RV maker Thor finds new suppliers as chip, chassis shortages drive $18B backlog

Dive Brief:

Thor Industries identified alternative suppliers in North America and Europe as ongoing shortages of semiconductors, chassis and raw materials doubled its global backlog of RV orders to a record $18 billion, the company said in its Q1 earnings report.
While the increase in RV deliveries outpaced the rest of the industry's growth rate in the quarter, the manufacturer said, the rising backlog reaffirmed the company's view that the dealer restocking process "could possibly extend into calendar 2023," President and CEO Bob Martin said in a statement.
Thor strengthened its supply chain with its $750 million acquisition of Airxcel, a supplier of RV appliances, windows, shades and other parts, in September.

Dive Insight:

RV supply chains face many of the same semiconductor, labor and chassis constraints as automakers and other industries. Winnebago Industries reported "a year's worth of demand" from dealers and a $1.5 billion towables backlog earlier this year.

Thor, the world's largest RV manufacturer, is working closely with suppliers to minimize cost increases, supply issues and delivery delays limiting its ability to ramp up production to meet robust demand, the company said.

Thor did not provide details on the new suppliers it identified. But a key problem challenged the company's efforts to diversify its chassis and component supply. "Due to engineering requirements, it is generally not possible to quickly change the chassis our various units are built upon," the company said in its filing.

Thor, which has nearly 400 manufacturing facilities with upwards of 23 million square feet in the U.S. and Europe, saw an increase in work-in-progress inventory as its overall backlog ballooned, driven primarily by a 138% YoY increase in its North American towables backlog, according to an investor presentation.

The company's North American motorized backlog grew 93%, partly due to its 2020 acquisition of luxury RV manufacturer Tiffin Group, which had a $781 million backlog of its own. Thor's European backlog, by comparison, rose 45% YoY, per the presentation.

Thor, which also owns Airstream, CrossRoads, Cruiser RV, Dutchmen and others, strengthened its grip on its supply chain with the purchase of Airxcel.

Material and labor costs are primary factors in Thor's pricing, and the company hopes to be able to mitigate any future increases in those costs through a combination of "product decontenting, material sourcing strategies, efficiency improvements or raising the selling prices for our products by corresponding amounts," it said in its filing.