Caravan Industry in Hull, the United Kingdom - Case Study Example

Caravan Industry in Hull, United Kingdom Caravans take a very popular undertaking in the United Kingdom for holiday ventures. They are associated with the caravan industry that has become an essential part of the economy. The industry encompasses, caravan manufacturing and services, caravan sales, and caravan parks (AACS 2010). The industry makes, repair, and use different kinds of caravans. We mainly have two types of caravans: static caravans and movable caravans. Movable caravans include convectional caravan, twin axle caravan, tiny teardrop trailers, pop-top caravans, tiny GRP caravans, folding caravans, stylish T@B, American airstream, and fifth wheels (CCC 2012). Static caravans are used as holiday homes and they are kept stationary in various places. All these options available for holiday venture and thus individuals must make wise decisions depending on their needs. Most of the caravans are used on holiday places. In the United Kingdom, there are various holiday places where caravans are used. The most popular ones are Cleethopper, Skegness, mablethorpe, and hornsea. Caravanning activities are very popular in these places. Most of these places are found in Hull and that is why hull has become very popular with caravanning. Moreover, there are various caravan-manufacturing companies in Hull. The caravan manufacturers in hull include Willerby Holiday Homes Ltd, Burstner Ltd, Corona Caravans Ltd, and Coachman Ltd. Among these manufacturers, the major ones are Willerby Holiday Homes Ltd and Corona Caravans Ltd. The reason for this is the large market share the two companies have in the caravan industry. As showed above, Hull has several caravan manufacturers. Some manufacture static caravans while others manufacture movable caravans. The company that is popular for manufacturing static caravans in Hull is Willerby Holiday Homes Ltd. Corona Caravans Ltd on the other hand is very popular in Hull for manufacturing movable caravans. The models made by different manufacturers vary both in shape and in characteristic. The reason why the companies in this industry try do this is to increase their competitiveness in this volatile market. Productions of caravans that are different from those of other companies convert the competition in this industry to an indirect. This promotes the survival of these companies in the caravan industry. Caravan industry is the greatest employer in the United Kingdom offering more than two percent of the total workforce. The employees employed in this industry undertake various responsibilities from management to development work. The workers also vary in their age. The industry employs person of various ages most of them beings above 35 years of age. Moreover, the qualifications and discipline of specialization of employees are not the same among them. This makes this industry to be a multi-disciplinary industry that encompasses several professional work and tasks. In addition, the manufacturers in this industry always try to attract competent employees as much as possible. Most of them try to attract competent employees using salary that is relatively better salaries of other companies or by improving the working conditions. Most of the companies in this industry are local company originating in the United Kingdom. Therefore, most of their employees are citizens of the United Kingdom. However, it is possible to find immigrants employed in a company in this industry. These cases are very common with large companies like Willerby Holiday homes Ltd and Corona Caravans Ltd. Most of the immigrants employed in these companies come from developing countries like Nigeria, Kenya, Mexico, and South Africa. However, in all the companies in this industry, the number of immigrants employed is always less than the number of local citizens of the United Kingdom. Caravan industry pays different salaries to different employees. Salary paid to an employee performing a particular role is different from salaries paid to an employee performing the same role in another company. This is because the companies in this industry vary both in their strategies and in policies. The major manufacturers, Willerby Holiday Homes Ltd and Corona Caravans pay better salaries than other companies do in this industry. However, all the companies in this industry have set their minimum wages above the one set by the government. The salary of an employee also depend on his position its seniority. The salary the manufacturers in this industry pay to managers is comparatively more than what they pay to other employees. This is the same for all the companies in the caravan industry regardless of their size. However, it is possible to find a junior employee being paid more in the larger companies than a senior person is paid in the smaller companies. This is because smaller companies have less revenue and thus they are not able to pay their employees as much the bigger companies do. Another factor that makes salary of employees to vary is their working experience. The employees with more experience are paid much better compared to those with little or no experience. This is because companies in this industry believe that more experienced employees are more productive. The performance of the caravan industry has been declining in the last three years. This is believed to be due to the change in economic conditions. “Production in the caravan industry was 14000 in 2009 but it increased to 16000” (NCC 2011, p. 3). The increase was associated with increase in demand of caravan and caravan related services that were experienced during that period. It also made the key companies in this industry to increase their number of employees. One company that experience significant growth during this period was Willerby Holiday Homes Ltd. However, recently the price of caravan holiday homes has been increasing as a resulting of changes in the economic situations. “The sudden 20% hike in price of caravan homes that has been experienced recently will significantly damage the sales” (KPMG 2012, p. 3). Therefore, sales are expected to decline and thus production will decrease. That is why some companies in this industry have decided to retrench some of their workers. Caravan industry generates a significant percentage of the total United Kingdom’s income. In the year 2010, it generated about 2.3 billion pounds (NCC 2012). This income was generated only through camping on caravan parks and caravanning only. This could show how significant this sector of the economy is to the overall economy of the United Kingdom. However, this income declined in 2011 to about 1.786 Billion pounds (NCC 2012). A much bigger decline is expected this year due to decline in sales that might be brought about by the 20% hike in price of caravan homes experienced in the industry. Therefore, this industry is retrogressing and thus something should be done to revive it. Hull has four large caravan manufacturing companies. In addition, it has several caravan parks and several organizations that provide caravan related services. This means that the caravan industry has a great effect to the economy of this region. Most of the economic activities in this area are related with caravan industry either directly or indirectly. This means that any decline in the activities of this industry has a great negative effect on the economic activities of the Hull society. Moreover, the caravan industry is the major employer in the Hull society. Therefore, a decline in this industry would increase the rate of unemployment and thus result to great negative effects to the Hull society. Companies in the caravan industry have been facing several challenges in their operations. The ones that face more challenges are the manufacturers. One challenge that the manufacturers in this industry face is sales decline. Recently, the sales of caravans have been declining significantly thus decreasing the manufacturers’ revenue. The decline in sales is because of the economic crunch that has been experienced in this country. The crunch has caused the cost of production of caravans to increase thus forcing the manufacturers to raise the prices of caravans. Due to this, the number of people willing and able to buy the caravans has decreased hence decreasing sales volumes of the manufacturers. Introduction of value added tax is the other challenge that the manufacturers of caravans are facing. In the past VAT was not charged on caravans produced by manufacturers. According to KPMG (2012, p. 5), “VAT introduction is expected to result to a market decline of 49% from its current position.” This means that the problems currently experienced by manufacturers concerning decline in sales are expected to increase if taxation continues. Another challenge is the popularity of the second-hand caravans. Currently, there are a variety of second-hand caravan available for sale that are cheaper than the new ones. This makes people to prefer them thus resulting to a decline in sales made by manufacturers. These challenges would hinder the caravan manufacturers from expanding their manufacturing operations. The caravan companies in this society will also be affected by these challenges. Since they are the backbones of the economy of this society, this economy might stagnate. Moreover, the challenges might force caravan manufacturers to continue retrenchment of their employees. Therefore, many employees in the Hull society might lose their jobs and thus unemployment rate in this society will increase. Several ways are available for overcoming the identified challenges. For the challenge of decline in sales, manufacturers can start venturing into external markets. This would be done through exporting their caravans to other countries where production is low. For the challenge of VAT, manufacturers can overcome it through lowering costs of production. This could be done through use of cheaper materials to construct their caravan or by reducing the number of employees. To control decrease in the sales of new caravans, the government should increase the tax charged on the second-hand caravans. This would raise the price of the second-hand caravans and thus make buying of new caravans to be more economical than buying second-hand make of caravans. References AACS, 2010, Finding out about Play Work, Retrieved from: http://readingroom.skillsfundingagency.bis.gov.uk/sfa/nextstep/lmib/Next%20Step%20LMI%20Bitesize%20-%20Skillsactive%20-%20caravan%20industry%20-%20Jun%202010.pdf, On 15 August 2012. CCC, 2012, Types of Caravans, Retrieved from: http://www.campingandcaravanningclub.co.uk/helpandadvice/gettingstarted/newtocaravans/typesofcaravans/, On 15 August 2012. KPMG, 2012, Economic Impact Study of the Proposed Change in VAT Legislation, Retrieved from: http://www.thencc.org.uk/downloads/NCC_FinalReport_210512.pdf, On August 2012. NCC, 2011, VAT: Addressing Borderline Anomalies 6 Holiday Caravans, Retrieved from: http://www.nationalcaravan.co.uk/downloads/VatAnomalies.pdf, On 15 August 2012. NCC, 2012, The Caravan Industry in the UK: Vital Statistics, Retrieved from: http://www.nationalcaravan.co.uk/Our_Industry/statistics.aspx, On 15 August 2012. Read More