Southern Recreational Vehicle Company
Case Study

I. Background of the Study

Southern Recreational Vehicle Company of St. Louis Missouri announced its plans to relocate its manufacturing and assembly operations by constructing a new plant in Ridgecrest, Mississippi. The firm, a major producer of pickup campers and camper trailers, had experienced five (5) consecutive years of declining profits because of spiraling production costs. The costs of labor and raw materials had increased alarmingly, utility costs had gone up sharply, and taxes and transportation expenses had steadily climbed upward. In spite of increased sales, the company suffered its first net loss since operations begun in 1982.
When management initially considered relocation, it closely scrutinized several geographic areas. Of primary importance to the relocation decision were the availability of adequate transportation facilities, state and municipal tax structures, an adequate labor supply, positive community attitudes, reasonable site costs, and financial inducements. Although several communities offered essentially the same inducements, the management of Southern Recreational Vehicle Company was favorably impressed by the efforts of the Mississippi Power and Light Company to attract “clean, labor-intensive” industry and the enthusiasm exhibited by state and local officials, who actively sought to bolster the state’s economy by enticing manufacturing firms to relocate within its boundaries.

II. Definition of the Problem
• The spiraling production costs o Rapid growth of labor and raw materials costs. o Utility costs had gone sharply o Increasing transportation expenses
• Increasing taxes expenses
• Unacknowledged net loss since the operations begun and up to the present
III. Areas of Consideration (S.W.O.T)
Strengths:
• Established name in producing pickup campers and