Great customer service is a competitive edge in any business and Thor Industries, the largest recreational vehicle company in North America, is learning that lesson, with an eye to what it could be.
Thor Industries began in 1980 with the purchase of Airstream and for more than 30 years, they’ve expanded through acquisitions of other RV makers. Today, 17 brands fall under their umbrella, including its namesake Thor Motorcoach along with well-known names like Dutchmen, Jayco, and Starcraft.
Sales were an impressive $7.3 billion in 2017, mainly from domestic buyers. The array of models and floor plans, along with economical pricing of certain lines make it almost unmatched in the industry. As the company website says, “When it comes to giving you more for your money, no other brand can compare.”
Yet, as Chairman Peter Orthwein notes, “The recreational vehicle industry is characterized by fierce competition” and Thor had to strategize hard, particularly in and after the 2007 recession to maintain its position.
While the strategy may have bolstered the bottom line, the brand may have paid a price. Orthwein says, “Thor industries began to emphasize the less-expensive end of its product lines”; with that came an uncharacteristic trend towards defects, warranty claims, and decreased customer satisfaction.
While any vehicle manufacturer has its share of warranty work, Thor’s customer complaints have been conspicuous. There are multiple websites dedicated to customers’ troubles; even the Better Business Bureau has 55 complaints registered. Many of the issues revolve around water leakage and mold problems, quality of materials and assembly, and electrical problems affecting components like a/c units, and slides.
Some of the situations became serious, including a handful Magnuson-Moss Warranty Act cases and even a National Highway Traffic Safety Administration recall on the Tuscany Motor Coach in 2018 for battery issues. It’s important to note that Thor prevailed in many of the court cases and no Thor product had been under NHTSA scrutiny as far back as 1994.
Thor recognizes that they, “Are involved in certain litigation arising out of our operations in the normal course of our business, most of which are based upon state lemon laws, warranty claims, other claims, and accidents...we do not believe that any one of these claims is material.”
Thor Motorcoach Chateau [Photo/Wikimedia Commons]
Thor grew aggressively almost from the outset. In 1984, Thor went public, landing on the New York Stock Exchange (NYSE) in 1986. A publicly-traded company, particularly one that’s sometimes a Wall Street darling, faces a different set of concerns than a family-held firm.
Labor is one concern. Thor employs nearly 18,000 workers in manufacturing facilities in Indiana, Michigan, Idaho, and Oregon. Indiana’s labor market is tight, particularly around Thor’s home of Elkhart, where 85-percent of American RVs are built. That’s contributing to rising labor costs and the need to provide incentives to attract and keep the best workers. Thor is responding to this pressure by considering labor markets outside of Northern Indiana.
Assembly work at most RV factories is low hourly rate combined with production bonuses - ie. piece rates, not ideal for attracting talent. While a certain number of employees are salaried or represented by labor organizations, not all are. Thor is, nonetheless, confident of its working relationship with labor. Not all employees are so positive: one Thor employee commenting on GlassDoor.com, suggested Thor management take the focus off the bottom line and back to the quality, employees, and customers “who sustained us through the downturn.”
The supply chain exerts yet another pressure. Thor has been expanding in response to increasing demand for its vehicles. Yet, many raw materials and components come from only a handful of suppliers that produce in quantity across the industry - like dominant chassis producers Ford and General Motors. Capacity or quality issues at suppliers spell trouble for RV builders.
In any industry, online reviews are rife with harsh criticism; and RV manufacturers are not immune from complaints. According to TripSavvy, “3 out of every 10 RVs will suffer a mechanical failure by only their 2nd year on the road. This jumps to 8 out of 10 RVs by their 5th year and nearly every RV by their 8th year in-service. That’s plenty of dissatisfied RV owners. Thor’s many brands comprise nearly half of the coaches built and sold in the country; thus by volume, but not necessarily percentage, they’ll have more complaints than others.
But, review sites don’t often tell the full story - particularly for how companies offer solutions. In one instance Thor offered to reimburse a customer one monthly payment as compensation for the inconvenience; to transport the unit back to Indiana at company expense for warranty repairs; and, to either fly the customer or reimburse him for mileage to the Indiana facility to inspect the work. Impressive to say the least.
Review sites also don’t showcase initiatives like those Thor has undertaken to ensure long-term customer satisfaction, including 24/7 factory direct support, Gold Star Inspection which provides a 200+ point inspection and road test, Rapid Response parts supplying, and Concierge Connection that gives every purchaser personal phone calls during their ownership.
Thor’s vehicles are generally built to order, meaning they’re closer from a repair standpoint to a house than to a car or truck. Nevertheless, there’s solid warranty coverage. There’s a limited one-year warranty along with an extended service plan to handle most problems. Units with a Ford Motorhome Chassis have a limited bumper-to-bumper warranty for 3 years or 36,000 miles and a limited powertrain warranty for 5 years or 60,000 miles. A wholly-owned separate provider covers non-Thor components.
Coverage aside, Thor acknowledges warranty pressures. In a press release, CEO Bob Martin noted, “During the first quarter [of 2018], we experienced an increase in year-over-year warranty costs.” Some was due to increased parts, shop, and labor costs, but it also reflected an increase in actual warranty claims.
Thor is also a member of the Recreation Vehicle Industry Association (RVIA), a voluntary association of recreation vehicle manufacturers that promote RV safety standards and each Thor vehicle carries the RVIA seal indicating their standards have been met.
By 2017, company documents point to Thor’s commitment to creating a culture of quality improvement. Among the initiatives: improving new and existing products, addressing the potential loss of existing customers; and adding internal audit processes to examine quality controls at least annually. Recent key appointments in Quality Control, Customer Service, and Operational Improvement also reflect Thor’s movement towards a quality assurance culture.
Since each subsidiary operates independently, each can meet the demands of its market segment and ensure decision-making is closest to the customer. Additionally, within each are functional groups like cabinet making, plumbing, and electrical which have autonomy to improve efficiency and directly tend to customer concerns.
That means quality issues are not necessarily company-wide. Rather, they are often a function of certain brands - like Thor’s economy lines, which are most prone to problems since they try to maximize consumer dollar. Conversely, Thor’s premium brands are more quality-rooted. A testament to that: back-to-back RV Business Magazine’s RV of the Year awards - in 2016 to the Keystone Montana and again in 2017 with the Airstream Basecamp - and the RVDA Quality Circle Awards earned by various subsidiaries each year since 2007.
Thor’s acquisition of Jayco in 2016 is a case-in-point. Derald Bontrager, president and CEO of Jayco, said, "The core values that are synonymous with Jayco and its brands shape the way we run our business...one of the things we found most attractive about Thor was their decentralized business structure, which allows their subsidiaries to continue operating independently. Our current leadership team will continue to manage Jayco, just as we have been running it since our founding. We will continue with the same focus our father had on serving our dealers and consumers better than anyone else in the industry."
Announced at the Dealer Open House in September 2018, was a suite of digital apps intended to enhance the customer experience, enhance safety, and inspire peace of mind in RV users. Known as TH2, features include; trip planning, roadside support, and remote systems monitoring.
While maintaining Thor’s market share remains a concern, CEO Bob Martin says, “We believe that the quality, design, and price of our products and the warranty coverage and service that we provide allow us to compete favorably for retail purchasers of recreation vehicles.“
It’s Thor’s way of recognizing something that Sam Walton, founder of Wal-Mart, said many years ago, “There is only one boss: the Customer. And, he/she can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”