Rick Lavers explains how this RV and modular home manufacturer got lost in its own complexity, but a culture change has it back on track.

Founded in 1964, Coachmen is one of the most well known names in the recreational vehicle industry and has a legacy of innovation, a strong balance sheet, and a propensity for doing right by its customers. But its positive history wasn’t enough to overcome the events of the last few years (don’t worry—there’s a happy ending).

Coachmen Industries is not only a leader in the RV industry, manufacturing everything from small camping trailers to motorized Class A vehicles and everything in between, its housing group is one of the nation’s leading producers of modular homes. Unfortunately, both of those markets fell over the last two years. In addition, several RV components supplied by outside vendors failed, damaging the company’s reputation for stellar quality and shutting down its camping trailer manufacturing plant for several months.

If that weren’t enough, the company found itself swimming in a pool of complexity. “We became too complex in our business practices and our manufacturing processes. Our intent was to offer a wide variety of products to serve our clients’ needs, but the end result was high production costs, inefficiencies, and reduced quality,” said CEO Rick Lavers.

Rick Lavers, CEO

In short, Coachmen was trying to be all things to all people, offering customers mid-level and high-end options for every product line. It even tried taking very successful entry-level brands into the luxury market—to no avail. “We stretched into areas the brand would not allow us to go. As a result, we weren’t reaching our full potential,” said Lavers.

Back on track
Coachmen reported substantial losses in 2005 and 2006 but started off 2007 on the right foot with a new management team, whose first job was to communicate with employees, middle management, and shareholders about the company’s mistakes and its plans to correct them. To do that, Lavers traveled to the company’s nine manufacturing facilities and talked to employees directly.

The second step was to initiate a culture change that would eliminate micromanagement. “I want our people to make decisions that affect their jobs without having to run it up five stages to get approval,” said Lavers, adding that empowerment and a willingness to take risks have been key to the company’s turnaround.

Lavers gave an example of empowerment at work: employees at Coachmen’s laminating plant, which makes side walls for RVs, came up with a more organized floor plan that was implemented during a regularly scheduled plant shut down. The result? Lower costs, higher quality, and simpler processes.

The third step was to communicate Coachmen’s new vision to employees and shareholders. For the housing and the RV divisions, quality became the number one priority. “Quality has always been at the top of our list, but we suffered bruises to our credibility when we experienced those product failures on the RV side. It was time to reemphasize our commitment,” said Lavers.

Coachmen saw immediate quality improvements when it began standardizing parts. At one time, the company used 18 types of doors in its RVs that varied slightly in size, but it was paying a pretty penny to have them specially manufactured. “No one else in the industry used doors of those sizes, so we bore all the cost. Finally, we realized a half-inch difference didn’t matter and began purchasing standard doors, which simplified our processes and greatly reduced costs.”

In addition to focusing on quality, Coachmen had to revisit what RVing is all about: fun. And you can’t have fun with an RV if the equipment isn’t working the way it should or is difficult to operate. With that in mind, Coachmen set out to be the “easy” RV company with plenty of dealers, convenient financing, and vehicles and components that are easy to operate and maintain.

But according to Lavers, quality isn’t enough. He admitted some of Coachmen’s products have become stale in recent years due to lack of innovation, but he doesn’t want to see the company go for flashy features that don’t add value. “We want to emphasize practical features that contribute to the joy of owning an RV,” he said.

To create additional efficiencies, Coachmen is considering applying a modular concept to RV manufacturing. “If we can assemble modules rather than building each RV from scratch, we can churn out more products of the same high quality.”

Gearing up
The CEO’s first job in Coachmen’s housing group was to initiate a new management team, which is now working on a new vision. “I don’t dictate what the vision is going to be. They will believe in the vision if they are the ones who create it.”

No matter what the new management team comes up with, the vision, like that for the RV group, will be founded in quality and ease of use. Lavers explained that when the company engaged independent builders in discussions, it learned it wasn’t as easy to do business with as it once was. “Some builders considered us almost as an adversary, so we are working hard to change that perception.”

To relieve some of the pain caused by the slumping housing market, Coachmen’s building division is looking for alternative ways to keep its modular home factories busy. As a result, it is devoting more effort towards multi-family product lines, such as dormitories and condominiums, and delving into new markets, including military housing.

Coachmen’s building division isn’t just waiting for the market to bounce back. Due to the expense of commuting and lack of land, some experts predict the housing market will move more toward urban living, whereas in the past, it was concentrated in the suburbs, and the company is gearing up for the shift. “Engineering, delivering, and assembling multi-family housing requires a whole new set of skills, so we are teaming with architects to develop new products and organizing ourselves accordingly,” said the CEO.

“Although we’re still in turnaround mode, the culture change and simplification process has worked wonders. We used to take up to a year to develop and bring a new product to market, but last fall more than 30% of the new products we featured at the annual industry trade show in Louisville were developed in the 90 days prior to the show. Those products are now leading our sales recovery.”