Crap. You know, I went to Coachmen Industries website to check for a list of RVs. The RV site didn’t some up. Just kept on a spinning, then timed out. And I saw that the main site was all about pre-fab housing. But I thought, oh well, the RV site’s down. But as bluecon points out in a comment below, Coachmen Industries is out of the RV business as of Boxing Day. Doh! But at least TTAC’s Best and Brightest spotted my lack of reportorial due diligence and properly revealed willingness to take Edmunds and Autoblog’s posts at face value. My bad. Lesson learned. And according to previously stated policy, I will not take this post down. Well, not the headline and the comments. The text is toast, ’cause there are limits to my prostration. And props to Warren, ’cause, as Kurt pointed out, this kind of housing is sure to find favor in the coming months and years ahead. Never a truer word was spoken in jest. Oh, and Buffett already owns an RV maker– that bought Coachmen’s assets.
Find Reviews by Make:
Read all comments
When you have money like Warren does, you can afford to invest in many companies when they’re down. If a few of them recover and their stock prices climb he makes enough to more than cover the ones that don’t.
Buffett’s investment strategy is to look beyond a mere one or two years. He has long advocated this position, and it has worked very well for him most of the time. This is how he built the modern Berkshire. Coachmen may not ever be the next Coca-Cola, but calling it insanity seems shortsighted to me.
I wouldn’t do it myself, but Buffett (who does have a few more bucks than I do) must believe that aging boomers will want these things and that oil prices won’t be a factor. He’s usually on the right side of the bet, so I wouldn’t be too quick to dismiss it.
The nice thing about being Warren Buffet is that when you invest in something, so do alot of other suckers people.
When you have money like Warren does, you can afford to invest in many companies when they’re down
I think you mean:
To get money like Warren does, you only invest in companies when they’re down
Seriously folks. The concept of “that industry isn’t going to recover right now so why buy its stock?” shows a fundamental error in investment strategy. You don’t wait for the herd to move and then follow it.
Unless the Dem’s(and isn’t Buffet advising?) bail out these coach builders there is gonna be a big bankruptcy domino. Why shouldn’t they get bailouts just like the Little 3?
So if they don’t get bailouts only a few will survive. Obviously Buffet is betting on the survivor.
Unless the Dem’s(and isn’t Buffet advising?) bail out these coach builders there is gonna be a big bankruptcy domino.
If Buffett’s competition fails, that would be good for Buffett. That would be another reason for him to invest.
This is not a segment that is likely to see a lot of new entrants, which is also good for those that are already in it. An established player with a good management team and enough cash to ride things out should survive, unless the entire segment implodes or we have a depression. Those who aren’t paralyzed by paranoia would find the latter to be highly unlikely, although the former is debatable.
Buffett owns Forest River, a long time competitor of Coachmen. Forest River bought Coachmen’s RV division.
Remember that RVs aren’t just huge $300K and up buses. They’re also popup campers that cost $8-$20K and travel trailers that cost $15-$35K. Total bargains compared to airfare and hotels for families.
According to this Coachmen Industries no longer builds RV’s.
“Coachmen Industries, Inc. Completes Sale of RV Group Assets
Monday December 29, 1:48 pm ET
MIDDLEBURY, Ind., Dec. 29 /PRNewswire-FirstCall/ — Coachmen Industries, Inc. (NYSE: COA – News) today announced that on Dec. 26, 2008 the Company closed on the sale of nearly all of the assets of its Recreation Vehicle business to Forest River, Inc. The sale had been overwhelmingly approved by the Shareholders the previous week.”
http://biz.yahoo.com/prnews/081229/clm028.html?.v=101
Maybe with the housing market as it is, he is expecting people to buy trailers/motorhomes and live in parking lots…
Sorry. Had to say it.
>)
The odds of a Depression.
Or how the government can build it’s very own Depression.
The easy credit overspending bubble bursts.
Housing industry collapses
Auto industry collapses
Rv industry collapses
and so on
All the mining, smelting, lumbering, steel making, etc. find their products are not in a very high demand.
More people out of work.
Government spends huge amounts of money(many trillions) that it doesn’t have by printing money and borrowing from Asia and the Saudi’s.
This spending doesn’t work so the government spends more trillions.(that it doesn’t have) The sppending never worked when FDR tried it and it won’t now.
Likely to get deflation and then stagflation and at some point a run on the US dollar. Then Depressflation.
Warren Buffett (actually Berkshire Hathaway, Inc.) already owns an RV producer, called Forest River, and that RV producer bought Coachmen’s RV business.
http://www.cnbc.com/id/27843229/
Coachmen will now focus on building buses for disabled people and systems-built residential mobile homes.
The number of people over 65 is expanding greatly, and some asshole Congressman actually snuck a provision into the tax code that allows the interest payments on RVs to be deducted like the interest payments on vacation homes, so this business could have a bright future.
And, as others have said, this industry will emerge from this downturn with fewer competitors.
The spending never worked when FDR tried it and it won’t now.
Actually, it did. The massive debt-funded expenditures of WWII ended the Depression. It would have ended sooner, had FDR not tried to balance the budget during the mid 30’s, before the New Deal had a chance to work.
There’s a lot of historical revisionism floating around the internet. I would encourage you to ignore it.
Pch101:
pot, kettle, black.
@PCH101:
Paul Krugman has been working hard to debunk O, let’s call them myth-conceptions even if puns are lazy writing.
Since he is the most prolific economist likely to hold some sway with the Obama administration, it makes sense to read his blog daily, and all of his New York Times articles. He is deliberate, persuasive, and most importantly influential. He is calling for multi-trillion dollar stimulus packages over the course of the Obama administration, and interestingly enough, he argues that somewhat inefficient use of the money will have positive effects.
As a side note, Michael Lewis, of Liar’s poker fame has a pair of articles in the NYT that are both worth a read. I urge everyone to read them.
http://www.nytimes.com/2009/01/04/opinion/04lewiseinhorn.html?_r=1&hp=&pagewanted=all
http://www.nytimes.com/2009/01/04/opinion/04lewiseinhornb.html?pagewanted=all
When the Depression doesn’t happen, be sure that you get back to me.
So FDR’s New Deal was a major success. Just wait 8 years and have somebody start a World War.
Kinda like the Granny Clampett cure for the common cold. Drink this and go to bed for a week and you will be cured.
Did you know that Toyota has a manufactured housing operation?
So FDR’s New Deal was a major success.
It was an experiment that didn’t go far enough, fast enough. But it was better than the Hoover alternative.
There is an abundance of post-1929 history that demonstrates that well-managed stimulus programs do work, just so long as the debt is ultimately repaid once the economy is restored. In addition, we have plenty of pre-1929 experiences that show that revisionist conservatism doesn’t work, because contraction feeds a downward spiral.
You can either read the history and draw a rational conclusion based upon it, or else you can rewrite it based upon an ideological bias. Doing the latter requires ignoring most of it, which leads me to believe that it may not be such a good idea.
If I was in the pre-fab home business, I’d be looking at ways to make them appeal to eco-weenies who want to live off-the-grid. I’d redesign them so they don’t look like “trailers,” put solar collectors on the roof, and turn the southernly exposure side into a big water heater.
But then I’m not Warren Buffett, either.
for a guy worth $30b+, $40 mil is literally chump change.
Rod Panhard:
Warren Buffett bought the Recreational Vehicle business; Coachmen kept the pre-fab business.
Your marketing idea is already being tried by a number of companies:
http://www.slate.com/id/2171842/
In ’03, Buffett bought Clayton Homes, a large and relatively successful maker of manufactured houses. They’re the ones you might see being towed down the highway, one side at a time. It’s a way to build houses that are lower cost than site-built. I think they’re made for the most part in low cost of living areas like the SE US, so his labor costs should be low. Evidently he’s satisfied with his investment in Clayton, and this might be a good time to buy. His huge buy-ins to DOW and GE earlier this year are looking shaky as of now though.
Geez Pch, we are living through the actual Keynesian stimulus government boondoggle spending plan. No need to look at ancient history. The stimulus plan has already been in effect for almost a year. Trillions already gone and Obama about to hugely increase it. So far all that stimulus has been spent and the economy continues to worsen.
It is like trying to put out a gasoline fire by pouring more gas on it. The Keynesian stuff never works. The old New Deal failed and the new New deal will also fail.
I don’t see how “manufactured housing” (you can’t say “mobile homes” or “modular housing” anymore) will be a good long-term investment. The main problem with these is that they are harder for buyers to get financing on than stick-built houses, and if they are older than a few years, no one will finance them. So a very nicely landscaped property with a manufactured house on it, after a few years, will be worth less than if it had no dwelling on it at all, let alone if it had a stick-built house. This difficulty of financing makes it harder to sell house-and-lot packages to those who can’t afford a stick-built house, and that’s where the market for manufactured housing is.
As far as motor homes and travel trailers are concerned, I’d be surprised if most people who want one for the flexibility it gives don’t already have it. You can stay in a lot of nice motels for what one of ’em costs.
@Pch101
Debt funded expenditures didn’t get us out of the Great Depression. The huge manfucaturer upswing that the United States went through to update its military for WWII is what saved the economy. At the time most of the military techonology of the U.S. was from WWI. All FDR did was create a huge amount of debt and inflation and WWII saved his ass. The Japanese tried something similar to the New Deal in the 90s and it didn’t work, all it did was create massive debt. I sugggest you read ‘America’s Great Depression’ by Murray N. Rothbard
@bluecon: Even if WWIII started tomorrow, we wouldn’t have the manufacturing upswing that we had in WWII not to mention the U.S. is no longer even capable of manufacturing on that scale.
The huge manfucaturer upswing that the United States went through to update its military for WWII is what saved the economy.
Er, who do you think paid for that?
fincar1:
I was a sub-prime mortgage banker for a couple months in 2005, before it made me sick, and there is a big distinction between a modular home and a manufactured home.
With regard to financing there is no difference between modular homes (not on a trailer frame, consisting of many pre-fabricated pieces) and traditional on-site construction.
There is, however, a difference between financing traditional construction and manufactured homes (single and double wide trailers); they are much more difficult to finance. Amusingly, the VIN is part of the mortgage application for a manufactured house, so I would have to ask people to find the VIN on their houses.
@Pch101
Without WWII there would’ve been no WAR Bonds.
@ eh_political
Thnx for those NYT links. Indeed, it was very unsettling to read those articles.
Without WWII there would’ve been no WAR Bonds.
That was obviously my point. The war drove the government to pursue a debt-driven fiscal stimulus that was far, far greater than even FDR thought they had needed.
Those companies had one customer — the government. The government needed to borrow massive amounts of money to pay for the equipment. Had they not borrowed the money, there would have been no boom driven by government spending, and those weapons would have not been built. This should be really obvious, they weren’t building P-51’s to sell them to Uruguay or the Good Humor Man.
Had the New Deal spent that kind of money in the mid-30’s, the results would have occurred that much sooner. FDR was in uncharted territory and undershot, attempting to turn off some of the programs before the time to wind them down was right.
The lessons have been learned. The stimulus is coming on harder and faster than it did during the FDR presidency. You’re about to witness the financial equivalent of WWII, and the benefits won’t be experienced overnight.
PCH is gonna stick to that belief that the New Deal pulled the country out of the Depression. That there is the obvious fact that it didn’t work doesn’t mean we shouldn’t try it again. We are living major history right now and most people(sheople?) don’t even realize it.
All I know is that if Krugman is for something, the whole idea is suspect.
Economists will argue the spending thing over and over forever because even if one side could make a much better argument, the other side would never let them win.
Couldn’t it all just be that at the end of the war we had the most efficient and productive economy in the world combined with a government that spent next to nothing on transfer payments and social programs? Couldn’t it be that the amount of trust and pride of Americans kept a lot of the friction out of the market? Many of these things tend to get ignored as if all that spending happened in a vacuum. It’s not just government investment is always good or bad, but actually whether it is good or bad. I define government spending as either necessary (little of it today other than social security because it was paid for, not just promised) or not. Then, of the unnecessary stuff, there is stuff that works for various reasons. So long as we get value for the money, and it doesn’t interfere with the market creating it’s own value, then it’s all okay with me.
Couldn’t it all just be that at the end of the war we had the most efficient and productive economy in the world combined with a government that spent next to nothing on transfer payments and social programs?
The GI Bill was a massive social program. There was low unemployment due to the war, and a large transfer payment program called Social Security.
The government spending caused by the war spurred business investment and employment. The spending had been unprecedented, and required large amounts of debt to pay for it. When soldiers returned from the war, they bought houses and cars and went to work in the massive corporations funded by the war.
The key to government spending is that it has to go into the right places. If it goes only into useless projects that put a lot of money into the hands of very few people, then the money goes into a hole and accomplishes very little. If it ultimately gets spent by businesses and consumers and cycled many times through the economy, then it did its job.
@Pch101 & bluecon:
bluecon said:
Geez Pch, we are living through the actual Keynesian stimulus government boondoggle spending plan. No need to look at ancient history. The stimulus plan has already been in effect for almost a year. Trillions already gone and Obama about to hugely increase it. So far all that stimulus has been spent and the economy continues to worsen.
It is like trying to put out a gasoline fire by pouring more gas on it. The Keynesian stuff never works. The old New Deal failed and the new New deal will also fail.
Pch said:
“The key to government spending is that it has to go into the right places. If it goes only into useless projects that put a lot of money into the hands of very few people, then the money goes into a hole and accomplishes very little. If it ultimately gets spent by businesses and consumers and cycled many times through the economy, then it did its job.”
As Michael Lewis points out, the “stimulus” offered so far has been sat on by the banks. If you read the articles I posted bluecon, you would not say that one cent of TARP can be defined as stimulus.
Now then, like it or not, we are entering a phase of massive deficit spending (not that the Bush administration wasn’t all about that as well). The question is one of economic focus, and its going to shift quite a bit. Bush and co entrusted another 700 billion plus to the very people who….well, I am not going to continue that thought.
With regard to Paul Krugman, again it is important to read what he has to say. He makes arguments backed by charts and statistics, and along with some other economic historians addresses two significant points about FDR’s policies. One, government intervention was neither as deep nor aggressive as was required to stem the depression. But two, FDR had the right idea.
Now I am not going to rehash all of Krugman’s arguments, but I am going to say that an outright dismissal of well documented, highly structured arguments tells me you haven’t read his ideas. It’s a shame, but you are about to benefit from them in any event.
PCH,
No big disagreements but, the GI bill, even when some of the benefits were frivolous is mischaracterized as a “social program”. Also at the time social security was tiny. I think the element causing much of the problem with modern programs is the lack of tying benefits to service to society.
the GI bill, even when some of the benefits were frivolous is mischaracterized as a “social program”.
Of course, it was a social program. Millions of people got the benefits, and the benefits were engineered to encourage them to buy homes and get educations. It was remarkably successful in creating an educated middle class that could work in the growing corporations of the era.
Just because you liked it doesn’t mean that it wasn’t a social program. You’re just gonna have to admit that even you like the government sometimes!
I do like the government sometimes. I think when you label the GI bill as a “social program” you miss the point that the recipients did something to earn it. Something big. They contributed. Modern social programs, other than social security, usually require a victim status, rather than contributor status. Pile on the added injury that they have replaced the stigma with some warped badge of honor for being a victim, and you have a bad incentive. Misplaced incentives are the fastest way to screw up anything. Our government should be constantly reinforcing the idea that there is no free lunch. Even the Salvation Army makes you say grace.