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Struggling Winnebago Unhitches Commercial Vehicle Business

September 20, 1991

DES MOINES, Iowa (AP) _ Winnebago Industries Inc., trying to halt two years of losses, said Friday it is ditching its fledgling commercial van business to concentrate on its mainstay - motor homes.

Winnebago launched the delivery truck business in early 1990 to counter cyclical downturns in its recreational vehicle business. But it never caught on.

″It didn’t account for company revenue, that was one of the problems,″ said Winnebago spokesman Robert Cooley. ″The market never developed and during these economic times it probably wasn’t going to, to any extent.″

Cooley said the commercial vehicle business is for sale, but no one has expressed an interest in it yet. The trucks, priced from $25,000 to $35,000, were aimed at the baking, package, industrial laundry and similar delivery services.

Securities industry analysts said pulling the plug was a prudent move and came as no surprise.

″If you’ve got a loser and know it’s a loser, it’s time to get out,″ said Robert Rollefson, a broker for R.G. Dickinson & Co. in Forest City and a longtime company watcher.

He also said the worst appears over for the company that has had eight straight quarterly losses, which it blames on the poor economy and high gas prices. Losses have narrowed in recent quarters and analysts said that trend appears to be continuing.

″I don’t see anyone saying it’s time for dancing in the streets,″ Rollefson said. ″But things are starting to look better.″

Winnebago announced its decision in a terse statement Friday morning.

″This action has been taken to help return the company to future profitability by concentrating efforts and resources on its core business of manufacturing motor homes,″ the statement said.

The company said it has expanded its lineup of motor homes for 1992. ″Several new models have recently been introduced and are being well received at both the dealer and retail customer levels,″ the statement said.

Winnebago motor homes cost $25,000 to $87,000.

Rollefson said ″the core business is not setting the world on fire, but it is holding its own.″

Analyst Frank Rolfes at Dain Bosworth Inc. in Minneapolis said dumping the delivery truck business was probably a good short-term strategy.

″The No. 1 objective right now should be to return the company to profitability, and this is one of the prices you have to pay,″ Rolfes said.

Winnebago soon will report results from its recently concluded fiscal year. In the third quarter ended June 1, losses narrowed to $2.25 million from $4.03 million a year earlier. But for the nine months ended June 1, losses widened to nearly $19.2 million from a loss of $14 million in the same period a year ago.

Winnebago employs 2,300. Cooley said halting production of commercial vehicles would have no immediate impact on the payroll ″because it has been such a small operation.″

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