Saturday, 26 November 2011

Micro Level Trends – UK Niche Industry (Part 1) – National Economic Revitalisation via Miles of Smiles

The last web-log looked at how a long established but little known private African company sought to extract value by matching its competence in van fabrication with the very real 'workaday' needs of its nation.

This investigation looks at a specific sector of the of UK auto-industry, similarly inhabited by a plethora of private companies, yet one reliant on a similar assembly production skill-set - though with more exacting standards – directed at the camper-van and motor-home 'leisure' market.

Thus whilst focused on technically similar products – converted vans and specialist body built chassis cabs - the 'erratic vs stable' developmental experience of the companies' very different continents and country's over the last 50 years fostered very different commercial market ends.

[NB though it must be remembered that the previously mentioned KVM does indeed provide safari / tour / camping vehicle solutions as commissioned].

However, within Britain, the previous general upward trajectory that lasted those 50 years with periodic lulls, is now well recognised as the last portion of a western dominated golden-age in global trade, an era which has now come to an abrupt end. Whilst Britain is far better placed than many of its European neighbours from a Debt:GDP perspective, it does not have the liquidity fire-power that the US can muster nor its geo-political strength, as recently seen by US visits to the Pacific Rim.

Thus whilst on the right fiscal constraint path to engender mid-term balancing of national budgets, realistically the growth element so desperately sought and discussed here and now, is still some time away. Britain has a very tough upward economic battle and new growth 'green shoots' can only be expected to 'take' and prosper in the right fiscal, regulatory and societal climate...a climate not yet arrived.

Yet there is an obvious imperative that the efforts undertaken by which to stimulate tomorrow's growth should be crafted in the near-term.

To assist this end, investment-auto-motives reviews the UK motor-caravan sector from 3 perspectives, to be relayed over the following weeks.

Part 1 – Social Dynamic: affects the marketplace.
Part 2 – Sector Participants: must assess the terrain and 'visioneer'.
Part 3 – Eco-Tech Transfer: from fringe to mainstream habitation.

In its own 'below the radar' manner the UK's motor-camping sector may be able to provide a relatively small but important contribution to that growth, acting on a local and regional level firm by firm, but also at a national level across various synergistic industrial sectors. investment-auto-motives views this segment as perhaps having the capability - acting in concert with many others - to operate as a small but useful 'economic starter-motor' which in turn assists a re-modelled 'national economic engine' which itself adopts 'eco-tech' learning for broader application from the motor-caravan sector itself; the sector in turn a funnel for best practice acquired from foreign leaders in 'green-tech'.

The following then is a very general overview of the British camper-van & motor-home sector, part of the far broader 'leisure camping' industry.

Motor-Camping in Context -

Whilst investment-auto-motives believes that it is the arena of motor-camping that can serve as a fundamental catalyst toward a revitalised eco-tech orientated future, it must be recognised as one aspect of a muti-dimensional arena.

Today camping per se spans from the very low priced to very expensive.

Ranging across: pseudo-disposable two-man tents directed at music festivals through lightweight walking & cycle-touring dedicated equipment; motor-bike tour items; the towed trailer-caravan segment covering tiny 'aero-pods' for small hatchback cars right up to large 5th wheel trailers for heavy duty pick-up trucks; typically large static-site caravans; chalets of varying standards and the more recent introduction of 'glamping' – a portmanteu of 'glamourous camping' - which encompasses luxuriously appointed themed tents, from Red-Indian Tepee to African Safari to Bedouin tents

Dramatic Growth of Camping -

Statistics gathered by the Office for National Statistics show that in 2009 a total of 5.43 million
camping trips, an massive increase of 29% compared to the previous year. It appears a watershed year since this number the overtook official recordings of B&B (Bed and Breakfast) stays in conventional buildings which itself attracted 4.98 million stays.

[NB however, it should be noted that the propensity for campers to undertake more trips through the year is generally greater than for those who use B&B accommodation. It should also be recognised that because that because the B&B is often the lower cost option for business trips (especially touring groups such blue-collar manual labourers) this may muddy the official statistics].

The ONS stated that in 2010 holiday visits abroad decreased by 12 per cent to 36.9 million compared to 2009, highlighting a trend for low cost nation-based holidays (ie camping) and for post financial crisis 'staycations'. So a definite expectation that couples and families had philosophically migrated to the homeland outdoors alternative.

The Middle-Class Rallye -

During mid 2010 the Telegraph newspaper reported a survey of 2,000 professionals from the AB1 socio-economic group, which discovered that over half were considering a camping trip that year, using their domestic bedding and travel technology like iPod docking stations.

The department store John Lewis noted the same year that wedding-list requests for camping equipment had increased by 44%.

This 'outdoorsy and stoic' British attitude bolstered and engrained by the now ubiqitous appearances of the 'Keep Calm & Carry On' sign on everything from mugs to T-shirts, providing a new sense of pseudo-defiant and semi-pioneering community...nicely complemented and balanced by the 'mix and match' opportunities afforded by the Kath Kidson range of countryside flora inspired goodies.

When the economy becomes tough, for the British middle classes the pragmatic meets the poetic. That sense of romanticism increasingly focused upon a recently grown consciousness for 'regionalism' and 'authenticity', harking back to a previous age of the rural idyll, exemplified by the popularity of local produce, farmers' markets, organic food, and arts and crafts – a less travelled idealised route toward William Morris rather than the much travelled one to Morrissons supermarket; even if that be the reality when stocking up for Cumbria or the Dales.

Even if presented in such a hyper-real manner, such outdoor activity allows the parents of 'molly-coddled', 'cotton-wool wrapped' 21st century children, to become albeit for a short but important time notionally re-connected with nature

For many of the 20-something set the activity is a natural extension to their lifestyle juxtaposition of summer music festival and travel-bound low budget gap years, cemented by and weight of accrued educational and travelling debt

A Clash of Holiday Cultures -

So whilst the conventional package holiday for families, couples and singles is far from dead and buried, this trend toward self-sufficiency and budget consciousness looks to perhaps become even higher up the leisure agenda thanks to the corporate and share-price suffering of the holiday firm Thomas Cook which demonstrating the financial woes of a contraction in general UK-outbound international travel and over-exuberance during its ravenous M&A period. It may or may not be “too big to fail”, all dependent upon re-financing methods, but for a new generation (ironically of all ages) that seeks partly packaged self-discovery culture imbued travel over the heavily faded 'attractions' of the Meditteranean, the watershed at Thomas Cook might be said to reflect a much re-orientated expectation of summer holidays themselves.

The 'back to nature' zeitgeist continues with an expected record attendance at the National Caravan, Motorhome and Camping Show to be held at London's EXCEL centre in February 2012

Of course, much of this new era is to be experienced under canvas, reminiscent of Scouting and Girl-Guides, and intentionally in dynamic contrast to the 1970s style experience for many of static caravans or chalets. But to avoid the worst of the weather there is a growing popularity for the motorised alternative.

Car-hitched caravanning has undoubtedly seen a remarkable re-emergence through the 2000s thanks to an ageing yet relatively wealthy grey-population who seek greater convenience and comfort from the car-caravan formula and don't care about the supposed 'caravan stigma'.

Focus on Motor-Camping -

But there has perhaps been a possibly greater upturn in demand and use of the smaller class of motor-caravans – ie camper-vans as opposed to motor-homes – by a younger demographic with shallower pockets; more cost effective and arguably for much of the year a more functional alternative to the car & caravan; given its innate self-propulsion, passenger car utility and van-like attributes throughout the holiday period, and if owned, throughout the full year.

A Renewed Camper-Van Culture

The re-emergence of camper-van is of course a cultural phenomenon much driven by the media and popular culture portrayal. The massive re-popularisation of the iconic VW camper (the Type 2) in original Split-Screen and later Bay Window guises comes from a merging of the previous retro-chic (as seen with New Beetle, New Mini & New Cinquecento) and the emergent hippy-esque counter-culture in reaction to suffocating corporatisation and 'packaged label-led lifestyles'.

But that rejection – or at least weekend and holiday period rejection – of the conventional by ironically employees of big corporates and authorities, is not just amongst the 20-somethings. Today's 30-somethings are not quite 'xerox' breed replicants of the '30-something' generation as depicted by the 1987-91 US television series of the same name.

Twenty years on things are different, even for 40-somethings. Though not wholly unlike that 'yuppy' era in terms of aspiration – an ever present human trait – today there appears greater attitudinal and lifestyle balance.

This reflected in the way that a 45 year old father might wear the same T-shirt, baggy ¾ length shorts and footwear as his wife, 7 year old son and indeed 5 year old daughter. Today the dynamic of many young families is that of extended youth for the parents and integration into that youth for the children, with an onus on a healthy pursuits lifestyle where gym membership has been replaced or complimented by the use of the functional family MPV, SUV or sporting estate car to enable weekend cycling trips and school-holiday camping trips.

Thus even with the supposed demise of the motherly school-run MPV, the 'FUNctional' vehicle in its many shapes is still very much with us, necessarily so as home owners once again re-discover their practical nature, having to recall what their dads taught them, and using the family vehicle for DIY materials haulage and trips to the recycling centre.

“Practicality” and “Regionalism” have become the contemporary watchwords.

Leading the Philosophical Convoy -

Unsurprisingly the near fetishistic world of TV food, and its conveying lens, reflects much of this. Herein for years the British public has grown-up with an enthusiastic, seemingly class-defying and multi-culturally inclusive national champion in the form of a now not quite so young, family man: Jamie Oliver.

His own televisual travels highlight the transcendence. Previously zooming around London on his scooter, then touring Southern Europe in his immaculate, expensive and much desired Split-Screen VW Kombi; but more recently whilst reviewing the foreign influence on British cuisine, doing so in an ex-army Bedford TK/MK truck, converted to house a wooden 'pub/kitchen'. The well known 1960s aspirational VW bus then replaced by a now little known odd-ball truck, reminiscent of a motorised old style Gypsy Caravan or the New Age Travellers of the early 1980s. Yet in its manufactured self a twist on the merged “Keep Calm...Kath Kidson” formula.

[NB the programme shows Jamie driving the large truck, but also a Land Rover Defender in certain scenes, thus beyond usual product placement by Land Rover, investment-auto-motives suspects that there is a possibility that TATA, the India conglomerate and maker of trucks and owner of Land Rover, may be seeking to co-align future truck imports / assembly in the UK, and so use the beneficial cross-relate to Land Rover vehicles]

A Convoy Derived from 'Glocalisation' -

The euphemistic term 'Glocalisation' has perhaps been over applied and misused in recent times, but undoubtedly reflects the backdrop to the emergent middle class 'eco-convoy' centred around camping.

Globalisation was emphatically the trend across the late 1990s and the 2000s decade, where West met East by way of not only a new round of western brand expansion across the globe, but for many 'Generation X & Yers' and the new 'Gen 21' general travel has become part of the life expectation. Those hoards of Backpackers themselves still seek new sights, but their own ageing into familydom and the constraints of the economic macro-reality indicates that such travel will be less 'global roaming' and more 'regional discovery'.

And of course, here in the UK much of the European discovery to be had was actually undertaken by young and not so young Australians and South Africans. And it was their own backgrounds of 'outdoors' living and camping that enabled them to embrace tent and van living when travelling across Europe.

New Market Entrants -

To serve that social shift new Van Rental business models were either created of imported, so expanding the UK market beyond the former more expensive, up-scale and older boundaries. The UK arrival of Australia & New Zealand's 'Wicked Campers' allowed ANZACs and now Brits to trek across the UK and Europe, the firm offering anything from a weekend package to a 3 month Van-Tour package.

[NB However, it seems that the firm advertises its campers as 'cars' since not only are many passenger car derived (ie MPVs) but done so to circumnavigate (gas and electricity use) safety laws]

Furthermore, others entered the sector using the classic VW camper as prime attraction, though typically in a smaller way, from the renting-out of a small fleet by enterprises like Devon Cool Campers or home-owned classic (less expensive) Bay-Window VW camper-van such as Hippy-Campers – a tactic also adopted by some established caravan dealers. Others modified other van and vehicle types into campers even if some realistically are not wholly fit for purpose.

It was clear then, that the traditional up-scale professionally converted and thus generally expensive camper-van and motor-home sector had been joined by – though not directly attacked – by a very different species of product.

The Japanese Experience -

Since the 2008 financial crisis and recognition that the future for the West looks far more economically subdued – at last recognised by as 'the new norm' – economists have almost delighted in the ability to apply parallel case studies from elsewhere; none more prosaic that Japan's 'lost decade'. This the obvious parallel given Japan's advanced country status meant that it was the vanguard of what has come to pass, and its painful ongoing process of cost-base devaluation

The cost-cutting constraints imposed on Japanese corporations so as to remain competitive came into lay in the mid 1990s, and of course impacted employee stability. The tale of redundant salary men (though less so women) has been told in Japanese film since. Less cinematic, but far more interesting have been the real-life social and consumer dynamic that took place as part of that process. Japanese growth over the 1980s saw a consumer boom in sales of smaller 4x4s and MPV's many of which were given mini RV (Recreational Vehicle) personalities. Nissan Prarie, Mitsubishi Space Wagon were of this ilk, later joined by special variants of Toyota Previa and Nissan Serena

Ironically though given the propensity to work by salary-men and take little holiday time, these vehicles sat outside homes, offices and shopping malls. Holidays that were taken were typically a flight away to a different part of Japan or to a foreign shore. The downturn ironically brought the RVs into being. Holidays by worried staff and management became far more regional, using the RV-car as the 'living pod', often parked in hotel car-parks so that the hotel's leisure facilities could be used on a pay-for day basis.

Corporate and independent hotel owners of course were partly angered given that rooms were left empty whilst singles, couples and sometimes families 'lived' in the car park, but they did offer a much needed trickle of an income stream which often was not turned down, both for financial reasons and indeed for humanitarian ones, since hotel management and staff knew that they could be themselves soon in a similar marginalised position, whilst corporate owners felt obliged not to turn their backs on their fellow Japanese countryman, and so instead turn a blind-eye.

Of course parallels are rarely 100% truisms, and general western society and the aligned corporate mentality is far more fragmented than the Japanese case, so a direct correlate and expectation cannot be drawn or expected.

However, Japan's long and drawn out technical recession markedly changed a previously heavily engrained attitude and behaviour, by which low-cost camping across city, suburban and usual rural areas became a necessary outcome. That in turn generated a true need for innate functionality from what had been stylised almost falsely functional products, and indeed it seems created new business opportunities in serving these new low-cost consumer groups, very much akin to the 'street-food' trend seen by van vendors in the USA.

So, we see that Japan's much changed conditions, now partly reflected in the UK, altered the basic dynamic of society and its leisure-time activities.

Back to Britain -

As part of the economic re-orientation drive to make the UK less reliant on services (esp financial) and more so materially productive sectors, television and general media have over the last few years spawned a subtle 'nationalistic' agenda. The visible 'book-ends' of this push have been the more serious 'Made in Britain' short series and book presented by Evan Davis and covering 'high-value' industries, contrasting by the more humourous 'Ade in Britain' presented by 'Ade' Edmondson spanning the local foods and traditions of various counties.

Such programmes then help to notionally 'nudge' the mindset of the populace, but far more meaningful and intelligent efforts must be undertaken by a more meaningfully merged mindset of British industry, British financing and International financing.

Yet as the FT has recently explained, whilst the financial institutions and intermediaries of cash-rich foreign countries appear happy to invest sums toward primarily large infrastructure projects with long run, low yield but steady 'utility' type payback schedules, Britain's own financing houses face the far more difficult task of understanding the current dynamic an the more nuanced challenges and opportunities therein.

The Challenge Ahead -

Thus all industrial sectors should perhaps better describe the contextual situation which they face. And the motor-caravan sector should do likewise. This especially the case given the 'boom and bust' experiences endured. These swings have many companies – especially those family owned - understandably and rightly cautious of expansion indebtedness. So although there is a natural onus on all to appreciate the market and commercial terrain, the greater responsibility may lie with those firms that have taken on private equity interests in their private shareholder structure.

Here then for family-firm and PE backed companies, learning from the aforementioned 'Japanese Experience' would prove useful. Whilst the economists spout about macro-economic case studies and fiscal policy-setting learning, it is left to industry's active participants to dissect the reality.

To Follow -

The next instalment Part 2 provides a basic overview of the motor-camping sector's primary manufacturing players.

These ranging from old established family run firms happy to continue in their own carved niche generation on generation, to conglomerate holding companies that recognise the need for the scale-up / cost-down imperative so as to grow margins and feed investment into the sector, and lastly but far from least, the entrepreneurial 'agitators' who wish to progress product and professionalism standards so as to create a new heyday for motor-camping.

Whilst Part 3 looks to how the sector could act as an eco-tech bridge between the fringe habitation of camping and the everyday world of conventional house-dwelling; an issue very much back at the top of the governmental agenda given the protected funds now made available to kick-start housing.

It shows how the UK's motor-camping sector must be re-invigorated, so as to embrace more leading edge technology where available, recognising how 'new-tech' transformed the sector in other countries and made globally renowned brands in doing so. All to demonstrate that the necessarily energy-efficient world of motor-camping can both grow its own gravitas and standing amongst the public, and in doing so grow the health of what should be a critical corner of UK industry, which can have a far broader, transformative affect across the nation.