has been that of a sponsor only.

So I have no first hand knowledge of what is going on there. My info comes from friends who work there and what has been on the public record. 

I do know from my sources that today, the factories in Kitchener and Cambridge are open, vans are still being built, expenses are being trimmed, possible layoffs and furloughs are being considered and a team of accountants and auditors are going over the books in an effort to find out what went so very wrong and why.

And everyone is wondering…. what’s next?