As Fleetwood did its strategic planning in the late 1980's and early 1990's, the company looked at its potential for growth beyond North America and it became obvious that the next largest RV market in the world was in Europe.

Fleetwood had served the European market on a limited scale over the last 20 years on an export basis and felt it knew the market as well as any company could being on the outside.

Elden Smith, vice president, RV Group, said, "We really didn't know that market from the inside. We also had determined after going through several currency fluctuations, if you're working outside of the market you are very vulnerable to these changes."

Fleetwood decided to explore having a manufacturing presence in Europe. For the next two years, Fleetwood studied the market, then met with the major manufacturers in Europe, talked to them about its intentions to ultimately come to Europe as a manufacturer, and the possibility of making an acquisition to get started.

After that research, Fleetwood believed that Germany would have the strongest, fastest growing market and also had the strongest economy in Europe. Another factor was the fact that the motorhome market particularly had been strong in Germany. Smith said, "We had a previous relationship with a company, Niesmann+Bischoff, in Germany through export. They had imported some of our products throughout the 1970's. After the exchange rates changed, the company was no longer able to import competitively, so it began manufacturing a motorhome of its own. During the 1980's Niesmann+Bischoff built an excellent reputation for itself and its product, a high-end motorhome.

"When we talked to them about an acquisition, they were interested and it looked like a way for us to get into the motorhome market in Europe with a high quality company with a strong reputation. We could help them develop lower priced products, more competitively priced, higher value products which would get us into the mainstream of the market. To make a long story short that's essentially what we did, we bought 80% of the company."

Within a few months after the acquisition, the German economy began to soften, eventually leading to the deepest economic recession experienced by Germany since the end of World War II. In addition, the German government, as part of the German reunification, had to make a significant investment to bring East Germany's economy up to West Germany's. That is when a 15-percent surtax was imposed on all income, both corporate and personal.

"Obviously the combined effect of economic recession and the income tax surcharge had a real dampening effect on the economy," Smith continued. "The discretionary income of the German people became limited. That's when we started to see the decline of the European motorhome market. We developed two new product lines, moved the company into middle and lower priced products and moved up from the 16th largest to the 6th largest manufacturer in Germany. The industry at the same time went from 23,000 units per year down to about 13,000. When we looked at our situation we decided we didn't have the breadth of products nor the depth of dealer organizations that we needed to grow."

Fleetwood reviewed its commitment in Europe annually. The company was losing between $4-6 million a year which was a burden on the United States operations. Smith said, "As we looked forward for the next several years, the prospects for improvement in the German economy were not good. In fact, they're basically projecting at least two more years of recession and probably more. It just became more and more evident that there was no real way we could regain that investment without making another tremendous investment."

Fleetwood started putting out feelers to other companies that might want to pick up these product lines and recently sold its interest in the European company to one of the largest RV companies in Europe.

Does that mean that Fleetwood is out of the European market for good. Not necessarily, according to Smith. He said, "Looking at it long term, I don't think there is any indication that we would never be interested in going into either Germany or Europe again. We will continue to evaluate the market potential from a strategic standpoint. We are still convinced that the best way to compete in Europe is to manufacture in the European community and not try to export to it.

"Somewhere down the road, it's entirely possible that we would choose to go back."