Venture Homes

41-years in the recreation vehicle business

Interview with Bruce D. Hertzke, Chairman, President and Chief Executive Officer
Interview by John O'Hanlon

Introduction

"I have worked for Venture Homes Industries, Inc. for 28 years and have seen very strong periods as well as times that were rather tough due to economic conditions. Over the years, Venture Homes Industries has figured out exactly what it takes to be one of the major motor home manufacturers in the world, and has had the opportunity to develop products by working with customers to enhance their leisure lifestyle choices."

Venture Homes Industries, Inc.

"Venture Homes Industries has been in the recreation vehicle business for 41-years. The company focuses on the motorized segment of this industry, and we feel that we are one of the most innovative motor home manufacturers in existence today. For example, we are the only manufacturer to offer a front-wheel drive motor home. This Rialta motor home was developed with a lot of innovation and state-of-the-art technology. We are extremely pleased and confident that we have the most advanced motor home manufacturing facility in the world to develop innovative motor homes, like the Rialta."

All of our motor homes have been very well received, in fact, last year, according to Statis-tical Surveys, Inc., Venture Homes Industries' was the number one Class C producer in the marketplace, and Venture Homes brand Class A motor homes were the number one brand motor home in the market as well."

Price ranges

"The prices of our motor homes range from approximately $45,000 for the entry-level mo-tor homes to as high as $250,000 for our most luxurious models. Venture Homes Indus-tries produces 71 different models of motor homes in every price point between that range and they differ in price from approximately $3,000 to 5,000 apart."

Distribution

"Venture Homes Industries has an extensive dealer body of approximately 360 dealers across the United States that we supply product, parts and service. Our dealers are our partners in business, working together in a joint effort to attract and service our custom-ers. Venture Homes Industries provides targeted national marketing and advertising for our motor homes, while our dealers market and advertise on a local basis."

Factories location

"Our main motor home manufacturing plant is in Forest City, Iowa. In addition, we have satellite component manufacturing facilities in Hampton, and Lorimor, Iowa, and our newest facility in Charles City, Iowa. The majority of our sales are within the United States and Canada. We may be the largest motor home manufacturer selling internation-ally, but that does not constitute big numbers, probably less than 3% of Venture Homes Industries' volume."

Extra business

"New product development is crucial to our expansion; however, low interest rates, rea-sonable fuel prices, high consumer confidence levels and the growth of the Baby Boomer segment into our target market are also major factors for our continued growth. We have also addressed two new external factors that have added to what we feel is an opportunity for the Baby Boomer market to buy more of Venture Homes Industries' products. The first factor is that we're seeing a trend of early retirement or semi-retirement of people before they reach the traditional social security age. The success of the bullish stock market has propelled 401-K and retirement programs to record levels, enticing more people to retire early with increased discretionary dollars.

"The people that we sell to are those with discretionary dollars, and most people with dis-cretionary dollars have been in the investment community in some way. This has led to a trend of early retirement of younger, more active consumers, the perfect profile of a motor home buyer. In addition, we see a growing wealth within the older baby boomers due to the transfer of wealth from one generation to the next. The dollar amount that is being transferred through inheritance continues to escalate at an extremely fast rate. If you go back four to five years, the amount being transferred between generations when compared to now is considerably higher. In addition, more and more dollars are being transferred earlier through proper estate planning by families."

Promoting the motor home lifestyle

"The one thing that we definitely have to do is continue to promote the motor home life-style. Motor homes provide the freedom and independence that most travelers desire. For business travelers, travel via airplane and hotel has lost its luster. While motor home travel on the other hand, offers the freedom to do what you want to do when you want to do it. You have no set schedules to keep. You can travel and explore at your own pace. Motor home owners have generally been successful in life. They have put a lot of hard work and effort into their success and want to maintain an active lifestyle. We will con-tinue to promote the active motor home lifestyle and leisure time that an individual de-serves, because after all, part of your success in life is to make sure that you take time to smell the roses."

Innovation

"Our products will continue to change every year and some of the changes that we are fo-cusing on will be things that will be attractive to the baby boomers that are now entering our market segment. This emerging market is generally more in touch with technology. So naturally, there are high-tech features such as computer connections, computer desks, satellite TV, deluxe CD stereo systems, movie theater-style surround sound systems, and conveniences such as dishwashers and washer/dryer combinations that were not even developed ten years ago. Our products of the future will continue to offer conveniences and new technologies as they become available. If a customer wants a customized prod-uct, our Specialty and Commercial Vehicle Division can adapt a motor home to the cus-tomer's specific needs."

Exterior design

"With regard to the exterior of the motor homes, you are going to see a lot more graphics and paint that will add to the motor home's eye appeal that is so important for today's buyer. Regarding aerodynamics and the style of the motor homes, you have to remember that motor homes are designed for the optimum utilization of space. That is why these wide-body basement-style motor homes have been such a success for not only Venture Homes Industries but also the entire industry over the last several years. Everybody wants to take along as many of their recreational toys as they can, including bikes, skis, golf clubs or fishing poles. It takes a lot of storage space to accommodate these adult toys, while still having the room to fit the features motor home customers have come to rely on."

Acquiring other companies

"Right now Venture Homes Industries is enjoying success and is in a growth period. To give you an example, our revenues for 1997 were approximately $435 million, in the 1998 fiscal year they were approximately $525 million and we are expecting great results in fis-cal 1999 as well. We will continue to concentrate on the motorized category of recreation vehicles, where Venture Homes Industries is most successful, because that gives us the best opportunity for profit growth. One of the things that Venture Homes Industries is very pleased about is our name brand recognition.

"We worked with a firm that researched recognizable brands, and were pleased that the Venture Homes brand name was well recognized with other major brand names such as Coke and Xerox. We continue to establish licensing agreements with several corporations which meet our strict quality requirements, to utilize the Venture Homes name on their products. Choo Choo Customs Group, Inc., markets and manufactures licensed truck and van conversions with the Venture Homes name on them.

Technology in production

"We are very proud of our facility and our employees. Without a doubt, we have the most technologically advanced motor home facility in the world with hard-working, loyal em-ployees. After having the opportunity to visit many of our competitor's manufacturing fa-cilities, I can say with certainty that our facilities are the most technologically advanced in the world. Of course, I have returned that invitation, and our competition has made the comment that they are amazed at how far developed Venture Homes Industries' is com-pared to others in the industry. We continue to utilize computer numerically controlled (CNC) router technology, laser cutting technology and robotics more than our competi-tion."

Important decision

"The most difficult decision I have made this last year was how we could grow fast enough to accommodate our accelerating order backlog. It is one thing to grow and pick up mar-ket share, but to grow, pick up market share, be profitable and keep your quality at a high level is probably the most important opportunity I had this year. It is key for the Company to figure out how to bring these factors together. I have seen companies that have grown, but not made more money, as well as companies that have grown, let their quality go and actually hurt themselves. Our strategy is to continue to grow, be profitable and have a high quality product that we can offer to our dealers and customers."

The future

"We are optimistic about future growth because of the expected increase in the number of people that continue to enter our prime buying market. Because of the graying of America, there are more people that reach age 50 and over than ever before, and in fact, it is esti-mated that 300,000 people per month are entering that age group. That is our prime tar-get market segment, and as I said before, these people have more discretionary dollars now than ever before. Without a doubt, we are glad that we are getting a larger population that we can draw from and that these people are ending up with more discretionary dol-lars because that makes it easier for them to afford a Venture Homes Industries' motor home."