Caravanning is not exclusive to the UK. Caravan holidays have become popular in Europe, US, New Zealand, Canada and parts of South Africa (The Caravan Club: travelling abroad). The concept of caravanning was mainly founded during the early 1900s when affluent businessmen were able to enjoy
34Revenue includes sales of products and related services, holiday bookings (NCC)
more leisure time with family and friends (BBC4). Though the Wandered Caravan35 was the earliest known caravan built in 1885.The first Eccles caravan model was built and sold in 1920 as featured in Figure 3.2 (Witter Towbars) which is in contrast to the modern day caravan (Swift Group).
Figure 3.2: First Eccles Caravan Towed by an Eccles Motor Vehicle (c.1926) (Witter Towbars) in Contrast to a Modern Caravan (Image courtesy of Swift Group, 2010)
The end of WWII resulted in a growing economy and employment in the UK with a growing emphasis on leisure activities until the 1960s when caravanning started to become a fashionable hobby for the middle working class during the 1960s(BBC 4). Southerton et al. (1998) acknowledged lifestyle change affecting the demand for touring caravans, with working class families seeking freedom to relax in the British countryside and seaside parks (BBC4). This yearning for enjoying freedom in the countryside with friends and family in what Southerton et al (1998) referred to as a “home from home” environment. UK touring caravan manufacturing has advanced significantly from the days of handcraftsmanship by cabinet makers, to becoming a sophisticated manufacturing operation. At the time of this research, the UK touring caravan manufacturing industry can be characterised as including automated production lines such as used in aircraft manufacturing (Figure 3.3), process re-engineering techniques with leading manufacturers competing through innovative thermoplastic and polyurethane materials plus internal design features such as solar heating, household appliances and fixed bedding options.
Figure 3.3: The Automated Production Line Enables Manufacturing of up to 250 Caravans per Day (Sourced from Bailey Caravans of Bristol)
Interview discussions with two participants from The Caravan Club in 2010 highlighted that the UK touring caravan manufacturing industry represents an important economic segment of the UK economy. This was a trend which continued throughout the duration of the research period. For instance, a Mintel Market Intelligence Report (2014) noted that camping and caravanning holidays attributed to between 15.3% (2011) and 14.2% (2013) of domestic holidays within the UK and the Caravan Club reported that “UK Caravan Club members alone spend in excess of £400 million in local economies every year” (Caravan News, 2015). Historically, approximately 95% of UK manufactured touring caravans have been sold within the domestic market and possibly unlike other industries, suppliers of touring caravan manufacturers are entirely or largely reliant on the success of this industry and buoyant sales of finished goods. Highlights from interview discussions held with National Caravan Council (NCC), The Caravan Club (CC) and Manufacturer A and Manufacturer B are captured in Table 3.2 as a snapshot of the industry history.
KEY
FACTORS INTRODUCTORY PHASE 1947 -1959 GROWTH PHASE 1960-1979 MATURITY PHASE 1980-2007 MODERN PHASE (Reduced demand/followed by stability) 2007- 2014
BUYERS Rich, curious Widening Mass market Diverse
PRODUCTS Poor quality
standard product Reasonable quality, customised product
Improved quality,
customised product Variable quality, standard and niche markets development COMPETITOR
S
Few Many new
entrants
Unstable, fragmented
Condensing Supply Issues
MARGINS High High Variable Low
PROFITS Low Highest Pressurised Weak
Table 3.2: Historical Trends for UK Touring Caravan Manufacturing (1947 – 2014).
The table has been adapted from Haperberg and Rieple (2001) industry life cycle framework. The table is divided into four time phases spanning over half a century (1947 – 2014). Each time phase category,
introduction, growth, maturity and reduced demand36, represents a shift in industry and manufacturing patterns caused by changes in customer demand as explained below:
The “introductory phase”: between 1940 and 1959 the UK touring caravan manufacturing industry launched a range of products for the new class of consumer. As mentioned previously, the touring caravan was initially regarded as “the plaything of a privileged minority”, as only the very richest families (those with motorcars) were able to tow them (BBC 4, 2009). Production of touring caravans rose from 3,031 units in 1947 to 10,258 in 1950 and 43,118 units by 1960 (NCC, 2009). Sam Alper (1924-2002) was known as “the Henry Ford of caravanning”, bringing mass production to the caravan industry post World War II (BBC 4, 2009).
The “growth phase” or second time stage featured in Table 4.1 (1960-1979) was characterised by rising production levels during the 1960s with an increase in the number of manufacturers. Production levels reached an all-time peak of 67,000 units in 1972 (NCC, 2009). A new caravan developed by Alper, the Sprite, was targeted at a starting price of £19937 for the average working class family (BBC4, 2009). Caravans International (CI) was considered the largest caravan manufacturer on the London Stock Exchange by 1976 (Caravans International: company history). This growth phase ended when the industry experienced turbulent times in 1974 (ibid.). Evidence of this volatility in production units can be seen in Figure 4.4
The “maturity phase” (1980-2007) was characterised by fuel shortages, high inflation, soaring costs of raw materials and increased competition from foreign package holidays. These issues led to a major restructuring within the industry and ultimately resulted in the disappearance of several leading manufacturers during the 1980s (BBC4, 2009). This economically unstable period was followed by merger and acquisition activity in the 1990s. Manufacturers started to move away from mass production strategies to producing smaller batch quantities, offering more customised products, but sales and margins were more pressurised and profit was variable across manufacturing brands. Sales fell from the peak of 67,000 units in 1972 to around one third of this volume by 2002.
The fourth “modern phase” (2007 to 2014) has been characterised by an initial decline in demand which has now settled at just over 20,000 units a year. This period has represented an exceptionally challenging time for manufacturers in the sector due primarily to the difficult economic climate for manufacturing, not just in the UK but worldwide.
36The time periods are selected based on eras where significant changes in production/sales levels were noted within the industry.
At the time of conducting the main research (2009-2011), approximately one and a half million British people actively participated in caravan or motor caravan holidays each year (Caravan Club). We can see from Figure 3.4 that since 2005, annual production figures for touring caravans fluctuated between the lowest figure: 19,514 units (2012) and peak figure: 32,050 units (2007); this is in stark contrast to the higher number of units produced during the 1970s boom period.
Figure 3.4: Approximate38 Production Units for UK Touring Caravan Manufacturing (1970-2014) (NCC, 2009; Manufacturer A).
The variation in customer demand levels over such a prolonged period (1970-2014) raised concern from UK Touring Caravan Manufacturing industry supply chain members about the long term sustainability of suppliers and manufacturers. Interviews with Manufacturer A in December 2014 and Manufacturer B in January 2015 revealed that in response to UK economic challenges such as tightening up of domestic borrowing and the subsequent downward trend in customer demand for UK touring caravans, there had been a move by UK touring caravan manufacturers towards re-growing the export market. Whilst the UK remains the largest European market for touring caravans (NCC), UK manufacturers are optimizing new demand opportunities for touring caravans (and motorhomes) across Europe and Australia and New Zealand. Figure 3.5 shows the trends in touring caravan dispatches to the export markets between 2000 and 2012.
38The term approximate is used because the exact month/year timing of the historical data is unknown. Units calculated since 2005 is worked on moving average total (MAT) to October 2014.
34800 67000 28000 42451 38800 21600 29060 32050 20000 26174 19514 20654 0 10000 20000 30000 40000 50000 60000 70000 80000 U N ITS P R O D U C E D A N N U A L L Y
Approximate Production Units for UK Touring
Caravan Manufacturing (1970-2014)
19 70 19 73 19 75 19 77 19 80 19 85 19 90 19 95 20 00 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14Figure 3.5: UK Touring Caravan Dispatches to Export Markets 2000-2012 (NCC).
Firstly, Figure 3.6 presents the historical trends in market share of UK touring caravan manufacturers based on the figures presented in Figure 3.4 and verified by discussions with interview participants. It indicates that there were six principal manufacturing companies in the sector at the start of the research period in 2007. This had declined to five by 2014. The two manufacturing companies that participated in the main research study were the two leading players which represented a market share of 71% in 2007 and 63% in 2014.
Figure 3.6: Comparison of UK Market share amongst UK touring manufacturers in 2007 and 2014 (developed from historical and current industry data gathered during interviews with NCC and Manufacturer A)