The End of the Road?

In March 2009, the Monaco Coach Corporation, an American corporation which primarily manufactured recreational vehicles and RV chassis, which had its headquartered in Coburg, Oregon, and maintained significant manufacturing operations in various locations in Indiana, filed for chapter 11 bankruptcy.

Previously

Monaco was incorporated in 1968 as the Caribou Manufacturing Company and began by building pickup campers. The most popular line was named "Monaco.", so in 1977 the name was changed to Monaco Coach Corporation. It then acquired the Roadmaster Chassis Division of Chrysler Corporation in 1984 and the Holiday Rambler Division of Harley-Davidson in 1996.

At the Helm

In 1987 Kay Toolson was appointed President and Monaco was manufacturing seven brands of motorhomes and RVs, including Monaco, Beaver, Safari, McKenzie, Holiday Rambler, R-Vision, and Roadmaster Chassis.

In 1994 Monaco President Kay Toolson announced they would move their Junction City operations to the Coburg Industrial Park in Eugene, Oregon and by 2005, the company had sales of approximately US$1.2 billion, and employed nearly 5,400 people.

But.....

In March 2009 the company had to file for Chapter 11 bankrutpcy  *( Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals, although it is most prominently used by corporate entities. In contrast, Chapter 7 governs the process of a liquidation bankruptcy, while Chapter 13 provides a reorganization process for the majority of private individuals)

The Start of the Recovery

In April of the same year, in the U.S. Bankruptcy Court in Delaware, an attorney for Monaco said the company had signed an asset purchase agreement with Workhorse International Holding Co., a Navistar International subsidiary.

Monaco's CEO was still Kay Toolson and in June, Judge Kevin Carey agreed to the company’s request to convert its Chapter 11 bankruptcy filing to a Chapter 7* case so it could liquidate its remaining assets, including seven pieces of real estate in Oregon, Indiana and Florida.

The order converting the case to Chapter 7* resulted in the Monaco Coach Corporation selling its factories, inventory, brands and intellectual property to Navistar International Corporation for $47 million.

The RV resort properties in California, Nevada, Florida and Michigan were sold to various other buyers.  Once the remaining assets were  liquidated under Chapter 7, “the entity ceased to exist,” and this effectively meant the end of Monaco Coach Corporation, Andrea Coles-Bjerre, an assistant law professor at the University of Oregon and a former bankruptcy lawyer in New York stated.

 Although Monaco Coach Corporation had become one of America's largest RV manufacturers, it began 2009 in terrible shape, with most of its remaining 2,000 employees on furlough, and having filed for bankruptcy was technically out of business.

The Way Forward

Today Monaco plants in Oregon and Indiana are open again, turning out motorhomes and travel trailers with the familiar Monaco brand names, but under the ownership of a new company, Monaco RV, a unit of Navistar International, a global transportation company.

By itself, Monaco RV is much smaller than the old Monaco Coach, whose sales at its peak exceeded  $1 billion a year, but it begins 2010 with encouraging prospects.

Foremost, it has the benefit of Navistar’s financial strength and expertise. Navistar is a holding company that dates back to the 1830s, and Cyrus McCormick’s invention of the mechanical reaper for harvesting grain. The company, which changed its name from International Harvester to Navistar in 1987, has units that build International trucks, MaxxForce diesel engines, school buses and military vehicles. It entered the RV business five years ago by acquiring Workhorse Custom Chassis, which makes chassis for motorhomes and stepvans.

Why Chapter 11

In the last days of Monaco Coach’s 41-year history, the company was pushing its products hard into an unstable market, desperately trying to keep factories open and workers employed. As the recession deepened, depressing sales of all RVs and especially large luxury motorhomes, the company’s inventories grew, discounts became necessary to keep products moving, credit tightened, and the company collapsed.

Navistar

Navistar, which has annual sales above $14 billion, purchased key factories, trademarks and other assets of Monaco Coach out of bankruptcy, formed Monaco RV, and hired members of the Monaco Coach management team to run the new company from its old headquarters in Coburg, Oregon, but with a new business approach.

The new approach puts more emphasis on building motorhomes and travel trailers to match the demands of the marketplace, according to Mike Snell, senior vice president of sales and product development. The company acquired all of the old Monaco Coach Corporation brands, including Monaco, Holiday Rambler, Beaver, Safari, McKenzie and R-Vision, but is focusing most production on segments of the market where demand seems highest. And currently, Snell said, that is primarily with lightweight towables and with motorhomes priced under $320,000.

The New Monaco

Monaco is known for its high-end coaches and will continue to build for the super luxury market, but in this economic climate many people are looking for more affordable RVs and so that’s where most of the production is going.

Monaco plants reopened last summer, and the company has hired back about 800 workers. Monaco RV is turning out two diesel motorhomes and six towable units a day in Oregon and two gas motorhomes and 13 towables a day in Indiana.

“That’s only a fraction of what we used to build,” Snell said, but it reflects current market conditions, with unemployment still high and credit tight. 

RV industry analysts expect RV sales to rise in 2010 and Snell thinks Monaco is well positioned to take advantage of the surge.

And the 2011 Two new Monaco motorhomes that Snell thinks will find a strong market in 2010 are  the 2011 Monaco Caymen (Pictured Right) and the 2011 Holiday Rambler Neptune (Pictured Below Left)

These are two of the company’s more affordable Class A coaches that will now be available in 40-foot floor plans. The new models are built on a Roadmaster raised rail chassis with eight outboard-mounted airbags and eight shock absorbers and a powerful Cummins ISC 360-horsepower engine.

The models have a new full-body paint scheme and lots of luxury features, including options such as a residential refrigerator, stackable washer/dryer combination and king-sized bed. Snell said he thinks 40 feet is the perfect size for a Class A coach, and with the new models, “We’ve got a nice, affordable coach that is 40 feet.”

Monaco’s emphasis with its travel trailers in 2010 will be on lightweight models, including the debut of the first fifth wheels in R-Vision’s popular Trail-Lite series.

Snell said Monaco RV is drawing on Navistar’s resources and engineering expertise to improve its products.  “We are really going to work on fuel economy,” he said. In the trucking industry, he noted, adding just one more mile per gallon can translate into huge savings, so there is a lot to be learned from Navistar’s experience with International trucks.

Beyond that, he said, Navistar as resources in everything from marketing to purchasing power that can benefit Monaco RV. “The synergies are huge,” he said.

Dealers

Monaco RV has lined up more than 150 dealers to sell its products, including 40 who are handling motorhomes.  Snell hopes to double the number of motorhome dealers over the next two years.

Loyalty

Despite the bankruptcy of Monaco Coach Corporation, Monaco brands have retained a strong following. Monaco RV sponsored its first Monaco coach rally in October, and the owners of more than 500 motorhomes gathered in Tucson, Arizona, for the event.  Monaco RV used the event to discuss the future of the company and to solicit suggestions on future products. Snell said, “It’s important to us to listen closely to the ideas and suggestions of the owners of our brands—after all, they are the best product experts.”

Snell emphasized that Monaco RV is part of a strong company with a rich history in the transportation industry and that Navistar is in the RV business “for the long haul.”

Of all the companies that could have acquired the Monaco brands, none is a better fit than Navistar, Snell said. “We couldn’t be more pleased.”