The pandemic may be on the wane but the state of the RV industry as the second quarter of 2022 starts rolling is one of catch up, a slightly easing supply chain situation, and continued record demand for the products they build.
Those are some of the things we're learning this week as we visit the Elkhart, Indiana region, the RV Capital of the world. We're here to observe the production and get our first hands-on look at the brand new 2022 Keystone Arcadia 3250 RL Fifth Wheel that we're buying later this week.
But as we toured the production facilities and learned about the latest innovations in towables and RV manufacturing, we were able to spend some time with Jeff Runels, the President and CEO of Keystone, who took us through a tour of the factory, showed us how these award-winning and innovative 5th wheels are built.
But we also got him to sit down for an interview and talk about the post-pandemic state of the RV industry, new technologies, and a growing emphasis on customer service that can directly on a factory to customer level handle many repair or maintenance issues without sending the owner to an RV dealer's service shop.
To watch the entire podcast (Episode 393), click the player below.
If you prefer an audio version, you can listen to it on your favorite podcast app – Spotify, Apple Podcasts, Google, Sticher, etc – or click the player below to hear it right now on the device you are reading this post.
But first, a recap of our new RV!
Jennifer and I got a look at our finished Arcadia. It is beautiful and we will hopefully take possession of it and be camping with it this weekend.
We still have to install the hitch on our 2021 Ford F-250 Lariat 4×4 diesel truck, scheduled for mid-week. And then we'll officially purchase it through Camping World.
But since we will be doing lots of videos with it and want to learn as much as we can about 5th wheels (we've never owned one before), we came down to the Keystone headquarters in Gishen, IN for an inspection and to shoot a couple of stories.
We loaded this unit with a maximum 600 watts of solar panels on the roof, a 3,000-watt inverter, and three 100 amp Dragonfly lithium batteries. Dragonfly is the parent company of Battleborn Batteries. We'll have a full review on our unit when we've camped in it in a few days.
While in Goshen, we will also be attending a driving school, both Jennifer and me. We both want some expert help in hooking up, backing up, and driving with a fifth wheel in tow behind our truck.
The State of the RV Industry Today – Interview with Jeff Runels
All right, welcome now to our interview of the week segment and our guest is Jeff Runels. He's the president of Keystone RV, and that's where we are coming to… Look at all those beautiful Arcadias back there. Jeff, it's great to have you on the podcast.
Jeff Runels: I appreciate it.
Mike Wendland: It's really great to be here, but it's particularly great to be here, because we're getting one of those. We're buying one of those this week.
Jeff Runels: Yes, you are.
Mike Wendland: we are really excited. So we wanted to talk to you about this unique time that we're in for the RV industry. Post pandemic, the demand is not dropping off like many predicted, I suppose a little bit, maybe, but not much.
The challenges that the industry faces, let's talk about those, and then where we see it going and then we want to touch on quality. So those are the main things we'll talk about, when we talk. So let's start with where we are in terms of this post pandemic whirlwind.
Where are we in this post pandemic whirlwind?
Jeff Runels: Whirlwind this is a perfect way to put it. It has been, we went from not sure if we were going to work to not working, to we can't ramp up fast enough, and it all happened, now looking you back, it seems like in a matter of minutes. And so we've really spent the last two years just trying to catch our breath. It was first, getting the parts and pieces in here, and then just getting the people. And I think I saw an article, it was last week or the week before, where greater Elkhart County was number one in small market employment in the nation.
Mike Wendland: Amazing.
Jeff Runels: That feels good, and at the same time, it's frustrating because with a discretionary good, you never know when it's going to be great and when it's going to go away. And so that's the spot we're in the market right now. People ask about gas prices or war or parts, we can usually weather one storm, maybe two storms, but with a discretionary good, it's hard to weather multiple storms. And it seems like, no matter how many things get thrown at us, we keep weathering those storms.
So as we're getting back into shows now, as the pandemic kind of drops off a little bit, we're starting to see some surges in different price points and markets again. Like you usually would at show season. This is the time of the year when the weather breaks. So we start to get pockets of fair weather folks are coming back and exploring and figuring out what they want. So right now we're in that time where we're just trying to figure out, okay, what's the next six months look like, because we can't go, in recent history, on anything.
What are the current RV delivery timelines?
Mike Wendland: Well, let me see if I can get a little better understanding perspective-wise. Pre-pandemic, back before the pandemic changed everybody's life so drastically if I was to order a new Arcadia or one of your other brands, a Montana, how long would it have taken me from the time I signed an order to getting delivery?
Jeff Runels: I'd say six to eight weeks would be a fair assessment.
Mike Wendland: This was pre-pandemic.
Jeff Runels: Pre-pandemic, yep.
Mike Wendland: Today, if I ordered one, how long would it take?
Jeff Runels: Probably, closer to 20 to 30 weeks.
Mike Wendland: 20 to 30 weeks. So now at the same time, how has employment been? What was employment like here? And I don't know if that's proprietary or not.
Jeff Runels: No. No.
Mike Wendland: But what was it like pre-pandemic? And what's it like now?
What's the current state of the workforce?
Jeff Runels: I would say that pre-pandemic we were going into what we felt was going to be an uptick. So unemployment was low, it went to nonexistent. We always talk about unemployment in this area in terms of, okay, you get three percent or less, you're really getting into unemployable, where there are barriers to working. We've been below that level for two years now. And we're still below that level. So we talk about pockets of hot and cold for different price points. But we're employing more as an industry right now in this area than we ever have before, and there's still a need for more.
Mike Wendland: I guess the question is, do you have as many people working for you now, post pandemic, than you did before?
Jeff Runels: More.
Mike Wendland: You have more.
Jeff Runels: We have more.
How does Amazon's plan to build in Elkhart affect the RV industry?
Mike Wendland: We had a story the other day we reported about Amazon looking for a 1,000 workers to build a new warehouse in Elkhart. That's got to cause some concern for people.
Jeff Runels: It has. It has. One thing about our industry is, a lot of this area is built on RVs and if it's not a manufacturer, it's a supplier. So we tend to fight with each other for workers, and we fight with other industries. If you want to get a house built around here, especially over the last two years, it's really difficult to find a construction company, because they're all fighting with us for skilled labor, whether it's plumbers or roofers or whatever the case may be. But then we fight with our suppliers, and so it's just kind of this flywheel that turns around and round and round.
Mike Wendland: But it's really a good news story out of a bad news situation…
Jeff Runels: Absolutely.
Mike Wendland: … because none of that would happen if there wasn't a big demand for these RVs.
Jeff Runels: That's right.
What do you see for the future for the RV industry?
Mike Wendland: So people wonder how long this is going to continue? How long can you keep weathering all these multiple storms? You weathered the pandemic, which was unprecedented. Then the supply chain thing kicked in, and then the employment problem. And now we're talking about runaway inflation, five-dollar-a-gallon gas. Where do you see things for the industry in six months or a year or two years? Does your crystal ball work that far?
Jeff Runels: My crystal ball never works. It never works that far, but it doesn't work in this industry. I think for the next two or three months, we're just catching our breath. I mean, we just got done saying we've had two years, where I don't think anybody in this industry's ever run that hard. And so we're always looking three months, six months, one year, three years out, you have to do that for any business. But right now, talk about supply chain issues, every time we think we get through them, we get another curveball. And Shanghai is the most recent curve.
Supply chain woes – again.
Mike Wendland: It's totally shut down, the whole city.
Jeff Runels: And so you, imagine, even if we have amazing demand, if we just get one part, whether it's a shower door or an entry door or a window, that can stop everything, because you can't really build units without certain parts. So I think even if demand slips a little bit, which we would expect after two years, we don't know how many people we've pulled forward in the cycle. We don't know how many new people we brought into the industry. Some of that's going to catch up with us over the next six months to one year. But even if that does, supply chain may still hold things up more.
Mike Wendland: Let's talk about quality for a little bit. It's a concern, the industry certainly has been addressing, trying to get more techs on one end towards building RVs that are higher quality. What are some of the things quality-wise that you're seeing RV manufacturers doing? And maybe some of the specific things that you're doing. We've learned some really cool things you're doing, for example, in our brand, the Arcadia. First of all, getting people to take more ownership of their own maintenance and their own repairs. Talk about some of those things that can help.
Innovative ways to keep RVs on the road
Jeff Runels: So with a shortage of service techs, our dealers are facing some of the same challenges we are. There's just not enough people, especially in the RV industry to go around. And so when you get into service, you want an experienced, qualified individual, and that requires teaching, and it requires learning how to service these coaches. And so as a manufacturer, we know that this is a limited season. The farther north you go, the more limited your season is.
And so people go to whether it's a new or used RV or an RV they've had for years, they take it into the service department, and they don't want to hear that, “We might not be able to get to you for six weeks. We might not be able to get to you for two months.”
Well, they lose half their season. They lose all their season. So we took steps at the beginning of the pandemic to say, “Okay, we need to find other ways to keep our customers camping.” And one of the things we did was this kind of DIY series where, look, not everything has to go into a dealer. If your unit is usable, we want you to stay out, and we want you to camp in it as long and as much as you can, and we'll participate, contact us. We want to make sure we get you the parts, whether it's through your dealer or through us.
And so we've done more direct to consumer part shipping. We've tried to do more online teaching. So we've got classes now online where we do videos and we say, “Okay, here's to do it yourself.” So little things like that, that helps, but it's certainly not everything we do.
What about Quality Check Systems?
Mike Wendland: What about the in-production steps that you can take inspection, checking these things for defects before they leave? One of the things we learned as we've come to visit ours is how many people have actually checked out all of the different parts in our unit. And it's not because we bought a unit, it's-
Jeff Runels: That's right.
Mike Wendland: … your standard procedure. And I know other manufacturers are serious about the same thing. Talk about some of the quality checks you have now that maybe weren't here in the pre-pandemic days.
Jeff Runels: So we've had to make some changes. As we have parts that stop the line when they're short, we also have things that we can continue to build if we're short a window valance or a pillow. And so if it's simple, we'll continue the line, because we want to keep our folks working, we want keep our suppliers working. And so that created a above and beyond check, where we have to make sure we're not missing a part or we're not forgetting to put something in. And through that, it helped us do a double check of all the quality.
So we quarantined spots in our yard after the fact. So if an Arcadia leaves this plant, traditionally, it sits in a yard directly at the plant, and then it's cleared and will go to another one of our holding yards. And then we may do a random sales audit, where we pull a ready to ship vehicle back into the plant.
Well, we've had to add steps to that, because if we were missing a pillow or a sham or a window valance, and it gets cleared and it leaves the plant, we have to have a system to make sure we're tracking all the different units and all the different plants for all the different shortages. So that gave us the opportunity to look over these units again. And so we enlisted the help of everyone from groups in our shipping department to groups that we actually put together for a secondary and even third PDI to walk these coaches…
Mike Wendland: PDIs, pre-delivery inspection.
Jeff Runels: Yep. And so we've always had a standalone PDI facility that works separate of the plant, which is a little unique to us. But now in essence we have two of those, in the case of most plants. There's just a couple of extra steps that we've added in, and then by plant and by product, we've had to add in other steps, depending on what the unit required.
More Innovation for the industry
Mike Wendland: What are some of the other innovative things that you see?
Jeff Runels: Well, we're sitting right here with the Arcadia, and that's near and dear to your heart, that was a product based on innovation. So we always have anywhere from three to five innovative, new ideas working in our R&D or our engineering department at one time. Now, not all of them will make it to the production line, but I see more ground up… So one of the other kind of nice things that's come out of the pandemic is, it's forced us to look at new materials. And so now there's a big push for new supply and new material.
And so I think that this has really shown us, we can go out and find alternatives to fiberglass, alternatives to rubber, alternatives to you name it.
So we are two and three sourced in a lot of places. And we're finding that some of those new sources may have come from outside of the industry. And so whether it's automotive or residential, they're bringing new ideas to the table. And that's kind of where the Arcadia was born. We're going to build it on a proprietary chassis, and we're going to see if we can make everything about this different and unique. And there are still quite a few innovations that were designed for the Arcadia, but you'll see released over the next two or three years that take this chassis and take some of these ideas. And so I see that evolving.
Mike Wendland: You see an emphasis on lighter RVs, for example, with fuel prices so high and the difficulty in getting trucks. Do you see the industry responding in that way?
Jeff Runels: I do. I think light has been kind of a call to arms for the last several years. The catch with getting lighter is it's going to come with some strings attached, whether that's sacrificing space, certainly we never want to sacrifice sturdiness or quality. And so what I've seen the industry and retail respond really well to is, okay, we've learned how to camp with an outside kitchen in place of a full kitchen.
We've learned to camp with a bed that maybe all the way against the wall. And I can't walk all the way around it. I think as retail gets more used to that, then they're going to be more accepting of what it takes to get some of these coaches lighter. But, again, go back to the supply line, the supply line's going to give us new opportunities to make it lighter and safer. And a lot of that comes from automotive and residential.
The overall state of the RV industry still looks good
Mike Wendland: You see a good future then for the RV industry-
Jeff Runels: I do.
Mike Wendland: … despite all these challenges.
Jeff Runels: I do.
Mike Wendland: These changes keep increasing, it seems like every week, another one.
Jeff Runels: I do. I think this is an industry on both sides, all sides, dealer, vendor, our side, that we respond to really well to these kinds of challenges. And I think good things come out of it. It feels like we take a step back and we usually take two steps forward. And I think that's what we're doing right now.
Mike Wendland: And you're catching your breath.
Jeff Runels: We're catching our back.
Mike Wendland: Jeff Runels, thanks for being a guest on the podcast.
Jeff Runels: Thanks for having me.
Mike Wendland: And we'll be doing a full review on our Arcadia in a few weeks. So some of those innovations that Jeff just talked about, you'll see coming up on our channel. I'm tired of talking, we want to get out and ride around in ours. So we're going to finish this podcast and go check it out. Thank you Jeff.
Have thoughts on this interview on the state of the RV industry?
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Meanwhile, let's go RVing!
New ebook from Mike and Jennifer Wendland – the Natchez Trace
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Each of the 7 Days of the ebook has:
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