Friday, 2 December 2011

Micro Level Trends – UK Niche Industry (Part 2) – National Economic Revitalisation via Miles of Smiles


Previously, Part 1 sought to provide a general picture of why camping in its various guises, and motor-camping in particular, has seen a new resurgence as a consequence of both the necessary tightening of holiday budgets and the societal effect of globalisation.

It is a re-emergence of the notionally merged “pragmatic & poetic”

[NB The recent profitability losses at the camping company Blacks Leisure, looks to be resultant from a combination of both heavy overhead (shop / estate size), and slow reaction in company strategy to react to slowed general consumer sales – to which the company intendedly exposed itself for growth - and the fierce cut-price competition by major supermarket chains. This then not a result of what is generally a buoyant camping market].

The Part 1 picture highlighted how the camper-van and motor-home sector has been influenced by new entrants serving new traveller markets – primarily young, but also across the age-spectrum – and how the traditional manufacturers of conventional high quality product must now look the the challenge of a new, arguably much changed, era; both externally amongst the (potential) market demographic and inwardly regards sector competition, which itself appears re-heated with evolving product offerings.

This evolution, as part of the race for market share and growth, exists from the consumer's perspective at (often intertwined) brand and technological levels. Whilst the race for company profitability will invariably take the M&A path for the biggest players with easier credit availability or cash-cushioned balance sheets.

Sector Overview -

The motor-caravan sector is very much interwoven with the broader camping and caravanning sector, both 'downstream' and 'upstream'.

Interaction 'downstream' is with end-users – the consumer - where all types of camping preferences tend to mingle within dedicated camping / leisure parks. Though there will be segmentation of sorts in high-use parks with hard-standing surfaces for vacation vehicles, often in more remote or beauty-spot areas the camper-vans, towed-caravans and 2/3/4 dome tents and large family tents will sit sporadically together. And of course depending of an owner's preferences and needs and the type of vehicle, a motor-caravan may be used in conjunction with not just an awning for light weather protection, but tent-extension or separate tent for full weather conditions.

Thus, motor-caravans are invariably cross-related with a raft of other types of camping product. Unsurprisingly, most so at the lowest price bracket where size and function are more limited, and with an increasing rate of separation from the more temporary an less comfortable 'tent world' as the price ladder is climbed, with concurrent increase in product utility, so independence and self-sustainability.

Again, unsurprisingly, it is the level of product sophistication that determines exactly how that camping interweave operates 'upstream' amongst product manufacturers and the sector's supplier-base. Some some firms assemble both motor-caravans and tow-caravans, seeking commonality where possible in construction materials and techniques and habitation systems, features and fittings. And further upstream still, amongst the supplier base, companies design and market their structural components, (water & energy) living systems, white goods and brown goods for required 'semi-permanent' compact habitation, whether a motor-home, caravan or chalet-type building.

(Please view accompanying graphic at top of page)

Thus whilst there are distinct camping products, the business dimension, both 'downstream' and 'upstream', is as a result of evolutionary history, has great cross-fertilisation, both in its technology solutions, and increasingly regards the horizontal and vertical business models that have been formed, especially so by the value-seeking of private equity companies.

Product Definition -

As a point of clarity, a simple definition of vehicle types is as follows:

Camper-Van = Conversion of Panel/Passenger Van vehicle
Motor-Home = Conversion of Chassis-Cab vehicle

Sector History -

In days gone by the UK produced both variants on (notionally) British vehicles, ranging from (GM-Vauxhall) Bedford, to (Ford) Thames in the more affluent 1960s and across the smaller car derived van arena including Morris Marinas and Ford Escorts in the less affluent 1970s. As national wealth grew after the deflated 1970s, so camping popularity declined in the face of affordable foreign travel.

Yet though many producers failed to survive, some old names continued, accompanied by new names in the 1980s, 1990s and beyond. During this era the only 'indigenous' van left was the Ford Transit made in Southampton – and thus close to the skilled and adaptable labor force from the boat-building sector. GM's Luton factory that previously made Bedford vans later made an agreement with Renault to contract manufacture its Trafic and Master models, and sold in re-badged form as Vauxhall (& Nissan) to date. Thus these 'British-ised' models served as platform for camper-vans and motor-homes for a long period.

But the scale growth of both FIAT-PSA, Renault, Volkswagen & Mercedes in commercial vehicle interests across Europe plus increasingly available wholesale credit terms to business customers (fleet operators and van-converters alike) meant that these 4 brands have become the dominant force in the UK, whilst smaller FIAT-PSA car-derived vans also serve the lower price points of the market.

Thus today the following models underpin the sector: FIAT Ducato / Peugeot Boxer, Renault Trafic & Master, Volkswagen T5 and Mercedes Sprinter all across medium-large vehicles, whilst Citroen tends to be preferred by converters of smaller vans (probably thanks to the slightly lower pricing and liberal credit terms than its competitors) along with FIAT Scudo & Doblo models.

Sector Participants -

Below is a non-exhaustive listing of the main manufacturers, by name, location, year established (if available), models offered and other business activities (if undertaken):

[NB not dealers which form a major element of the industry]

Autocruise Van Conversions Ltd
- Cottingham, Hull, East Yorkshire
- Models: Autocruise, Pioneer, Thoroughbred

[NB a holding of Swift Group – see end of list]

Auto-Sleepers Ltd
- Worcestershire
- Est 1961
- Models: Compact, Coachbuilt, Premier, Monocoque
- Motor-Vans and Caravans since 2010 (AS Brand)

Auto-Trail Ltd
- Grimsby, Lincolnshire
- Est 1982
- Models: Tracker, Apache, Frontier

Bentley Motorhomes
[NB not VW Bentley Motorcars affiliated]
- Mexborough, Doncaster, Yorkshire
- Est 2009
- Models: Artisan Range - ochre, indego, cobalt, cerise
- Models: Signature Range - Cauldwell, Donington, Oulton (race circuits)

(This company appears to legitimately use 'associative titling'. Its founders Mssrs Bentley (father & son) reflective of the 1920s 'Bentley Boys', its products reflective of UK race-tracks, and its in-built energy management system named EOS (Energy Optimisation System for energy and water)
reflective of the VW Eos convertible. Thus heavily brand associative)

Bilbo's Design
- South Godstone, Surrey
- Est 1977
- Models: SE, Komba, Celex, Nexa

Concept Multi-Car Ltd
- Hythe, Kent
- Est 1988
- Main Conversion Agent for Reimo GmbH

Danbury Motorcaravans
- Danbury, Bristol
- Est 1970s
- Models: Dynamic, Versito, Surf / Active / Royale
- Models: Amigo (VW Type 2 imported from Brazil)

Devon Conversions
- Ferry Hill, County Durham (formerly Sidmouth)
- Est 1956
- Models: Tempest, Monte Carlo, Aztec, Moonraker, Sundowner, Sapphire

[NB such is the legend of Devon Conversions in the UK on VW T2 vehicles in the 1960s & 1970s that other now Devon based converters with new VW T5 vans mimic the name for its brand equity]

Explorer Group (Elddis Brand)
- Consett, County Durham
- Est 1964
- Models: Autoquest, , Aspire
- Motorhomes & Tow-Caravans

G&P Campervan
- Stafford, Staffordshire
- Est 1996
- Models: Client Commission basis

Hillside Leisure Ltd
- Derby, Derbyshire
- Est 2004
- Models: Client Conversions, New & Used Vans

IH Motorcampers
- Knottingly, West Yorkshire
- Est 1992
- Models: J-series, C-series

MURVI Motorcaravans Ltd
- Ivybridge, Plymouth, Devon.
- Est 1979
- Models: Piccolo, Morello, Meteor, Morocco, Mallard
- SVO section for vehicle adaption for less-abled users

Romahome Ltd
- Cowes, Isle of Wight
- Est 2001 (formerly 1982 otherwise known)
- Models: R10 PSA FIAT Doblo, R20 (hi & lo), R25, R30
- Specialists in smaller van conversions

Swift Group
- Cottingham, East Yorkshire
- Est 1965
- Models: Autocruise (Ducato Van), Escape, Ducato Chassis cab, Swift Sundance, Swift Bolero, Swift Kon-Tiki (PSA Boxer) / Bessacarr E400 / E500 / E700
- Camper-Vans, Motor-Homes, Tow-Caravans & Holiday Homes

[NB the largest player as a brand/company consolidator via M&A in the sector & industry, and also recognises the importance of 'leveraging the brand' by advertising via and swapping the original van manufacturer's front grill badge (typically FIAT) for its own]

The Basic Business Model -

The model typically consists of:

- Direct Sales
- Indirect Sales
- Product Hire
- After Sales Services
- After Sales Products
- Product Refurbishment

Direct Sales:
The motor-caravan company's typical business model is that of own brand manufacture so as to try and grow own brand equity in the national market-place. The perception of product build quality has been the historical differentiator, and often quoted as the reason for new 'pseudo-visionary' builders to either set-up on their own from a previous manufacturer or enter the market-space anew. However, given that product materials and build methods are systemically very similar, and that incremental quality improvements over time have raised the standards for all, the importance of brand power has come to the fore - as was described in the summary of Bentley Motorhomes, and its targeting of psychological associations.

Indirect Sales:
However, given the level of geographic and pricing competition, the long-term ideal of market dominance may be accompanied by the tactical diversion of contract manufacture agreements for others. These usually non-direct compete tow-caravan producers that wish to introduce a new motor-caravan range to supplement themselves. Whilst this then gives smaller ex-factory product margins, and may be seen a engendered back-door direct competition, it does offer the potential for a second income stream which depending of market analysis may be viewed as complementary, and depending on firm's cash-book, P&L and balance sheet positions, may be considered necessary.

Product Hire:
In a bid to expand market recognition in camp-sites and on the road, depending on staffing resources, some firms will hire out their products, either for themselves directly to the public or to established dealers that offer the service using new vehicles, so as to maintain their own reputations. as premium providers.

This then provides an immediate market for new build products, but may run the risk of over-exposing the brand on the used product market 18-24 months later. If substantial numbers are made available for rent, this may cause a relative glut on the used market, so diminishing residual values and by defacto measure prohibiting new vehicle pricing elasticity that may be required depending upon company fortunes.

After Sales Services :
As is the norm, an after-sales service seeks to maintain strong customer connection so as to gain additional customer interaction for sale of complementary, services, products and ideally repeat purchase of the 'big-ticket' camper-van/motor-home at a future date.
General e-mail & telephone assistance regards low-level product maintenance issues are typically provided for free as part of general customer-care package.
As with VMs or niche producers selling conventional cars and vans in a direct sales manner, mechanical servicing, accident repair and product guarantee replacement offers an important income stream. Though unlike major volume producers of cars that now tend to include this service as 'whole package fixed' at the point of sale, and like their niche car counterparts, the motor-caravan sector conventionally sells the mechanical servicing aspect as a separate item, engine servicing (at specific mileages) undertaken alongside required maintenance of body structure, systems, fixtures and fittings. Thus this may provide two incomes streams (engine & cabin) and the relative complexity of the latter, especially in older high-use vehicles, may offer important income, especially so during recessionary periods when new product sales slump.
Cultural :
The brand-cultural link tends to be important, as motor-caravanners, like two-caravanners – though sociable tend also to have a natural tribal affiliation for those that bought similarly. This seen on camp-sites by separate owners comparing notes, but also promoted by word of mouth amongst caravanning groups with those who want to 'fit-in' buying similarly, aswell as episodes where groups of two or more friends (often couples) seek to buy similarly for both sociological reasons and economic ones when seeking a discount for multiple buys.
But immersion into that brand tribal culture typically starts with (the industry standard exercise of) a pre-purchase factory tour. This of course seeks to draw the prospective buyer into the fold through personable relations with customer service staff, and if a family owned company, pseudo-intimate dealings.
Specific brand-related club tours also offer additional income, organised by the company itself it acts in the manner of a holiday package tour operator, undertaking preferred camp-site bookings and organising excursions on behalf of its club-members so eliminating the hassle for them, whilst taking a margin from the group discounts obtained. The factory itself often used as the start/end point of the tour.

After Sales Products:
These refer to those functional ancilleries and cosmetic accessories that are needed, wanted or desired by new and current owners. These range from anti-theft wheel-locking devices to stationary vehicle skirts (to hide 'unsightly' wheels when camped) to awnings to a host of other items. These may be purchased from a leisure camping retailer by owners themselves, but often prefer to obtain via their van-maker if the inventory is sold. This tends to offer small margin income.

Product Refurbishment:
In the distant past product refurbishment of older motor-caravans was a stable business, but increased consumer wealth and easier credit terms meant that from the 1980s onward refurbishment was vastly overtaken by repeat new sales. However, economic downturns obviously tend to impede repeat sales, people extending ownership periods and investigating the cost of light refurbishment to help refresh and modernise their 'pride and joy'.
However, given that such projects are typically limited to only upholstery, fabrics and soft-furnishing changes - seating, bedding & curtains – what appears a low-cost 'refurb' to the owner infact will be relatively labour intensive for the producer, and may only realistically be undertaken by manufacturers with 'full-house' operations that include in-house trimming. Such jobs will also effect production scheduling. Thus the costed price of a 'refurb' by a manufacturer may well end-up prohibitively high.
This type of work is then more typically undertaken by caravan repairers (such as CoachCraft & Leisure of Redruth in Cornwall), themselves specifically set-up in a more remote low-cost location and reliant on broad (mail-delivered) supplier network for fabrics etc.
Nonetheless, the refurbishment arena looks set to grow given these 'austerity times' so UK manufacturers might do well to grow their own links with the repair sector so as to both grow the 'refurb' business as a substitute for new sales.

Core Manufacturing Activity -

The central business model of manufacture itself typically relies upon the containment of low overheads via what is usually a mix of core long-stay staff, especially so on the factory floor , assisted by semi-skilled or un-skilled low cost labour either on short-term contracts; usually in an apprentice-type arrangement whereby skills can be gradually developed whilst necessarily maintaining as low a staffing overhead as possible.

[NB In recent years however, it has been possible to employ practical, proficient and cost-effective staff from Eastern European, many of which have carpentry and fabrication backgrounds].

Middle management have either tended to rise from the shop-floor and surrounding functions through years of experience. Senior management tends to either be family-based if family owned, or brought in from other similar competitor firms in the usual effort bid to replicate success and grow market share, or from other corners of associated industries depending upon strategic need, or indeed from private equity or banking in a bid to 'shape-up' the business with a critical external eye.

Typically to serve professionalism and efficiency a large factory space on large site is the norm, itself often wholly owned or made available over decades with lease contracts that state that land rental equates to a potion of turnover or EBIT / EBITDA profits. Many sites either came from original engineering firm backgrounds, or from lease-sale as a result of UK agricultural decline in the 1960s/1970s, thus large tracts of land put to alternative commercial use at the time. This then provided for a large build facility / factory to be located on site with dedicated showroom and offices along with room for sizeable inventory storage.

Alternatively, the plethora of smaller businesses tend to operate from small family owned land holdings or small light-engineering business parks on the fringes of semi-rural towns, where synergistic activities take place by different firms.

However, increasing the polarity between large and small, sizeable capital investment efforts appear to have been made amongst the larger producers, especially the conglomerate that is Swift Group Ltd. Labour-saving new fabrication and assembly equipment has been purchased - such as vacuum assisted items for handling of large panels – to both ensure safe handing of large and costly panels, enable critical budget constraints on manpower size and importantly reduce the risk of technician injury which may lead to litigation, especially amongst short-term contract workers.

There seems a notable difference in capital expenditure dedicated to R&D between UK players versus those in Germany and France. The UK sector seems to devote the majority of its investment into land, plant equipment and back-office IT, whilst foreign manufacturers – the Germans specifically – direct what externally appear a far greater percentage of CapEx toward new technologically biased new product development (NPD) initiatives. Whilst NPD efforts are obviously undertaken in the UK so as to appear modern and attractive to the marketplace, it is primarily cosmetic and of low-technological challenge in nature, with those companies with the greatest financial standing emphasising new model year vehicles through annual changes to paint, colour and trim changes as well as external and internal fixtures and fittings – thus following the car industry norm engrained since the 1950s – and extolling the mechanical R&D changes in the base vehicle from the VM source.

[NB It should be noted that often both UK and European companies source specific proprietary items from the same supplier, especially in the white and brown goods arena. Hence a 'quality-name' kitchen or entertainment system item (ie Siemens or B&O) helps to ratify the quality product's 'look and feel' and its price point].

Though it should also be recognised that unconventional 'blue-sky' and 'hi-design' whilst useful as futurist vision projects for student exercises for inspiration or simply PR exercises, are rarely ever undertaken by mainstream producers, who recognise the innate camping-vehicle formula as being “conventional with a twist”, not radical or overtly futuristic.

Because of the highly competitive nature of the continental marketplace, the Europeans in particular seem to devote more time, effort and monies toward deeper technical competence and USP, relative to both the product's structural build and eco-tech habitation systems in the HVAC sphere (Heating, Ventilation & Air-Conditioning), whilst on-par or possibly even behind the British emphasis on fashion.

As stated previously, periodically time-limited marketing ties between motor-van producers and tow-caravan producers have been formed to on a contract manufacturing basis for a series of motor-caravans (or vice versa tow-caravans). Yet, whilst still deemed a useful initiative as a result of spare production capacity and / or at the supposed behest of customers - via dealership feedback – there appears a renewed desire to try and avoid such tactics given the loss of brand equity if recognised as producing badge-engineered products, the smaller margins therein and an inability to quality control other manufacturer's product sold under the company marque.

Foreign Competition -

The size of the motor-camping sector on the continent is vast, with a greater motor-camping heritage than Britain a consequence of obvious greater inter-national connectivity, most European countries – but especially so in Germany and France, followed by Italy and with Spain a recent scale newcomer given the level of standard van production in the country.

There is little point in listing all manufacturers, but some are listed as follows:

Germany: Bavaria, BreslaMobile, Burstner, Carthago, Concorde, Dopfer, Eberhardt, Eura, Fischer, Frankia, FR-Mobil, Grimm, Hehn-Mobil, Hobby, HRZ, HYMER, Joko, Karmann-mobil, Knaus, LMC, Moncayo, Niesmann&Bischoff, Phoenix, Procab (off-road), Silverdream, Tischer (pick-up truck bed), Vario-mobile (HGV sized), Varius, Wochnermobil, Woelcke (multi-segment),
France: Adria, CSA Gerard, Citi-Van, Dethleffs, Eriba, Esterel, Fleurette, Notin, Pilote, Rapido,
Italy: Arca, Caravans International, Laika, Le Voyageur, Mobilvetta, Giottiline,
Spain: Benimar

In addition, the main VM van manufacturers have renewed interest in this sector, with Volkswagen, Ford, FIAT, Iveco, Mercedes-Benz, Renault offering 'factory-made' van conversions

Thus we see that Germany has (over) 30 prime manufacturers, France (over) 10, Italy (over) 6 and Spain with 1 (but probably seeking more similar).

As listed the UK has (over) 14 prime manufacturers. Upon this 'loose' basis – without the visibility of sector value (turnover, profitability, size of workforce employed, its national 'value-addedness') - stands at only half the size of Germany, but critically ahead of the remaining European countries.

Sector Evolution -

The economic impact Eurozone crisis will have taken a toll upon the sales of new motor-homes, especially so in Italy and Spain, and whilst German producers though not wholly untouched will be buoyed by the slowed but still fundamentally healthy national economy and from the usual “Buy German” homeland sentiment.

The UK itself has also obviously been affected by the down-turn, thus sales trending will have been lower since 2009. Yet whilst not perhaps as unscathed as Germany, the fact that many of the UK's motor-caravanners are in the 50+ age-group, still have relatively secure public sector jobs, have assured pension schemes and often the option of early retirement so as to enjoy their travelling leisure time.

This demographic trend, plus a generally ageing UK population seeking similar leisure time travelling, and the emergence of budget conscious young families looking to join 'Jamie Oliver's Convoy'

In the mid-term and long-run, growth patterns in the sector look to continue, pulling-back after the recent 'blip' resulting from the 'new economic norm'. That gives a consequential expansion of varying consumer-types (ie target demographics in marketing parlance) creating additional attraction for further new sector entrants offering products and services across a broader band of price levels (ie in the lower sectors), with additional differentiation introduced.

Thus a new-norm for camping and motor-camping specifically sees a broader more cost-conscious marketplace, which although still encompassing the 'wealthy grey participants' that boosted the premium segments of the sector before 2009, is nevertheless fundamentally altered by recent socio-economic events.

Whereas previously the market consisted of a growing but still relatively 'thin' market of 'premium' and 'semi-premium' users with deep pockets and extended leisure time, they are now joined by very different groups that have arrived from the 'bottom-up' by way of age and disposable spending patterns.

This then sets the scene for gradual overall market expansion, thanks to the arrival of new segments. However, though the broad market will expand en mass, that is not to say that sector consolidation will not continue, especially in the well established upper-segments, as 'trade-buyers' and 'PE buyers' seek cross company and value chain synergies.

Thus investment-auto-motives expects to see further consolidation as exemplified by the market leader Swift Group Ltd, either by itself after it 'operationally digests' the acquisitions to date, but just as likely, the appearance of another consolidating holding company seeking to acquire so as to compete against Swift Group's seeming relentless rise.

Expect to see over the long run new efforts then to maximise the efficiencies and synergies of what have been to date separate interest companies, and indeed very probably new efforts from those consolidators to reach into the emergent lower-end of the market using a high volume-based business model basis, as well as having to necessarily try and develop distinct premium brands.

Thus the importance of branding and perfectly assimilated understanding of all target groups' functional and emotional needs will be required..

Aspiring to Generic Status -

Unless a participant or connoisseur of the arena, most British people will be hard-pressed to name any UK brand of campervan or motor-home producer.

Talk of cars and people will instinctively mention renowned names like Rolls-Royce Motors, Bentley Motors, Jaguar, Land Rover and McLaren, even if they realistically be now wholly or partly foreign owned, their lineage and aspirational qualities, and in days gone by would have mentioned the many now defunct names that thrived, then died in the 20th century.

To most British the word 'camper-van' generates the notion of the classic VW camper, an trendy image seen everywhere in consumer culture from T-shirts to mugs, with no debate about any other pretender to the iconographic throne. High sums are spent because the image-equity is so great.

And to most, the word 'motor-home' brings forth images of massive, luxuriously appointed vehicles peppered around film-sets for the stars, or in the paddock of the F1 motor-racing circuits.

But elsewhere, especially in the US and Europe, a social history far more aligned to the great outdoors and cross-border travel means that certain brands have become almost 'generic' representing the motor-caravan sector's products.

By far the best known are Winnebago, Airstream and HYMER, (all whom either currently sell or look set to sell product to sub-segment markets in the UK).

[NB The UK's 'retro-romantic' Devon brand, associated with 1960s camper conversions also exists, but far more distant in the popular consciousness and really only known by camper-van owners].

Winnebago represents the Spirit of Freedom in America, a seeming modern-day successor of the 18th & 19th centuries Pioneer's Wagons, ironically mixing with notions of a latter-day 1960s 'Route 66' travelling counter-culture with the reality of comfort and vehicle size that means that the 'Easy Rider' Harley Davidson can be stored on-board for periodic rides into the local town when parked up in a suburban leisure park. Furthemore, it serves the NASCAR racers and organisers, so sits at the very heart of US automania. Given these deep-seated cultural connetations, and the transatlantic influence, the name Winnebago has greater recognition than the plethora of little-known, indeed unknown. UK brands. Tough times in 2007 forced a strategic re-think which appears to have led to the film 'Winnebago Man' about a “tell it how it is” salesman, and though unstated, who's 'no-bull' attitude reflects that of the typical product owner.

Airstream, is equally well known, although its roots and prime recognition is in the tow-caravan sector, what it calls “Travel Trailers”. However, it has on-and-off produced motor-homes since the 1960s to compete with Winnebago, today operating in the smaller product categories based on a Chevrolet van and Mercedes' Sprinter van, yet holding the contract for sale to US government officials that require travel-spaces. However even though it be heavily tow-caravan biased, the brand Airstream – once again because of 'Americana' – holds greater renown that any UK manufacturer. It of course became legendary for its comprehensive use of aluminium, its structural frame and riveted material application taken from the aerospace industry of the 1920s & 1930s.

HYMER of Germany very probably holds the highest brand recognition in the sector amongst most Europeans, and though a marginal name versus car or truck brands, in Europe it has earned itself almost the same level of brand-equity as Winnebago or Airstream in their home continent. It has that semi-iconoc status because of its long history and because of its innovative attitude toward product improvement, its originators, like Airstream, utilising aircraft engineering know-how and recognsing the importance of vehicle packaging by avoiding the then rear-engined VW van Today, it produces both motor-homes and tow-caravans, with 10 models of the former ranging across 'integrated' (ie mono-body) and 'semi-integrated' (ie chassis-cab) classes of varying size. With its self-termed uses of 'C-class', 'S-class' & 'SL-class' there is obvious associative reference to Mercedes Car's nomenclature, with even greater automotive cross-pollination with use of the name HYMERCAR, and even greater connect with a Brabus-linked edition motor-home named the 655SL, using a tuned Brabus engine and Brabus wheels. Perhaps not wholly beautiful animal and an odd cross-breed, but nevertheless a firm product statement to try and further segment the sector through differentiation and premium co-branding.

As stated, “Devon” (Camper) Conversions is perhaps the best known of liitle known producers group. It appears still a family owned business, under current ownership for the last 21 years. However the business moved away from Sidmouth in Devon in the South West to the North East's County Durham some years ago to create a modern, spacious factory and showroom. That necessary move though probably part damaged the marque's affiliation to its origins and thus somewhat lost its romantic connection with Devon beaches and countryside. That opportunity for the actual Devon location referenced in names taken-up by others.

So as we see, there is no brand in the UK that can claim to be so legendary in the sector as to have become the generic – such as “Hoover” or “Kleenex” – thus without the general popularist impact of the success stories at Winnebago, Airstream and HYMER.

Creating the Legend -

The success of these respective brands across the US and Europe conform to the historical differences in business approach that lay at the heart of yesteryear and today's management cultures.

The 3 foreign firms previously mentioned seemingly took 3 distinct paths into their respective futures based upon either financial leverage/equity building, product innovation, or a marriage of the two.

In the US, it seems that Wall Street sourced debt financing allied with benefit of a very large and homogeneous USA marketplace and American soft-power foreign influence allowed for massive cross-America and inter-national expansion strategy.

This perhaps best seen by Iowa based Winnebago Industries expansion programme from its Modernistic Industries' roots, and the subsequent NYSE public listing that gave it financial fire-power.

Airstream married progressive technology with the heyday of American capital markets, able to initially secure its differentiated position amongst competitors through aluminium construction and later – part of Thor Industries own public listing – was able to 'spring-board' itself forward through sizeable equity financing.

In typical German manner, HYMER was started by father and son engineers, who as stated relied upon product USP and functional value to grow their business, which has stayed privately financed for many years from 1923 until undertaking its own IPO on the Frankfurt Exchange at the beginning of 1991. However, the fact that the Hymer family-held holding company (named 'Erwin Hymer') still holds 74.5% of the stock-base, highlights the keenness to retain family control.

Critically, unlike the boom and bust years of Winnebago and Airstream, unsurprisingly with such generational long control and oversight, the HYMER story has been one of stability and constant growth, relying upon both product innovation and financial temperance to guide the company forward over the long-term.

Lessons from History -

It would probably be true to say that the UK market is the most intensely competitive market compared to Germany, continental Europe or North America. Given a smaller motor-camping population relative to the other nations, it would be no surprise to find via deep and meaningful market analysis, that the ratio between manufacturers & per head participant basis is lower in Britain here than anywhere else.

From an investment perspective then, such a national picture highlights the criticality of thorough and insightful 'top-down' sector analysis and 'bottom-up' company analysis. Although investment-auto-motives posits that much of the sector's fortuitous future depends upon technical innovation and cross-fertilisation of that progress with more mainstream static housing, so as to attract investment and improve multi-application margins, the sector's history has pointedly been one of understandable cost-abatement and scale efficiencies.

But it has been a boom & bust model that as a result could be said to have undermined the long-run of the broader sector.

Undoubtedly, the archetypical case-study well remembered in the industry itself was the created and subsequently lost fame and fortune of Caravans International.

'CI' as it was colloquially known was built-up by East London born Sam Alper. Having established Alperson Caravans after WW2 and gained much popularity for its Sprite model, producing cash partly used to acquire competitor Bluebird and Eccles companies; and so form 'CI' in 1963. Recognition, awards and a flourishing business followed through the 1960s and 1970s as CI leveraged great force and consolidated the tow-caravan sector. During this period Alper also set-up a table-top game producer and the renowned Little Chef roadside restaurant chain, thus seeking income from a complementary business strategy, seemingly using the financial success of 'CI' to do so. However, the economic down-turn of the late 1970s and early 1980 saw caravan sales plummet and as a result of this, plus very possibly the sizable distribution of company funds to new Alper projects, financial-indebtedness saw the company collapse in 1983.

[NB What seems remarkable in retrospect is that Alper, MD of the biggest producer, also held the notionally independent post of Treasurer of the sector's industry body, the National Caravan Council. This is not to suggest any impropriety, simply that such links today would probably be frowned upon].

A Modern-Day Re-Play of 'C.I.' ?

Today the Sprite name exists as a sub-brand of Swift Group, the contemporary sector consolidator that could be viewed as the ambitious spiritual successor to 'CI'. A company press release demonstrating its ambitions:

"a multi million pound investment programme in online technology enables dealers not only to order online, but also to check product availability and delivery dates. Spare parts and after sales service are also vital parts of the Group operation. Dealers have access to online systems, helping them to identify parts, many by photograph. They can also submit Pre Delivery Inspection checks and claim for warranty work using the same industry leading system"

Thus we see the transformative effect Swift seeks to achieve through its own operational streamlining and dealer & customer connectedness. However, in direct contrast to the charismatic (over-dependent) single-leader model of the 'CI' business, Swift Group Ltd is led by recently new CEO James Buckley, who in turn cannot feasibly act as company hero or tyrant as he must report to the BoD of Swift Holdings UK Ltd (Peter Smith as Chairman) – itself with a broad portfolio of motor-home, caravan and holiday home interests.

Thus the marriage of consensus, accountability and multiple (broad-background) directors' inputs, plus a far more close-knit set of industrial interests (relative to Alper's games and restaurants) has set a template for far greater stability than was the case at 'CI' a generation ago.

So to answer the question “is Swift Group a modern-day re-play of 'C.I.' ? The firm's basic structure appears thankfully not, which should aid fundamental stability to the sector itself.

Swift Group then has – for obvious profit maximisation - undertaken the transformative challenge of the sector, moving beyond the usual basics of overt product focus - which often takes bias of attention – toward far greater integration of the business whole, especially CRM, through the deployment of IT systems.

However, whilst new visible IT enabling of the sales-front, and its 'invisible' counterpart in back-office are vital to said 'streamlining', the product of course should not be over-looked. This too has been recognised by the company and the previous appointment of a new design director implies that NPD work will not falter.

Yet, it must be stated that the sector as a whole, and perhaps particularly Swift Group, would benefit by uncoupling itself from NPD directed at styling, the cosmetic and low-value functional changes.
There must be a renewal of a true 'design' philosophy that merges both the aesthetic and the engineered, one by which new forms of innovation in body structure and habitation systems can be achieved; and ideally latterly applied to more the more permanent variety of habitation, in chalets/ cabins, bigger holiday-homes and through to conventional apartment and house builds.

The “British HYMER” Ambition -

To this end the UK should seek to develop a renaissance of the progressive R&D culture that obviously existed across the motor-camping & tow-caravan sector all those decades ago. One seemingly lost by natural convergence on industry standard solutions, which themselves as critical aspects of the business model sought to be cost-effective enough to withstand the boom and bust periods previously endured.

And as with most R&D, it should ideally take a two-track approach that looks to both incremental improvement of current materials and processes and to the possibility of the type of 'leap-frog' change seen by the likes of Airstream and HYMER during their own creation and histories.

Though Airstream is the better known brand in the UK, the prime case study must be HYMER AG, given the manner in which it transformed the sector with typical German zeal of the applied scientific to create what was in the early1980s a dramatic step-change in structural and habitaion quality. As itself notes “the functional needs of motor-home, given thin skin technology, must outperform conventional buildings”; introducing a 6-year anti-ingress guarantee in 1985.

[NB whilst a host of other firms have copied the basic foam sandwich construction method, none it seems have managed to equal HYMER to this day given its experience and no doubt patent rights on the proprietary system].

Though far more easily said than done, British producers must now emulate such past achievemnts which have proven themselves as the foundation-stone to product and so company success.

Given the size and market strength of Swift Group one would expect such progress to come from such a big player. And though such ambitions may indeed exist at Board level at Swift Group – given its ability to deploy across its portfolio – it would perhaps be even better if such a UK ambition were supported by the National Caravan Council, acting as central development hub for a consortium of players whereby a percentage of respective turnover is matched by government funds, or perhaps a portion of the housing project development monies is given to specific participants on a phase by phase development basis, or indeed offering 'prize money' similar to the manner of America's “X-Prize” Foundation.

Whatever the route to innovation - as the energy challenge and carbon-footprint stories become ever more crystallised in the wide consumer experience - it could and should become a major determinant of success for individual company's, the sector at large and ideally itself as a vehicle for philosophical change through a trickle-down process into the 21st century habitation demands of the wider world.

To Follow -

In the final Part 3 of this sequence, investment-auto-motives takes a brief look at the HYMER case-study together with the simple but important progress made by a similar German company AL-KO.

Working from these success stories, the essay looks (very basically) at the general areas where further technical progress may be made with a concentration of manufacturer and supplier co-operation, organised through a UK trade association.

To compliment this, investment-auto-motives posits the need for a philosophical re-moulding of how investment itself is deployed, thus the manner in which The City itself views, and indeed, assists the sector, balancing the necessary capital stewardship and returns maximisation view with a now necessary longer-term outlook.