Hull’s multi-million-pound caravan industry has its roots in beehives. James Graham found out more.
WHEN the 1980s’ pop group, the Housemartins, sang Caravan of Love, was there more to it than just a cover of an old soul song?
The band, Hull’s famous sons, may well have been paying homage to an industry which employs hundreds in their home city, turns over millions of pounds each year and has survived the economic scrapes of recent decades.
Hull is the caravan capital of the UK and it has been that way since the 1960s. There are fewer firms than there once were, but it is still a massive business.
Caravans may have a frumpy image, yet 60 million holiday nights are spent in them each year, and the sector, which is described as a fashion industry in some quarters, continues to grow.
Over the years, Hull’s industry has attracted everyone from fly-by-night chancers to Wall Street investors.
So why has the city become the caravan Mecca? Most industry insiders say it’s all down to the port – easy for exports but also convenient for raw materials, such as steel and wood from Scandinavia.
But what was the spark? Before the 1960s, the industry was dominated by Sprite, based in Newmarket, and there were also big firms in Bristol and Scotland.
The oldest caravan business in Hull, and one which could be credited with bringing the trade to the city, is Willerby Holiday Homes. Now owned by Edinburgh-based Burndene Investments, which also makes tights and stockings, Willerby, employs up to 700 people and has a turnover of 100m.
It grew from the Yorkshire Apiary Company which made beehives but switched to temporary buildings in 1946 after it was commissioned by the Government.
Its products, which used the same materials and building techniques as beehives, were sent to the war-ravaged Continent, shipped to docks such as Hamburg.
The firm started adding chassis, and a caravan firm was born which flourished during a post-war travel boom.
Alan Hughes, sales director of the business, denies that Willerby started the caravan trade in Hull but as demand soared, other entrepreneurs – including some of Willerby’s own workers – tapped into the skills, raw materials and transport links in Hull, and set up on their own.
The industry grew and at its peak there were as many as 40 firms, which either went bust of were soaked up by stronger rivals.
Consolidation continues today, but only in one part of the business. The industry is split between most people’s idea of a caravan – the tourer – and the statics, or caravan holiday homes, as they are known in the industry.
Most firms used to build both, but during the past 15 years, many businesses have decided to sell their touring interests, usually to the Cottingham-based Swift Group.
Willerby did this as early as 1987 when sales of tourers were heading to a peak of 38,000. Cosalt, the workwear-to-caravans quoted company, followed suit in 1992. Beverley-based ABI, formed through the merger of Ace and Belmont in the mid-1960s, was the most recent, selling a string of its brands to Swift in June.
Cosalt Holiday Homes, based at Stoneferry, employs 300 staff and had a turnover of 55m last year. It started its first caravan business in Grimsby in 1965 but soon found it couldn’t produce tourers and statics from the same factory. So, in 1971, it bought the Riviera Caravan Company, in Beverley, for 1 after it went into receivership.
John Hodson, marketing manager at Cosalt, is convinced the party’s over for tourers. “I can’t see any future in them, the market is declining. Swift may be okay because they’ve got a big share of it.
“People just can’t justify paying 20,000 for something they’re going to use maybe three or four weeks a year.”
Alan Hughes, at Willerby, agrees: “We could see the touring market was going to decline, but also it was affecting our ability to cope with orders for holiday homes.”
Tony Hailey, managing director of the Swift Group, presides over the biggest touring caravan manufacturer in the country after spending up to 30m on acquisitions during the past 12 years. But the fact that everyone else is bailing out of the sector does not worry Hailey, also chairman of the National Caravan Council, the trade body which represents manufacturers, dealers and park operators.
“We’ve been expanding the business and have taken a bigger and bigger share of the market. We now have 35 per cent and we’re investing heavily,” he says.
“The recent acquisition of the Ace brand (from ABI) is all part of our confidence in developing and growing the business further.”
Swift are not alone. The Explorer Group, based in County Durham, is the UK’s second biggest producer of tourers and owns Hull’s Coachman Caravan Company. Jim Hibbs, managing director of Coachman, declined to discuss the business.
The Swift Group’s holding company, Adam Dale Industries, which also owns four caravan dealerships, is believed to turn over around 125m.
Swift obviously plans to corner the market and Hailey believes tourers are enjoying a renaissance after being hit by the recession of the early 1990s. UK sales reached a peak of 38,800 in 1990 but slumped to 21,600 in 1995. They currently stand at around 22,000.
“We had very strong sales last year but there was a sharp downturn brought about by foot-and-mouth and all the uncertainty surrounding that,” he says.
“The boom year was during Thatcher’s time when the UK economy really overheated. When the downturn came, sales fell off the cliff.”
Sales of static caravans, which dropped from a peak of 27,000 in 1990 to 17,800 three years later, have made a stronger recovery and are expected to top 28,000 this year.
There are a number of explanations for the success of statics. John Hodson points out that they can be rented out and owners are likely to use them more frequently than a tourer.
The quality of the UK’s 3,500 caravan parks has also improved and many involved in the industry are keen to stress how luxurious modern models are, all fitted out with double-glazing, central heating and top-class showers, “often better than in their own homes”.
Exports which reached a high of 14,000 in 1994, are still strong at around 10,000 despite the affect of the strong pound. In contrast, overseas sales of tourers have slumped form 6,000 in the mid-1990s to around 2,000 today.
Cosalt has always targeted the home market, claiming to have a 22 per cent share. John Hodson plays down the affect of the strong pound on the export business, arguing that manufacturers benefit from cheaper imported raw materials.
Alan Hughes, at Willerby, doesn’t agree. He has seen the European price of his caravans rocket by 25 per cent. “You may benefit in the short term from cheaper materials, but the majority come from this country and you’ve still got overheads like wages.”
In June, Willerby’s owner, Burndene Investments, warned shareholders that profits from its caravan business would be 15 per cent down because of the weak euro.
But Hughes believes Willerby will weather the storm. “We’re big enough and we’ve invested a lot of capital so we can produce the product people are demanding.”
ABI, once the biggest firm in Hull, suffered heavy losses from currency deals in 1998 and went into receivership despite having a healthy order book.
The business is now owned by multi-millionaire Gary Klesch, general partner in the Bermuda-based investment fund, Klesch Capital Partners LP. Klesch was a legendary Wall Street investor and a former high-ranking United States Treasury Department Official who was well-known for buying ailing businesses and turning them around. It will remain to be seen if he can work his magic with ABI, now focusing on the static market.
The static market continues to grow and one of the industry’s biggest fears is that the parks will run out of space.
According to the most recent tourist board statistics, caravans of all kinds remain the most popular paid-for accommodation. Caravan holidays account for 17 per cent of all UK holiday spend, with a value of 1.6bn a year.
John Hodson adds: “It’s like the Skoda thing. People have always had a certain image of caravans but as more and more people see what they’re actually like, more have short breaks. The spin-off has been tremendous.”