COBURG, OR announced today that it will relocate all service and
production operations in Wakarusa, Elkhart and Nappanee, Indiana
and permanently cease operations at those locations. The shutdown
is presently scheduled for approximately September 17, 2008.
Production of the majority of motorized units currently
manufactured in these locations will be relocated to Monaco's
Coburg, Oregon operations. Production of two of the models will be
relocated to the Warsaw, Indiana manufacturing location. The
towable production line will also be integrated into Monaco's
Warsaw location.
"We have implemented several successful initiatives over the
past 18 months in an effort to size our business to match declining
market demand. However, market conditions have continued to
deteriorate, and we do not see significant improvements occurring
in the near future. Therefore, the Company finds it necessary to
take further action by implementing a significant capacity
reduction," said Kay Toolson, Chairman and CEO. "We deeply regret
the impact that shutting down these operations will have on our
employees and their families as well as the communities in which
they live and work."
The Class A market is in its fourth year of declining shipments.
The Recreation Vehicle Industry Association reported 32,900 Class A
shipments in 2007, down 29% from 46,300 shipments reported in 2004.
As a result of record high fuel prices, declining consumer
confidence and challenging consumer credit markets, Class A
shipments have continued to weaken in 2008, down an additional 40%
from 2007.
Approximately 1,400 hourly and salaried employees will be
impacted by the move, or 33% of the Company's total workforce.
Monaco Coach Corporation will still maintain a significant presence
in the Northern Indiana area with approximately 700 employees at
its Warsaw, Milford and Goshen operations.
"We feel this action, while painful, will enable us to continue
to provide world-class products and best-in-the-industry customer
care," said John Nepute, President. "Both the Coburg and Warsaw
manufacturing facilities have experience building these types of
models."
Nepute added, "Over the last several quarters, in order to align
production with retail demand we have reduced production by taking
days and weeks off. The closure of these production facilities in
Indiana will decrease our Class A motorized capacity from
approximately 180 units per week to 90 and should allow the Company
to begin working full-time at the remaining plants in the fourth
quarter. The new manufacturing footprint should also allow us to
reduce the need for discounting at lower sales volumes."
"This change will also reduce our working capital requirements
and borrowing requirements significantly," said Nepute.
"Additionally, we will continue to adjust other areas in our
business to reduce our break-even level."
The moves, once completed, are expected to reduce costs by over
$12 million per quarter. One-time costs associated with the move
will be approximately $7.5 million in the third quarter, including
employee compensation expenses. The Company has created a
compensation package for its employees who continue to work through
the shutdown and relocation assistance for any employees moving to
Oregon.
The Company is evaluating the impairment charges that will be
taken due to the idling of the Indiana facilities, which have a
current book value of $47.9 million.
Monaco Coach Corporation will host a conference call broadcast
live over the Internet at 2:00 p.m. Eastern Daylight Time (EDT) on
Wednesday, July 30, 2008 to discuss the financial results for its
second quarter of fiscal year 2008, ended June 28, 2008. For the
conference call, simply log on to http://www.monaco-online.com. If
you are unable to participate during the live webcast, the call
will be archived on the web site.
About Monaco Coach Corporation
Monaco Coach Corporation, a leading national manufacturer of
motorized and towable recreational vehicles, is ranked as the
number one producer of diesel-powered motorhomes. Dedicated to
quality and service, Monaco Coach is a leader in innovative RVs
designed to meet the needs of a broad range of customers with
varied interests and offers products that appeal to RVers across
generations.
Headquartered in Coburg, Oregon, with substantial manufacturing
facilities in Indiana, the Company offers a variety of RVs, from
entry-level priced towables to custom-made luxury models under the
Monaco, Holiday Rambler, Safari, Beaver, McKenzie, R-Vision and
Dodge brand names. The Company maintains RV service centers in
Harrisburg, Oregon and Wildwood, Florida and operates
motorhome-only resorts in California, Florida, Nevada and
Michigan.
Monaco Coach Corporation trades on the New York Stock Exchange
under the symbol "MNC," and the Company is included in the S&P
Small-Cap 600 stock index. For additional information about Monaco
Coach Corporation, please visit www.monaco-online.com or
www.trail-lite.com.
The statements above regarding anticipated plant capacity,
ability to reduce discounting, potential savings and expenses per
quarter, one-time costs associated with the move, reduction of
working capital needs, reduction of borrowings, and reduction of
break-even level are forward-looking statements based on current
information and expectations and involve a number of risks and
uncertainties. A number of factors could cause actual results to
differ materially from these statements, including larger than
projected transition costs, less than anticipated manufacturing
gains, slower than expected sales of new and existing products, a
general slowdown in the economy, new product introductions by
competitors, or the loss of dealers or deterioration in the
relationships with dealers. Please refer to the Company's SEC
reports, including but not limited to the most recent Form 10-Q,
the annual report on Form 10-K for 2007, and the 2007 Annual Report
to Shareholders for additional factors. These filings can be
accessed over the Internet at http://www.sec.gov.
CONTACT: Craig Wanichek Director of Corporate Communications
Monaco Coach Corporation (541) 681-8029 Email Contact
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