• 13 hours Three Stocks To Watch Ahead Of Earnings Season
  • 17 hours Markets Flat As Bulls And Bears Battle It Out
  • 19 hours The Mining Industry Still Has a Human Rights Problem
  • 2 days 5 Billionaires Booted From Their Own Companies
  • 2 days Can Toyota's Hydrogen Car Take On Tesla?
  • 3 days Why Universal Basic Income Won't Work
  • 4 days Is This The Real Golden State?
  • 4 days Blockchain Firm Pushes For Ethical Mining
  • 5 days America’s Working Class Are Footing All The Bills
  • 5 days Market Volatility Sends Investors Scrambling Into This Asset Class
  • 5 days How Much Energy Would It Take To Power The Death Star?
  • 6 days A Tweet About Hong Kong Could Cost The NBA $4 Billion
  • 6 days World's Largest Miner Doubles Down On Renewables
  • 6 days Nasdaq Cracks Down On Small Chinese IPOs
  • 7 days Is There Any Reason To Be Bullish About Netflix?
  • 7 days Precious Metals See Record Inflows As Investors Hedge Against Teetering Economy
  • 7 days NYU Professor: Tesla Could Lose 80% Of Its Value
  • 8 days Uber To Offer On Demand Employment
  • 8 days SoftBank Reeling After Questionable WeWork Investment
  • 8 days Opportunity Arises In The Democratic Republic Of Congo
A Recession Would Devastate The U.S. Oil Industry

A Recession Would Devastate The U.S. Oil Industry

The U.S.-China trade war and…

Why Universal Basic Income Won't Work

Why Universal Basic Income Won't Work

The universal basic income (UBI)…

S&P 500 Officially In An Earnings Recession

S&P 500 Officially In An Earnings Recession

With second-quarter earnings season now…

  1. Home
  2. Markets
  3. Economy

Another Surprising Industry Falls Victim To Ongoing Trade War Chaos

`RV

Trade war crosscurrents have damaged the American manufacturing sector, and within, a lot of stress is building up in the RV industry, according to discussions with industry insiders and economists, along with data showing a sharp sales decline amid increasing costs, reported Reuters.

The industry has taken a massive blow from President Trump's tariffs on steel and aluminum and other retaliatory duties on thousands of Chinese-made RV parts, from electronics to LED lights to vinyl.

Domestic shipments of RVs to dealers have plummeted 22% in the first five months of this year, compared to the same period last year, after dropping 4% in 2018, according to the Recreational Vehicle Industry Association.

The RV industry's crisis shows how President Trump's trade war has backfired, hurting the industry he promised to protect.

Tariff-related price hikes have forced RV manufacturers to pass on costs to dealerships, which in turn the American consumer bears the brunt of the tariff, has slowed sales at dealers who are cutting orders and laying off workers.

Michael Hicks, a Ball State University economist who tracks the industry, warned that the collapse in RV shipments could indicate a wider economic downturn. Hicks said shipments had fallen sharply just before the last three U.S. recessions.

"The RV industry is a great bellwether of the economy," said Hicks, because the vehicles are an expensive and discretionary purchase, easily delayed by consumers who start to worry about their financial stability.

Reuters suggests that the RV industry is headed for a significant consolidation after several years of expansion, led to new factories, has oversupplied the market.

(Click to enlarge)

Managers at RV manufacturers and suppliers said President Trump's trade war is why the industry is now crashing.

"The tariff price increases are what tipped the RV business — it started the landslide, no question," said Tom Bond, the materials and purchasing manager at Adnik Manufacturing, an Elkhart-based division of Norco Industries. Related: Bezos’ Next Big Project Could Be Worth $100 Billion Per Year

Thor Industries controls almost 50% of the North America RV market, reported its sales have dropped 23% in its fiscal third quarter, which ended in April, compared to a year ago. Production cuts and layoffs have been in full swing at some of Thor's North American plants.

Thor assembler Demiris Jahmal Williams told Reuters his hours were cut, and his factory has been shut down through July.

"This is the worse I've seen it," he said.

Michael Happe, CEO of Winnebago Industries Inc, said tariffs had forced RV manufacturers to increase costs to dealers.

While many American believe the RV industry is entirely American - that's not the case when Reuters examined supply chains of RV manufacturers that extended into China. The industry relies heavily on imports for everything from air compressors, electronics, bedding fabrics, lighting, and flooring.

And according to Hick's comments, the next recession may have already arrived with crashing RV shipments spurred by a trade war.

Any rate cut today is three quarters too late, the downturn has already begun.

By Zerohedge

More Top Reads From conil.me

Back to homepage

Leave a comment

Leave a comment