Sunday, July 20, 2008

Winnebago withstands rough economic road - Des Moines,IA,USA
Forest City, Ia. - Each morning, Winnebago Industries Inc. Chairman Bob Olson reviews key company, motor home industry and U.S. economic statistics with his top managers.

Of late, the numbers have been ugly.

The number 4 has shown up on the left side of the decimal on gas station price signs regularly this spring and summer. Winnebago's latest SEC filings show its quarterly motor home deliveries down about 25 percent, which is better than the industry average that trends 45 percent below last year. Winnebago's earnings for the quarter ending May 31 dropped to $3 million from $11.2 million a year earlier. Winnebago stock traded below $12 per share last week from a high a year ago of $32.42.

Beyond Forest City, consumer confidence is low, the pending November election clouds the future of government economic decision-making, interest rates charged by lenders for motor home purchases are an uncomfortable 7 percent or more, steel prices have doubled in the last year and about $400 billion in home mortgages are in default.

Winnebago has dealt with high fuel prices before and lived to tell about it. The housing numbers are what worry Olson today.

"We've had downturns before, but this one is totally different from the past," said Olson, 56, who rose from the Winnebago plant floor to management and who succeeded Bruce Hertzke as Winnebago's chairman and chief executive officer in March.

"In the past, we've fought problems with fuel prices, interest rates or housing, but one at a time," Olson said. "Now, we're facing trouble on all fronts. And housing worries me the most because when people are losing their homes or if their homes are falling in value, they feel more like tightening their budgets than buying an RV."
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