Fleetwood President John Draheim stands next to the company’s new Encounter crossover motorhome, which it unveiled at the National RV Trade Show.

The past six months have been a whirlwind of activity for Fleetwood RV Inc. and its new president, John Draheim.

An industry veteran who got his start with Fleetwood before moving on to take key posts with Monaco Coach, National RV and Thor California, Draheim returned to Fleetwood in early 2008, during a particularly challenging time for the once venerable RV maker, as it slashed operations and sold off whole business units in an attempt to stem consistent and significant quarterly losses, culminating in the company’s bankruptcy filing in early 2009.

Draheim played a key role in helping New York-based private equity firm AIP acquire Fleetwood Enterprises’ assets from bankruptcy in July, and shortly thereafter he was named president of the company and co-leader, along with CEO Chuck Wilkinson.

Following Fleetwood RV’s much anticipated presentation to dealers Dec. 1 at the National RV Trade Show in Louisville, Ky., Draheim spoke at length with RV PRO regarding the company’s new products for 2010, its plans to leverage the strengths of its new parent company and its goal to return to its glory days of old.

RV PRO: The Fleetwood name has been synonymous with RVs for decades, but now the company has new ownership, new leadership and seemingly a new direction. So, do you want dealers and customers to think of Fleetwood RV as an “old” company or a “new” company?

Draheim: We’re a new company. Fleetwood RV Inc. is a new company.

The brand has equity in the marketplace; the brand has a significant amount of value. We worked hard through the transaction to make sure we did everything we could to not have any impact upon the brand. For example, buying the warranty liability as part of the transaction, so we could take care of the dealer inventory and the customers out there in the warranty cycle, because they’ve already purchased the coach and maybe they’ve had it six months and they have six months (left) on their warranty. Because those are all things that impact the brand equity. …

But we are definitely a new company. We want everyone to view us as a new company. We have a completely different direction now: We’re no longer focused on being the biggest in the industry; we’re focused on being the best. And we believe we now have the operational expertise and the organizational expertise to do that.

RVP: How many dealers does Fleetwood RV have now, and how does it compare with the number of dealers Fleetwood Enterprises had?

Draheim: The old company had roughly 175 dealers on the books when (AIP) transacted the deal; 125 of those were active and the others were not active.

Our number of dealers is a moving target, because we’re signing up dealers every day. I’m going to estimate that we’re right around 50 to 55 dealers signed up today (editor’s note: Dec. 1). That would be dealers, rather than locations, because locations will be higher.

We have a three-phase plan of signing up our dealer channel. Phase I was the first 60 days, which we’re through now; Phase II is here at the show (in Louisville); and Phase III is when the market gets above 30,000 retail units, which we think will be in a year or two. …

We have more interest than we can supply at the moment. We’re actually not executing agreements because we don’t feel that would be fair to our other partners that we’re already engaged with. And until we’re comfortable we can supply them with their product needs and requirements we don’t want to expand our network.

RVP: During your presentation to dealers, you mentioned something about selling “through” dealers rather than “to” dealers. Can you elaborate on what you meant by that?

Draheim: Most manufacturers in this industry are selling product to the dealer for the dealer to inventory, for the dealer to stock. And their dealer agreements have inventory targets dealers have to meet, and their people (manufacturers’ sales reps) are all compensated on wholesale shipments.

We’re less interested in what the dealer has in inventory; we’re more interested in what he’s retailing and how fast he’s retailing them. Because the whole lending environment now is keyed to turns, and they (lenders) have some very aggressive targets for dealers on turns. We’re aligning ourselves with that same philosophy.

We don’t have any dealer inventory targets in our dealer agreement; we’ve pulled them all out of there. We’re focusing on selling units through the dealer channel – because we’re not in the retail business ourselves – and we’ll do everything we can to help the dealer to maximize his retail sell-through.

If he can sell 100 units a year on a five unit inventory, great. If he was to stock 50 units to sell 100, then those are his internal things, but we’re going to work the retail side. We believe that so much we are actually paying our internal district sales managers a large portion of their compensation based upon their dealers’ retail success, not upon how many units they put on their dealers’ lots.

RVP: You also told dealers that Fleetwood is reducing price points for certain units. Is it fair to say the company’s focus right now is on more entry-level and more price-sensitive motorhomes?

Draheim: I wouldn’t read it as a long-term direction; I would read it as we’ve identified areas where we’ve found vulnerabilities in our product offering and we want to quickly vector products into those market spaces where we felt a little vulnerable, but also where we think the market is heading over the next 12 to 18 months. …

The ostentatious-isms of the early 2000s – where money was cheap and people were buying up everything – it’s a completely opposite economy today. … People are doing the opposite today; they can afford a $200,000 product, but they’re going to buy a $100,000 product.

So we felt we were fairly vulnerable there; we needed to have some products in those spaces. Some were done by just taking options and adding them as standard and not changing the price; others were completely new products like Diamond Classic or Encounter where we’re getting into that space with something new.

RVP: Regarding Fleetwood’s 2010 product lineup, are there maybe one or two models in particular that you expect to be touting to dealers and customers?

Draheim: Yeah, I would say the Encounter crossover motorhome. We’re very proud of that. We’re emotionally invested in that model and we think it has a lot of great attributes, some fabulous innovations and we think it’s right at where the heart of the market is.

I guess we’re challenging any conventional wisdom. … We tried to take the reasons – why would you buy a Class C and why would you buy an A? – and which are the most important of each and how can we blend them together? And can we create a category that makes us stand out and be different? … We’re trying to stand out in a sea of sameness. …

RVP: Given that AIP took over Fleetwood in July, one might think that there wasn’t time for the company to come up with new products in time for the National RV Trade Show in December, and yet Fleetwood did unveil some new models. How did that all come about?

Draheim: The previous organization had already started and had approved product plans through the reorganization process. … Those products included the fundamental brands that were already in existence. …

But the Encounter and Bounder Classic were two categories of product that were really grassroots, skunkworks-type projects that ideas filtered up very quickly from the marketplace. We vetted them very quickly through a process – because we have a lot less layers in the company now. … So the Encounter project went from idea to product in 90 to 100 days because we decided to put our resources behind it.

For the Bounder Classic, it was something that materials, product development, and sales and operations – those four groups – sat down with the idea and they actually developed it and brought it to us when it was pretty much done and said, “We would like to pursue this.” … After that things came together quickly.

RVP: To bring a product from concept to development in 90 days sounds like a record for this industry. You’re an industry veteran: Have you ever heard of a product being developed that quickly previously?

Draheim: I have not. And I can’t divulge the tricks or mechanisms we used to do it so quickly (laughs). But certainly having a partner in AIP that has four or five partners on its staff that are MIT engineering grads didn’t hurt us. Their biggest strength, frankly, is engineering and product development. That was a big help.

RVP: Engineers at a private equity firm? One would normally think of a firm like that being populated with investment bankers.

Draheim: They are an operationally focused private equity company. They’re not a traditional private equity firm. … They have access to the funds, but two-thirds of their firm is made up of people who are engineering grads or entrepreneurs. Their financial component is only one-third of their firm. And they’re a middle-market size firm. They bring a tremendous amount to the table. …

RVP: Speaking of products, is there anything on the radar about Fleetwood getting back into the towables market anytime soon?

Draheim: It’s not on the radar. We haven’t discussed it. Right now we’re a full line motorhome manufacturer. That is our intention. Frankly, it will probably take us a year to two years to become the operationally excellent company that we want to be, and anything that would take us away from that focus would not be good.

RVP: On another topic, can you talk about employment levels at Fleetwood now and how they compare to when AIP first took over the manufacturer?

Draheim: Before the transaction, we had zero employees. On July 17th, Fleetwood Enterprises, the old company, terminated all of us. On the 20th of July, (AIP) rehired 380 people on the first day. The bulk of that 380 was in service, parts and warranty. …

And then the people we’ve been adding – we’ve been adding in the operations or the manufacturing side. … Now we’re at 940 employees.

RVP: Can you talk a bit about the organizational structure for Fleetwood now that it’s part of AIP? You told dealers during your presentation that things are different now, and that the company has instituted a “value stream.” What’s that?

Draheim: …What we decided to do is look at what made Fleetwood great, back when they were firing on all cylinders. How were they structured?

And the way they were structured was: Every plant was pretty much its own business unit. Every plant had its product development, its own sales, its own material function, its own operations. And that plant was responsible to be profitable and be competitive. And the plants within the company competed against each other. We’ve really wanted to go back to that business model.

So each value stream has its own production facility and the value stream is managed by sales, operations and PD – three people, a triad – and they’re for that business. And so it’s really a business within a business. We think it engages them more … and it makes them more accountable to the company. That’s the value stream. …

RVP: Is it also beneficial that Fleetwood RV’s manufacturing and headquarters are located in the same place, versus having those two operations in different parts of the country, as they were before with Fleetwood Enterprises?

Draheim: Yes, I see it as a huge advantage. It’s about speed and also about experiencing issues firsthand. I walk out on the shop floor every day. There’s not a day that I’m in Indiana that I don’t spend at least an hour walking the line, talking with the people, watching what they’re doing.

And I’m not responsible, technically, for the operations. But it’s important for me to know what troubles they’re running into and what their morale is and all of those types of things.

RVP: So, what’s a typical day like for you, assuming there is such a thing?

Draheim: There has not been a typical day yet. When I get one I’ll let you know (laughs). There are some days when I’m fixing the copy machine because I need a copy and the machine is broke, and there are other days when I’m running an executive meeting with 40 people in there.

I also try to speak to at least one dealer a day. I don’t hit that goal every day, but that’s important to me to gauge the market.

Also, I talk with my three value stream sales managers every day, several times a day. A typical day would also involve me talking with our CFO about CFO-type stuff – cash and revenue issues and things like that.

And I’m doing a tremendous amount of travel. I’m on the road and visiting dealers or going to shows and talking with customers.

But I think my days will become more typical now that we’re through some of the heavy lifting of those first four or five months. There was a tremendous amount of heavy lifting as we were trying to reestablish our employee base, reestablish our dealer channel, get our 2010 products done and get them into the market and get ready for the Louisville show.

Now that all of that is behind us I think my days will start to become a little more typical. …