BY DOUG LEDUC
dougl@fwbusiness.com
Recreational-vehicle dealers in northeast Indiana are concerned about the impact a federal auction of trailers produced to house victims of Hurricane Katrina could have on sales of new entry-level trailers.But an association that represents the dealers said it hasn’t had much success getting information on the auction the Federal Emergency Management Agency began this month.
The auction could involve tens of thousands of travel trailers. But plans for the auction appear to be fluid, said Phil Ingrassia, communications vice president for the Recreational Vehicle Dealer Association. And that has made it “very difficult for people in the industry to understand what’s going on,” he said.
The auctions “could have a devastating effect on Indiana,” warned Dennis Harney, executive director of the Indiana Manufactured Housing Association Recreation Vehicle Indiana Council.
About “65 percent of all recreational vehicles are produced in Indiana,” he said.
“We’re watching this as closely as possible and the national industry is watching it as closely as possible, but information is difficult to get at this point.”
A major site for the auctions is Hope Municipal Airport, in Arkansas, where FEMA has been storing thousands of trailers it purchased for Gulf Coast residents left homeless in 2005 by Hurricane Katrina. Many of the trailers now offered for sale have never been occupied.
The sale is being handled by the federal government’s General Services Administration, but the airport and Hope’s city hall and Chamber of Commerce have been inundated with phone calls from individuals with questions about the auctions.
The calls are politely redirected to FEMA or GSA. Hope officials said they aren’t appropriate contacts for information on the auction, and they aren’t in a position to elaborate on it because the information they have been getting about the sale keeps changing, particularly in terms of its scale.
“Two or three months ago, it was upwards of 30,000. Now, we’re hearing over a three-year period, 5,000,” said Hope Mayor Dennis Ramsey. “There’s been a change in personnel, and the (FEMA) folks we had conversed with the last couple of years no longer are here.
“The acting director for logistics was down here for FEMA, and they obviously are sensitive to not adversely affecting the market for the resale of travel trailers, but I do not know what the ultimate goal is,” Ramsey said.
A call to a FEMA spokesman in Washington, D.C., was not returned.
The RVDA issued a statement saying its president, Mike Molino, is urging the federal government to consider the impact its auctions will have on local dealers, the RV industry and public safety.
In a letter to R. David Paulison, FEMA’s director, Molino urged the agency to carefully consider how public auctions of a large number of trailers could affect the retail market for RVs, particularly in Gulf Coast states, where many of the sales are taking place.
“The practice of selling directly to consumers also raises significant public safety implications,” Molino said in the letter. “These vehicles appear simple but are really rather complicated with electrical, plumbing and propane gas systems that power sophisticated heating and cooling units, fire safety equipment and gas leak detectors.
Molino suggested in the letter that a way to protect the public could be to offer the units in lots, instead of auctioning each trailer individually.
Ingrassia said the association is concerned about the sheer numbers that could be involved in the auction, having come across media reports that as many as 46,000 trailers could be sold by the government directly to consumers.
The trailers aren’t coming up for sale all at once.
“FEMA has made some public statements and statements to us that they’re going to do 300 a month. But we don’t really know what the plan is, and we’re trying to get a plan from them,” Ingrassia said.
If the agency plans to auction off 46,000 trailers, it would be dumping a volume on the market Ingrassia said would be about equal to 30 percent of the trailers sold at the retail level in the United States last year.
“We want to open the dialogue; we’re not trying to beat FEMA up, they have a very tough job,” Ingrassia said. “We’re urging the federal government to minimize the disruption on the local markets and national market for RVs by making it easier for dealers to buy these en masse and resell them.”
Area RV dealers echoed concerns outlined by the association. At Ben Davis RV in Auburn, Michael Kurtz, RV sales manager, said the auction of trailers that were purchased by FEMA but never put to use is an example of government waste that could hurt the image of the industry.
Kurtz said he worries that people unfamiliar with RVs could get their first impression about the industry from the stripped-down, no-frills models built to FEMA specifications.
“They didn’t have the decals, the proper amount of windows or the things that make a travel trailer look sporty or appealing; they were just straight, boring boxes,” he said. “And they’re not properly equipped for actual traveling.”
There also is a concern that “Katrina has left such a negative impact on everybody’s minds,” he said.
“There are families that are living in travel trailers and are incredibly unhappy about it; their homes are not being replaced.”
The fact that the trailers are entry-level RV inventory could help limit the impact of the auctions to the potential loss of some first-time buyers, said Rick Berning, owner of Berning Trailer Sales in Fort Wayne.
But there is real reason for concern, he said, because “there’s a lot of new people getting into the market for RVs.”
Many first-time buyers start out with used RVs, and with consumers able to shop for FEMA trailers via the Internet at prices well below retail, Berning said dealers can expect to see an impact “definitely on the used sales.”
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