Caravan sector feels the pain

YORKSHIRE'S caravan manufacturing industry is facing its worst downturn as consumer confidence crashes, insiders say.

Up to one fifth of the 5,000 workers employed in the industry around Hull are estimated to have lost their jobs since the start of the credit crunch.

Manufacturers are scaling back workforces and cutting production as they prepare for the "worst-case scenario".

The region is home to some of the UK's biggest manufacturers of static holiday homes, motorhomes and touring caravans, who are holding crisis talks with unions to limit redundancies. The fear of recession is limiting demand for caravans, as people hold off "big ticket" purchases while uncertainty reigns. Lack of credit is also curtailing sales, with customers struggling to get finance for purchases.

AIM-listed caravan retailer Discover Leisure recently issued a profits warning and said falling consumer demand during the summer made for some of the worst conditions the market has seen.

The East Yorkshire-based retailer, one of the UK's biggest, is "massively" scaling back purchases of new motorhomes and tourers as it tries to offload a stock hangover. "Consumer confidence fell further in the summer period and led to a reduced demand across the UK leisure vehicle market," the group said in a statement. Finance director Neil Harwood said: "People might have the money but their confidence is really not there. People are just holding on to the product they have got.

"We believe the fundamentals are very much right in this industry – it's just unfortunate that the current market conditions are probably the worst many people have seen."

Firms including Swift, ABI, Atlas, Willerby and Coachman are understood to have cut staff or decreased production in the face of the most aggressive downturn the industry has seen, with worrying implications for suppliers.

Beverley-based ABI Holiday Homes' order book is about half of what it was last year. The firm has cut 80 jobs – about a third of its workforce – in two waves of redundancies.

"This is for the worst-case scenario," said chief executive Mel Copper. "We've taken the pain and the bad news. Unfortunately that has resulted in job losses." Sales of its holiday homes are down 11.5 per cent on last year, but Mr Copper feels there is worse to come.

"The prospects looking forward with the current economy and the lack of feel-good factor, we think it's creating a further slowdown in our marketplace. We've seen it hit already compared to last year.

"We are seeing delayed decisions and it's whether these decisions manifest themselves. We think it's going to increase the pressure on our retail customers and we suspect we're going to see a further decline in our market place."

The firm did not see its usual Easter sales spike, nor has its autumn sales boom happened. As a result it has reduced production capacity by about 40 per cent.

"Ourselves and most of our competitors have taken the decision to reduce capacity and take stock of the market place," he said. "It's taken us by surprise. We could see in June we would have a problem. The speed has taken everybody by surprise."

Cosalt is considering options as it looks to "exit" its holiday home business, which is considered "non-core". The Hull-based subsidiary of the marine safety group employs 280 staff, and Cosalt is consulting unions over its future.

A spokesman said Cosalt is "looking at a whole range of options as to what they do with it". These could include selling the business as a going concern or closing it down.

Atlas Holiday Homes in Hull is reported to have cut about 80 jobs, and staff at East Yorkshire's Swift and Willerby Holiday Homes in Hull are understood to be on short-time working.

Management at Willerby declined to comment and Atlas and motorhome manufacturer Swift did not return calls.

Caravan industry veteran Jim Hibbs said the scale of the downturn is unprecedented. "This is the worst downturn that any of us have faced," he said.

Mr Hibbs, who heads Hull-based touring caravan manufacturer Coachman, has cut about 10 per cent of his workforce, laying off 16 staff. "We do not want to be over-producing in a difficult market," he said. "We are all adjusting production levels down. We (the East Yorkshire caravan industry) have probably lost approaching 1,000 staff already. It's very sad and very serious."

The firm, which has a build-to-order policy, is running production at about 80 per cent of last year.

Ucatt, Yorkshire Forward and Hull and East Riding councils recently held a job-matching event for workers affected by the crisis.

A Ucatt spokesman said: "It's a huge confidence issue. Caravans are a medium-to-long-term investment and that's not what people are looking at at the moment. We are working hard with all of these companies to try and minimise job losses."

But Mr Hibbs said better-than-expected performances at the recent Lawns caravan show in Cottingham and the weekend's Birmingham International Caravan Show suggest an underlying strength.

He believes an increasing trend of holidaying in the UK and the strength of the "grey pound" will help to keep the industry afloat.

"At this moment in time things are tough but by no means is it absolutely dire," he said. "It's a very resilient industry and will come through. I can see looking past the current troubles, 18 months down the chain we will be looking at a much more vibrant and bigger industry."

Umbrella organisation the National Caravan Council agrees there may be opportunities which arise from the downturn. "The caravan holiday home sector is finding the current situation particularly challenging," said director of communications Louise Wood.

"However, the credit crisis may also bring opportunities. For example, those who previously were considering buying a villa in Spain or an apartment in Florida may no longer be able to afford those options, with exchange rates and airfares rising. They could become potential purchasers of caravan holiday homes in the UK."

INDUSTRY HEARTLAND

East Yorkshire's caravan industry has grown since the 1940s.

A concentration of manufacturers established operations in the region thanks to its proximity to the ports of Goole, Hull and Immingham.

With many caravans originally built from sheet materials imported from Scandinavia, Russia and the Far East, it made sense to build factories in the region to reduce transport costs. Access to the booming Benelux market via the ports also helped to establish the region as a caravan manufacturing heartland.

As the industry grew, so did a skilled manufacturing base.

The region is now home to some of the UK's biggest manufacturers of static holiday homes, motorhomes and touring caravans.