Thor Industries, Inc. Business Information, Profile, and History

Company Perspectives:

Thor offers employees incentives based on productivity and profits while encouraging them to be actively involved in community programs. Thor executives serve on the boards of numerous civic organizations. Thor has been driving for excellence for nearly twenty years. It's a commitment reaching far into the future, and well beyond the next twenty years.

History of Thor Industries, Inc.

Thor Industries, Inc., is the nation's second largest manufacturer of recreation vehicles and the largest builder of mid-size buses. The company manufacturers such popular recreation vehicles as Airstream, Land Yacht, Dutchmen, Signature, Four Winds, Tahoe and others, as well as buses under the names of El Dorado, National, and Champion. Through 13 recreational vehicle and bus manufacturing plants in the United States and two in Canada, Thor annually produces approximately 40,000 vehicles. In January 2000, Thor was named by Forbes magazine to its Platinum 400 list of 'exceptional big corporations,' based on its profitability as well as its prospects for long- and short-term growth.

Wally Byam Invents the Airstream

Thor was founded in 1980 with the purchase of Airstream, a legendary maker of aluminum trailers that had set the standard for quality in the recreational vehicle industry for half a century. These distinctive, silver, bullet-shaped trailers were immensely popular travel vehicles in the late 1940s and throughout the 1950s, becoming famous for their unique design and durability. Airstreams would later be exhibited at both the Smithsonian Institution and the Henry Ford museum, and early models would be highly prized by collectors. More than 60 percent of all Airstreams ever built were still rolling along the nation's highways and back roads in the 21st century.

The Airstream was the creation of one man: Wally Byam. Born in Oregon on the Fourth of July in 1896, Byam was a prototypical American wanderer and inventor. As a boy, he traveled through the Northwest with his grandfather, who led a mule train in Oregon. As a teenager, he worked as a shepherd, living in a small donkey cart, outfitted with only the most basic equipment and tools. After high school, seeking adventure, Byam signed on with the merchant marine, where, in three years, he graduated from cabin boy to ship's mate. He then worked his way through Stanford University, graduating in 1923 with a law degree.

Opting not to practice law, Byam entered the booming advertising business of the late 1920s. He first worked as a copywriter for the Los Angeles Times and then became owner of his own ad agency. Later, he started a number of magazines, one of which published an article on how to build a travel trailer. When readers wrote to complain that their homemade trailer projects had failed, Byam tested the directions himself and found that they were, indeed, defective. So, he decided to build a trailer according to his own plans.

His first attempts were primitive. One was a plywood platform built on top of a Ford Model T chassis. Another was a cramped plywood box which was, Byam wrote in his book, Trailer Travel Here and Abroad, 'little more than a bed you could crawl into, a shelf to hold a water bottle, a flashlight and some camping equipment.' Nonetheless, the trailer attracted attention, and Byam began to receive requests to build similar models for others.

When Byam wrote an article in Popular Mechanics describing how to build his new, improved plywood trailer for less than $100, many readers responded with orders for the $5 plans he offered. Meanwhile, he had turned over his Los Angeles backyard to building made-to-order trailers for customers who often arrived to lend a hand in the construction process. Byam's tiny home-based business survived the stock market crash of 1929, and by 1930 he had abandoned magazine publishing to build travel trailers full time.

Continuing to modify the basic design, Byam began to introduce a more aerodynamic look to his trailers and to adopt aircraft construction methods in order to lessen wind resistance. In 1934, he christened his ovoid-shaped trailers 'Airstream,' because 'that's the way they travel, like a stream of air. 'According to Bryan Burkhardt and David Hunt in Airstream, The History of the Land Yacht, 'the single most important designer in determining the final shape of what would become the classic Airstream Clipper' was William Hawley Bowlus, whose vehicle designs and travel trailer company Byam took over in a 1935 bankruptcy auction. In 1936, the Airstream Trailer Co. introduced the famous Clipper model, named after the Pan Am Clipper, the first transatlantic plane to carry people in numbers. With the capacity to sleep four, the bullet-shaped Clipper had a shiny, riveted aluminum body, carried its own water supply, featured an enclosed galley, and was fitted with electric lights. Even with a $1,200 price tag--very expensive during the Depression--the meticulously constructed Airstream was a winner. Of more than 300 travel trailer companies in operation in 1936, Byam's company was the only one to survive.

The company closed its doors during World War II since aluminum was critical to the war, and tires and gasoline were strictly rationed. Byam spent the war working in the engineering departments of aircraft companies, and he put that experience to good use at war's end. By 1948, he had built a new manufacturing facility in Van Nuys, California, to meet the surging demand for Airstreams by returning servicemen and their young families. In 1952, the company leased a facility in Jackson Center, Ohio, to build Airstreams for the Midwest and Eastern markets, and soon thereafter, the California factory was moved to larger quarters in Santa Fe Springs.

Over the next decade, until his death in 1962, Byam continued to refine the Airstream design, and his company prospered. Putting into practice his mission 'to refine and perfect our product by continuous travel-testing of the highways and byways of the world,' he led a group of Airstream drivers through remote areas of Central America in 1951. This was the first of many such caravans that he and other Airstream enthusiasts made to Africa, Europe, the Soviet Union, China Australia, New Zealand, and more. Intrepid travelers, organized as the Wally Byam Caravan Club International, would continue to explore the world in their Airstreams through the 1990s.

Conglomerate Ownership: 1967-80

Airstream's reputation for quality solidified the company's existence, and the company continued to thrive following the death of its founder in 1962. Its design excellence placed it at the forefront anywhere trailers were required, and the vehicle proved easily adaptable to government and military needs. Specially equipped Airstream trailers, for example, were set up around the vast White Sands missile range to provide a temporary office for President John F. Kennedy when he visited the site. When astronauts Neil Armstrong, Mike Collins, and Ed Aldrin returned from the first lunar landing in 1969, they were quarantined in a specially designed Airstream Mobile Quarantine Facility aboard the U.S.S Hornet. An Airstream carried the crew of the space shuttle Discovery to their launch vehicle for their historic nine-day mission; in fact, every shuttle astronaut since has ridden in an Airstream.

In 1967, Airstream was acquired by Beatrice Foods, as part of that company's aggressive acquisition strategy into a bevy of non-food interests. Beatrice made Airstream a division, allowing it, however, to operate autonomously. Airstream continued to produce high quality vehicles, and in 1979, introduced its first motor home. Featuring riveted aluminum construction, like its trailer counterpart, and pioneering a new level of aerodymanic efficiency, the motor home soon became a popular addition to the Airstream line.

However, the gasoline crisis of the 1970s and the resulting economic downturn hit Airstream hard. The company reportedly lost $12 million on sales of $22 million in 1979, and similar losses continued in 1980. Moreover, parent Beatrice was struggling to manage its vast holdings and remain profitable. A new CEO in 1980, James Dutt, began selling off non-core companies, and those that could not provide Beatrice with at least a 20 percent return on net assets. Airstream was among those to go.

1980: Thor Takes Over

When Wade F.B. Thompson and Peter B. Orthwein purchased Airstream in 1980, they had been involved in the recreational vehicle business for only three years. In 1977, the two entrepreneurs had combined their marketing and financial expertise to purchase HI-LO Trailer, a small player in the industry. Under their leadership, HI-LO prospered, and the two looked around for a bigger opportunity. Airstream was an obvious target.

Combining the first two letters of their last names, Thompson and Orthwein formed Thor Industries, Inc. in order to acquire Airstream. The acquisition of the legendary recreational vehicle and motor home manufacturer and the formation of the new company occurred simultaneously on August 29, 1980. The two new owners acted immediately to reverse the downward trend of Airstream's fortunes. They moved to improve quality, reduce costs, strengthen dealer relationships, and enhance their famous product. Within a year, sales had increased to $26 million, and they had achieved net income before taxes of $1 million, a $13 million turnaround.

With Airstream again a profitable enterprise, Thompson and Orthwein searched for another likely acquisition. In 1982, they purchased the recreational vehicle operations of Commodore Corporation. Known in Canada as General Coach, this new addition to the Thor line manufactured travel trailers and motor homes in British Columbia and Ontario. Under Thor, General Coach would build Citation and Corsair travel trailers, fifth wheels, motor homes, and truck campers, and maintain one of the highest customer satisfaction indexes and lowest warranty costs of any North American recreational vehicle manufacturer.

In 1984, Thor went public, and in 1986 gained listing on the New York Stock Exchange. That year, Forbes magazine ranked Thor sixth out of 200 best small companies in America. In 1987, Money magazine named Airstream travel trailers one of 99 'best-made products' in America.

Growth and Expansion: 1988 and Beyond

On September 8, 1988, Thor entered the small- and mid-size bus industry with the acquisition of El Dorado, a company based in Salina, Kansas. Under Thor, El Dorado would more than quadruple its sales--all from internal growth&mdashø become the largest manufacturer of small buses in the United States. The Thor acquisition of National Coach, a bankrupt builder of mid-size buses, followed in 1991. Under Thor, National would become its parent's most profitable bus operation. Finally, in 1998, Thor added Champion to its bus-manufacturing group.

Meanwhile, Thompson and Orthwein continued to make strategic acquisitions on the recreational vehicle side. Dutchmen, purchased in 1991, became Thor's largest towable company and a major profit center. Motor home manufacturer Four Winds International, acquired in 1992, became Thor's largest company by the turn of the century. Four Winds was a major supplier to most of the large recreational vehicle rental operations throughout the United States and Canada. CruiseAmerica, the largest of these operators, agreed to make Four Winds its primary supplier after Thor provided financing so that CruiseAmerica's former owners could repurchase their company. As a result of that transaction, Thor expected sales of some $30 million to CruiseAmerica in 2001.

In 1995, Thor introduced the lightweight Aerolite, a laminated, aerodymanic European-style travel trailer. Sold at an affordable price, the Aerolite proved ideal for towing behind smaller cars as well as mini-vans and sports-utility vehicles. Sales of this model in 2000 hit all-time records. Thor California started up in 1995 with the introduction of two new lines of travel trailers and fifth wheel vehicles, Tahoe and Wanderer. In less than five years, Tahoe or Wanderer had become the best-selling vehicle of its kind in Colorado, Arizona, Nevada, New Mexico, and Alberta, Canada.

If Thor executives had succeeded, another major addition would have taken place in 2000. That year, the company made two strong attempt to purchase Coachmen Industries Inc., a major motor home and modular home manufacturer. Had the deal gone through, it would have made Thor the second largest motor home builder in the United States. However, in April 2000, Coachmen's board rejected Thor's April 17 bid of $289.6 million in a cash and stock transaction. According to Thor's 2000 Annual Report, 'Although this offer was a substantial premium above Coachmen's price and we made it clear we wished to complete a friendly transaction, our proposal was rejected by Coachmen's board of directors and withdrawn by us.'

Acquisitions aside, Thor was also cultivating a sense of civic responsibility as part of its corporate culture. Specifically, Thor took the lead in raising the awareness level of prostate cancer and in encouraging its early detection. Its 'Drive against Prostate Cancer,' inspired by the company's chairman, president and CEO, Wade Thompson, a cancer survivor, offered free screening to more than 8,000 men and raised significant funds for cancer research. The New York Stock Exchange recognized Thor's public service initiative by offering company executives the opportunity to ring the stock market's closing bell on June 16, 2000.

Looking Ahead

As it entered 2001, Thor believed that the $8 billion recreational vehicle industry, which included about 75 manufacturers, would continue to consolidate. Thompson and Orthwein, who retained control of the company, planned to continue to seek acquisition opportunities in recreational vehicles, buses, and related industries.

Some industry observers agreed with Thor executives that, as baby boomers move into their 50s and 60s--the target recreational vehicle demographic--sales would enjoy significant growth. They pointed out that, between 2000 and 2005, four million people, or 11,000 potential new buyers each day, would turn 50. Other analysts, however, observed an industry-wide decrease in demand for recreational vehicles in 2000, due to higher interest rates, lower consumer confidence levels, and rising gasoline prices, as a cause of concern, at least in the short run.

Meanwhile, the company's bus business was on track to continued success. In the growing $700 million mid-size bus industry, Thor had an estimated 35 percent market share and was larger than its next three competitors combined. Major bus customers included rental car companies, who used the buses to ferry customers around airports, New Jersey Transit, the Los Angeles Department of Transportation, Cal Trans, and Marriott Hotels. Believing that fuel cells were the power of the future, Thor announced in 2000 that the company would build the world's first commercially viable fuel-cell-powered, zero-emissions transit buses, in an exclusive alliance with International Fuel Cells (IFC), Inc., a United Technologies company, and ISE Research. (IFC's fuel cells had powered every NASA space shuttle mission.) The first fuel-cell-powered bus was scheduled to be built in California in 2001. Thor had exclusive rights for the use of IFC's fuel cells in the complete drive system, called ThunderPower, for all North American mid-sized buses.

Principal Divisions: Airstream; Four Winds; Dutchmen; Komfort; Thor America; Thor California; General Coach America; Aero Coach; El Dorado National; Champion; Thor Bus.

Principal Operating Units: Recreation Vehicles; Buses.

Principal Competitors: Coachmen Industries, Inc.; Fleetwood Enterprises, Inc.; Winnebago Industries Inc.

Chronology

• Key Dates:

• 1931: Wally Byam begins to manufacture travel trailers.
• 1934: The Airstream name is adopted.
• 1936: Byam's Airstream Co. introduces the 'Clipper.'
• 1967: Beatrice Foods acquires Airstream.
• 1979: Airstream introduces the first motor homes.
• 1980: Thor Industries, Inc. is founded with acquisition of Airstream.
• 1988: Thor enters bus industry with purchase of several companies.
• 2000: Thor named to the Forbes Platinum 400 list.