If you examine the schedule of contests at next summer's Olympic games in Atlanta, you'll not see any references to the RV aftermarket. But maybe you should. Certainly the games being played in the RV aftermarket are more exciting than say, Synchronized Water Ballet.
The recent events with this part of our industry have taken on Olympian proportions, filled with gamesmanship, strategy, competition and drama. On one playing field, you have the Distributor Games -- Coast Distribution verses the rest of the wholesalers distributors. Then, you have the Suppliers Games. The key teams in these events are The Dometic Corporation, Norcold, Recreation Vehicle Products, and a few minor players such as Carter Shades.
Now these games are more complex than a simple competition where one team lines up on one end of the field and the other on the opposite end and then battle for victory. Here, the Supplier Games and Distributor Games or being contested on the same field at the same time. You have to pay close attention or you'll miss something important. If you think it's less of a game than a free-for-all, you may be right.
Yes, once again, the RV aftermarket is in a turmoil. And, yes, once again, Coast Distribution is the center of attention. For those late arrivals, here's how the games have progressed so far.
Game One:
Coast vs.
Dometic
After several years the relationship between Coast and Dometic
is ending. Dometic decides to withdraw from two-step distribution
and go dealer-direct. Coast faced the possibility of being closed
out of the refrigerator and air conditioner business. Judge penalizes
Coast one point -- loafing. Focusing on it's own CP Products generic
brand instead of paying enough attention to its brand name suppliers.
Recap Game
One:
Advantage: Dometic.
Scoring:
Dometic Up 1
Coast Down 2*
*includes penalty
Game Two:
Coast vs. Other
Distributors.
With Coast not having a refrigerator, air conditioner, or awning
product to market, and not yet having figured out how to knock
off these products, other distributors have decisive edge. However,
judge penalizes Other Distributors 5 points for failing to sway
Dometic to stay with two-step distribution and join their team.
Recap Game
Two:
Advantage: Coast
Scoring:
Other Distributors -- Net: down 4
Up 1 on Coast
Down 5 on penalties:
Coast Down 1
Overall standings
Dometic 1
RVP 0
Norcold 0
Carter 0
Coast -3
Other Distributors -4
Analysis: Coast only carried Dometic's line of awnings, refrigerators and air conditions.There are only two suppliers providing these products to the aftermarket. For refrigerators, the source is either Dometic or Norcold; for air conditioners it is Dometic, with its Duo-Therm brand, or RV Products, with its Coleman brand. Losing Dometic's A&E awning line was a less pressing problem since there are several awning manufacturers who would jump at the chance to team up with the largest distributor.
Anyone who knows Coast's Tim McGuire knows that he doesn't take to losing gracefully. He went on the offensive.
Game three:
Coast vs.
Norcold
Coast went to Norcold, a supplier they had chosen not to do business
with in the past. According to what the Norcold sales team were
telling distributors at the recent WDA Executive Conference in
Dallas, Coast first asked Norcold for a CP private-labeled line
of refrigerators, including one that would fit into the Dometic
hole in the RV. Norcold declined.
Advantage:
Norcold
Coast Down 2
Next Coast asked for exclusive distribution privileges to the aftermarket.
Norcold declined.
Advantage: Norcold
Recap
Norcold Up 2
Coast Down 4.
As it ends up, Norcold will add Coast Distribution as one of its distributors. Norcold explained that the door was always open for Coast to buy from them, it was Coast that chose not to buy _ so there really was no change in policy. Judge awards Norcold 10 bonus points adhering to rules of good sportsmanship. Coast gains point for getting refrigerator line. Other Distributors gain point for not losing Norcold.
Advantage:
Norcold
Advantage: Coast
Advantage: Rest of Distributors
Recap Game
Three
Scoring:
Norcold Up 13
Rest of Distributors Up 1
Coast Down Net 2
As we look at the overall standings, Norcold is in first place.
Overall standings
Norcold 13
Dometic 1
RVP 0
Carter 0
Other Distributors -3
Coast -5
Game Four:
Coast vs.
RVP
Coast Mounts Rally
Coast goes to RVP, another company where there was no
relationship.
Coast convinces RVP to enter into an exclusive relationship.
Analysis:
From the sidelines, I cannot understand the alliance between Coast
Distribution and RVP. It's easy to see the advantages for Coast
_ their deal with Dometic was falling apart. Apparently, Dometic
felt the relationship with Coast had fallen short of its expectations;
otherwise, why sever the bonds? Capturing RVP was a significant
coup for Coast since RVP has both Coleman air conditioners and
Faulkner awnings, both acquired from The Coleman Co. when Mel
Adams led a team of employees to a leveraged buyout and the
establishment
of RVP, Inc. At the time of the LBO, RVP was a supplier to Coast
for both airs and awnings. Shortly thereafter came the dramatic
move by Dometic to eliminate all of its distributors that would
not agree to discarding all competing awning lines. Coast was
on board with the Dometic plan and as a result RVP was out of
Coast _ a shocking result for the RVP team that had just gambled
their financial futures on the new company. Most distributors
balked at the Dometic plan and gave up the profitable Dometic
lines.
Over the years
distributors
other than Coast worked hard for RVP, and their aftermarket
business
has grown _ especially, the air conditioning business. Awnings
are another story. Outside of the East Coast where Faulkner awnings
are popular, the Faulkner awning has never reached its potential,
and I suspect not a profitable side of RVP's business. So what
to do? Sell Faulkner, maybe? I have it from a good source that
RVP in recent months was entertaining the idea of selling Faulkner.
The talks were proceeding, then suddenly, RVP became unresponsive
_ they no longer intended to sell. p> Now comes the dramatic
news that RVP has agreed to an exclusive arrangement with Coast.
In other words, RVP was abandoning all those distributors who
believed that they had worked hard for them after they backed
out of Coast originally. That move baffled me.
I'm not surprised that RVP would take Coast back as a distributor
_ that just makes good business sense. But to turn its back on
all the other distributors that rallied around the company during
that earlier crisis?
With Coast losing Dometic, RVP was in the driver's seat. Coast needed air conditioners and awnings. Norcold didn't fold and their prestige and reputation in the industry has soared.
If Coast was such a wonderful distributor and business partner, why would Dometic decide to part company with them? If Coast was such a wonderful distributor and business partner for its brand name suppliers, why would many of the most prestigious supplier-manufacturers in the industry cease doing business with them? The Reeses', Camcos' Thetfords', BALs', Barkers', Adcos' and Dometics' have withdrawn themselves of the relationship with Coast, and at nearly the same moment, RVP invests its aftermarket future in a relationship that, if history can be used as a gauge, very well may end in failure. Why?
I asked Mel and he said, it was strictly a business decision. He said he needed to grow the volume of the awning business in order to make it viable. Coast's proposal promised that volume.
So as game four rages on, let's take a look at the score:
Advantage:
Coast*
Advantage: RVP**
*Bonus points: 10 Coast -- awarded by judges for getting
RVP to agree to the deal. ** Penalized 10 points for cutting
off other distributors -- unsportsmanlike conduct.
Recap Game
Four:
Scoring:
Coast Up Net 11
Other Distributors Down 3*
* Lost two awning lines, one air conditioning line.
Overall standings
Norcold 13
Coast 6
Dometic 1
Carter 0
Other Distributors -6
RVP -9
Game five -- RVP
vs. Carter
Shade
Having long been competing near the cellar in the awning games,
RVP makes bold move to acquire Carter Shades.
Advantage -- Carter
Advantage -- RVP
Recap game five
Carter Up 1
RVP Up 1
Other Distributors Down 1*
* Lost another awning line.
Coast Up 2**
** Earns two point for getting another exclusive awning line.
Analysis:
As I have observed the various moves by Coast over the past few
years, I have listened to industry people try to convince me that
Tim McGuire is a genius, citing the way he built The Coast
Distribution
System through acquisitions and behind the scenes maneuvering
_ many of which have changed the face of industry. I had rejected
that "genius" theory, opting instead for terms such
as "arrogance and ruthlessness;" however, I am now
persuaded.
It must certainly take someone of superior intelligence to convince,
in the face of Coast's record, a company like RVP and an executive
like Mel Adams that it should abandon prior relationships and
partnerships and put its future in Coast's hands. And not only
that, but to also convince them that they should acquire another
struggling awning company, Carter, and add it to its own struggling
awning company, Faulkner, and expect to come out a winner.
Tim, my hat is off to you. Congratulations. Nice shot. You are a genius in my mind. Add bonus points: Coast 10. Awe, shucks, make that 15; maybe I've been too critical in the past.
Knowing and
respecting Mel
Adams the way that I do, I find it hard to accept that Mel bought
into this arrangement. And yes, rumors do abound about the
backroom
maneuvering; however, Mel claims these are absolutely not true.
There has to be more to the story, and we may never know what
that is. On its face, the whole arrangement just doesn't make
sense. Penalty RVP: 10 points -- disappointing a judge.
Overall standings
Coast 23
Norcold 13
Dometic 1
Carter 1
Other -7
RVP -20
The season is not
over, so
stay tuned. Admittedly, the judges for these games is biased,
you may have scored the games differently. However, the true judge
for these events will be the dealers. What brands of aftermarket
products they purchase and from what distributor they choose to
buy will ultimate decide the winners of these games.
And one still uncertain race is whether Dometic will be satisfied
with their decision to go dealer direct.
Add to that the teams anxious to get into the games, such as Carefree of Colorado, and maybe even Atwood Mobile Products or others, the outcome of these standings and the games may still be a long way off. In the meantime, don't throw those wagering tickets away, your team could still make a grandstand play and restructure the standings and the RV aftermarket.