Operations Review
New Products
Continuing the Company's emphasis on new product development, Winnebago Industries, Inc. is introducing additional new and redesigned motor homes for 1999. Throughout the past two model years new product development has led to over 75 percent of Winnebago Industries' 1999 motor homes being introduced as dramatically redesigned or completely new compared to the Company's 1997 offerings. This new product development has led our motor home sales (Class A and C) to outperform the motor home industry in retail sales by 12 percent since the beginning of calendar 1998 through August. Winnebago Industries currently builds five brands of motor homes: Winnebago, Itasca, Rialta, Vectra and the new Ultimate series.
Ultimate
Leading the new product introduction for 1999 is the Ultimate series, a new generation of diesel pusher motor homes. The new Ultimate Advantage and Ultimate Freedom models are wide-body, bus-style Class A luxury coaches featuring the all-new Ulti-Bay chassis, a brand new foundation and construction that is unique to the industry. Knowing that premium coaches such as these needed to maximize storage, designers from Winnebago Industries and Freightliner Custom Chassis Corp. worked together for over two years to develop this new rear engine diesel pusher chassis.
The new Ulti-Bay chassis is the ultimate in storage design, providing more efficiencies in terms of material use and space utilization. Freightliner provides the front and rear sections of the chassis, while Winnebago Industries completes the mid-section structure of the chassis and body with tall, extremely spacious storage compartments in the area normally claimed by chassis rails. The new Ulti-Bay design centralizes exterior storage and provides a tremendous increase in easily accessible storage space – up to 184.5 cubic feet of exterior storage space is available.
Winnebago Industries' largest and most luxurious coaches, the Ultimate Advantage and Ultimate Freedom are both available in 38- and 40-foot models featuring Winnebago Industries' patented StoreMoreÔ Hydraulic Slideout System with an innovative kitchen/sofa slideout room extension.
The StoreMore system, featured on most of Winnebago Industries' slideout models, includes spacious interior storage, as well as roomy exterior compartments that extend outward with the room for easy access to stored items. The exterior StoreMore compartments on the Ultimate series are also lighted and full-height for excellent usability.
1999 Ultimate Freedom 40JD
Vectra Grand Tour
The all-new 1999 Vectra Grand TourÒ has been totally redesigned for those who want big bus, diesel pusher class features in a gas-powered, front engine vehicle. Both the 37B and 39Y models feature new spacious slideout room extensions: a front kitchen/sofa slide with the StoreMore Hydraulic Slideout System and a rear bedroom slide on the passenger side.
All Ultimate and Vectra series models feature Coleman high-efficiency central air conditioning systems that are integrated with a ceiling distribution system. This true central air conditioning system is virtually invisible inside and out, and quietly distributes cool air throughout the motor homes. Most other motor homes from Winnebago Industries also feature the dampening, directional ceiling ducting of the roof air conditioning.
1999 Vectra Grand Tour 37B
Chieftain and Sunflyer
Loaded with some of the most innovative and functional amenities found in the RV industry, the Winnebago ChieftainÒ and Itasca SunflyerÒ were exceptionally well received when introduced in fiscal 1998. We introduced these motor homes last year with three models, then supplemented them during the year with two additional models featuring double slideouts when the new increased gross vehicle weight rating chassis offerings became available from Ford and Chevrolet. For 1999, Winnebago Industries is introducing additional floorplans. Most Chieftain and Sunflyer models include a galley/couch slideout with the StoreMore Hydraulic Slideout System, while the new 35U and 35C feature a dinette/couch slideout, also with the StoreMore system. In addition to the dinette/couch slideout, the new 35U features a unique bed/wardrobe slideout where a side-facing, queen size bed and mirrored wardrobe move out to create approximately 132 cubic feet of additional living space.
1999 Winnebago Adventurer 35C
Adventurer and Suncruiser
The Winnebago AdventurerÒ and Itasca SuncruiserÒ are the most popular motor home products offered by Winnebago Industries. Redesigned in the 1998 model year, the 1999 model offerings were enhanced with a variety of slideout models, including a redesigned 37-foot model that represents one of the best values in the marketplace for a vehicle of its size. For 1999, an Adventurer/Suncruiser rear engine diesel pusher model is also offered that features exceptional offerings at an exceptional value.
New features included on all the Class A models mentioned above are the new Tri/Mark KeyOneÔ system and the PowerLineÔ Energy Management System. The KeyOne system is a convenience that allows for the use of just one key to open all lockable compartment, entrance and fuel doors. The PowerLine system is a fully automatic system that monitors the usage of 120-volt electrical power when utilizing 30-amp service and redistributes the power as needed.
Brave and Sunrise
The Winnebago BraveÒ and Itasca SunriseÒ motor homes have also been enhanced for 1999. The objective was to create a look that said "value" to the consumer while retaining the existing positioning in the marketplace. Two distinct product lines are now offered in each: the entry-level Brave SE and Sunrise SE and the full-basement Brave and Sunrise models. The 35C model has an available dinette/couch slideout featuring the StoreMore Hydraulic Slideout System that increases the living space by 20 square feet. The Brave and Sunrise 32T and 35C models also offer the optional energy efficient roof air conditioners with the PowerLine Energy Management System.
Minnie Winnie and Sundancer
Winnebago Industries Class C motor homes have continued to gain market share in the retail market for the last four years. Winnebago Industries' retail share in the Class C market was 22.1 percent this calendar year through August compared to just 12.2 percent in calendar 1994, an increase of 81 percent. We anticipate that we will continue to perform well in the marketplace due to ongoing product improvement.
The Winnebago Minnie WinnieÒ and Itasca SundancerÒ lines feature three widebody, basement models for 1999, including the new 30V model with galley/lounge slideout, greatly enhancing the amount of livable space inside.
1999 Winnebago Minnie Winnie 30W
Minnie and Spirit
The Winnebago MinnieÒ and Itasca SpiritÒ products have continued their solid performance in the marketplace. For 1999 we’ll continue to position them as value offerings in the entry-level Class C market with seven models ranging from 22 to 31 feet in length. The Minnie and Spirit lineup also include standard dinette/couch slideout models featuring the StoreMore Hydraulic Slideout System.
Rialta
The RialtaÒ from Winnebago Industries continues to offer a unique niche market for Winnebago Industries because this type of Class C product is simply not available anywhere else. The Rialta offers fuel efficiency, front-wheel-drive maneuverability and multi-purpose usability. The new 1999 Rialta provides upscale amenities and a new model, bringing total available floorplans to four. With the new floorplan, the 22HD, we were able to combine some of the best features of the other available floorplans, while adding more interior storage and new features such as a larger refrigerator that haven't previously been offered.
1999 Rialta QD
EuroVan Camper
The EuroVan Camper project has also been very successful. Winnebago Industries produces the camper portion of this Class B motor home which is marketed through a select group of Volkswagen of America and Volkswagen of Canada dealers. Year to date, it is a leader in Class B sales in the United States.
Commercial Vehicles
The Commercial Vehicle Division has developed several models specifically designed to target several popular customizing markets. These include the new Med OneÔ (medical), Dental OneÔ (dental), The ProtectorÔ (law enforcement), Suite OneÔ (limousine), and Ability EquippedÔ (handicap accessible). The Ability Equipped models have increased in volume by 25 percent since last year and growth of an additional 25 percent is anticipated in the coming year. Also, the Executive Suite will be introduced at the annual RV Trade Show this month in Louisville, Kentucky. This Rialta-based shell is customized as a mobile office for business purposes.
WIT
The Winnebago-Itasca Travelers (WIT) Club is comprised of owners of Winnebago Industries products. Membership is an excellent way for owners to stay active and in touch with their friends through participation in local, state and special interest clubs in addition to the international organization. The WIT Club also conducts caravans, rallies and tours throughout North America. Membership benefits include a monthly magazine, professional trip routing, purchasing and service discounts, mail forwarding, and the opportunity for Premium Road Service and various types of insurance.
WIT members have proven themselves to be loyal customers of Winnebago Industries’ products and consequently repurchase our products at a much higher rate than the general population.
1998 Winnebago-Itasca Traveler's Club Grand National Rally
OEM
Winnebago Industries generated $30.2 million in revenue in fiscal 1998 from the sale of original equipment manufacturing (OEM) components, compared to revenues of $29 million in fiscal 1997. The sale of OEM components to a wide array of outside companies allows the Company to maximize use of Winnebago Industries’ production capacity, while affording us the added benefit of low cost component parts. This in turn helps keep our motor home prices as competitive as possible.
Winnebago Industries' Creative Aluminum Products Company (CAPCO), which produces aluminum extrusion products for the Company as well as for a variety of outside companies, is our largest OEM facility. CAPCO accounts for approximately 88 percent of Winnebago Industries’ current OEM business. OEM revenues are also generated from the sale of thermoformed and rotocast plastics, fiberglass components, panel lamination, electro-deposition painting of steel and sewn or upholstered items.
Service
Winnebago Industries recognizes that good quality products are our most critical element. But along with that, it is the Company's long-standing strategy to provide quality support services that make us most effective at the dealer level and inevitably make our retail customers more satisfied. Because of that strategy, Winnebago Industries is an industry leader in customer satisfaction and has developed one of the most comprehensive warranty programs in the industry. This provides the Company with an important market advantage when selling our motor homes. With the purchase of any new Winnebago, Itasca, Vectra or Ultimate motor home, Winnebago Industries offers a comprehensive 12-month/15,000-mile bumper-to-bumper warranty, a 3-year/36,000-mile sidewall and slideout room assemblies warranty, and a 10-year fiberglass roof warranty. Rialta models have a 2-year/24,000-mile basic transferable warranty with a 5-year/50,000-mile drive-train warranty.
Every new owner also automatically receives a free one-year membership in Winnebago Industries' Premium Roadside Assistance program offering 24-hour customer and emergency service in addition to jump-starting engines, fuel delivery, lockout and tire changing services.
Experienced service advisors respond to inquiries from prospective customers, answer questions pertaining to Winnebago Industries produced vehicles and work with the owner and dealership personnel to expedite repairs.
Winnebago Industries now offers a parts program, making the Company's outstanding service and warranty programs even better. The "Trip Saver" program is designed to get customers back on the road quicker. With Trip Saver, a part needed to repair a condition that impairs the use or safety of the motor home during the new vehicle warranty period, will be shipped by air from the Company within 24 hours. A similar service called "Sale Saver" was extended to dealers in 1998. In order to save a sale, the dealer can request parts be shipped by air from the Company within 24 hours.
Winnebago Industries' dealers have many other market advantages such as access to a computerized network for filing warranty claims and parts ordering, the most extensive service literature in the RV industry, hands-on sales and service training, microfiche parts catalog and parts shipping advantages. The Company's dealers will soon be able to order replacement parts, as well as enter and access warranty claims online via the Internet. Scheduled to be up and running by January 1, 1999, the new Internet system replaces a dial-up network, is extremely user friendly and will provide Winnebago Industries' dealers with instant access to information.
Winnebago Industries has always been a leader in dealer communications, service and warranty. This capability represents yet another extension of Winnebago Industries' commitment to its dealer network. By providing access to our warranty and parts systems through the Internet, we will be able to provide more timely information, as well as demonstrate our commitment to their success.
In addition to the on-line warranty and parts ordering system, Winnebago Industries' website (www.winnebagoind.com) now provides a dealer locator system. This new system locates the two nearest dealers for any one or more motor home lines by entering a zip code or Canadian province.
The new dealer locator system is an additional dealer benefit and sales tool. After reviewing motor home information on the website, the new system allows interested customers to easily find their closest Winnebago Industries' dealers so that they can plan their next motor home shopping trip to actually kick the tires and experience the motor home for themselves.
Winnebago Industries' Service Training Classroom
Excellence In Quality
Quality continues to be of vital importance to Winnebago Industries. The Company believes its employees to be critical to the total quality process. The Cost Savings Suggestion Program is designed to reward employees for suggesting improvements to the Company’s motor home products or internal processes that result in cost and/or time savings. Since the program was initiated seven years ago, over 2,300 ideas have been implemented, resulting in an annualized cost savings of more than $4 million. This program had its most successful year ever in fiscal 1998, with over 450 employee suggestions implemented and a payout to employees of approximately $70,000.
This cost savings program is designed to help the Company control costs and thereby improve financial performance. It also means striving to build high quality products that represent the greatest value for the dollar to our customers.
"Quality is a Journey -- Not a Destination"
Winnebago Industries adopted the motto, "Quality is a Journey – Not a Destination" in 1997 and it continues to be important in the manufacturing process today. We continue to be pleased with the results of our quality efforts, however, we will never be completely satisfied. We will continue to look for ways to make our products and services better.
Technology
Technology has played a great part in the drive for quality and increased productivity. The high level of technology at Winnebago Industries provides employees with the tools necessary to do their jobs better and to maximize quality and efficiency. The Company's investment in advanced technology is on-going to assure our customers of top-quality products in the future.
An example of new technology making productivity and quality improvements during fiscal 1998 was the installation of a new laser cutting tool. This new laser tool increases accuracy and reduces labor by 25 percent, while enabling us to produce the same output on this one machine as is produced by both a metal stamping press and a cutting machine together. This laser cutting tool was purchased for additional capacity, while a second laser cutting tool will be added in December, 1998 that will actually replace a metal stamping press and cutting machine.
An additional computer numerically controlled (CNC) router was installed this year for the purpose of routing motor home back walls. Due to the productivity and quality benefits of CNC routers, this is the ninth CNC router to be installed within the last several years. Other new equipment includes a computerized milling machine that increases our tooling capacity for cutting wood patterns for molded parts, as well as a new full body paint system that allows us to paint full body paint schemes on motor homes such as the new Ultimate Advantage and Ultimate Freedom with high-quality base coat/clear coat finishes. In addition, a new rotational molding machine will be installed in December to meet the additional demands for rotational molded products.
We will continue to focus on new technologies that will translate into better quality due to improved accuracy, improved fit and finish; faster processes and an improved environment.
Laser cutting tool
RVDA Quality Circle Award
The technology improvements are an indication of Winnebago Industries' commitment to the total quality process needed to market Winnebago Industries' motor homes. That commitment to our dealers and retail customers was proven with the vote of confidence from our dealer body.
The Dealer Satisfaction Index (DSI) conducted by the Recreation Vehicle Dealer Association annually rates manufacturers' performance in five key categories: sales agreement quality, product competitiveness, sales support, aftermarket and management. RVDA recently announced that our dealers ranked Winnebago Industries as one of only six "Quality Circle Award" winners in the industry, and one of only three motor home manufacturers to win the award. Even more significant is that Winnebago Industries was one of only two motor home manufacturers to receive this honor in both 1996 and 1997.
We feel very strongly about maintaining these high confidence levels, and will continue to strive for excellence in our dealer and retail customer relations.
RVDA Quality Circle Award
CSI
Sales and aftermarket support are the backbone of Winnebago Industries' business philosophy. We also pay close attention to the Customer Satisfaction Index (CSI) data as it is collected from our retail customers. This information allows us to monitor what the end-user thinks about our Company, our dealers and the product itself. The CSI data is the same information we use to determine our "Circle of Excellence Award" winners. The data shows a continued growth in our customers' level of satisfaction with their Winnebago Industries' motor home. Results from the "satisfied" respondents (including "completely satisfied," "very satisfied," and "somewhat satisfied"), has risen consistently each year, with a new high last year of 95.2 percent. These are numbers we are extremely proud of because it means our strategy is working.
The 1998 CSI program had 149 dealers achieve the Circle of Excellence status, the largest number of winning dealers for any given year. Seven of those dealers have earned this prestigious award each year since its inception in 1986.
