Despite strong earnings in the last three quarters, Monaco Coach Corp. laid off 115 of its Bend employees, citing softer demand for motor coaches in the wake of a weak economy and the threat of war with Iraq.

The news came at 1:30 p.m. Friday, during the last 10-minute break of the day, said Brandi Husted, an assembler of wood products for the Marquis coach for the past year and a half. Employees were rounded up and told to meet in the audit bay across the street from the main plant. Once there, Steve Bettis, Monaco’s director of Eastern Oregon operations, stood at the top of the stairs and made the announcement.

”He told us the main corporation is only allowing us to make seven coaches a week instead of 12 now,” Husted said.

Mike Duncan, Monaco’s communications director, said that while the company is downsizing its production and work force at the Bend plant, it is simply returning to production levels seen at the plant prior to Monaco’s acquisition of it.

Prior to June 2001, seven coaches rolled off the line weekly.

As a result, about 16 percent of the 730-person work force at the Bend plant would have to be let go, employees were told. In the corner of the room, unemployment handbooks were stacked dozens high. Employees were then escorted off the premises.

”They gave (our final pay checks) to us as they took our badges,” Husted said.

The determining factors for who was cut from the payroll: those who had the most ”points,” which are accrued when an employee is either late to, or absent from work; and job qualifications.

Matthew Chappell, a Monaco employee of 20 months, who worked in the oak department at the Bend plant, said he heard the news secondhand. He had taken a personal day Friday to be with his daughter, who was in the hospital.

The father of five children, Chappell felt a wave of shock and anger. He was supporting his family on his $11.50 hourly wage. Now he’ll qualify for unemployment and will pursue retraining opportunities to become a history teacher.

”There are a lot of different avenues, I guess,” he said.

Since June 2001, when Coburg-based Monaco Coach Corp. (NYSE:MNC) acquired Beaver Coaches for $25 million, the company has been a standout in the motor coach industry. In just the last nine months, Monaco’s net income soared 74 percent to $32.4 million, and its earnings per share by 86.4 percent to $1.10.

Monaco dealers seemed a bit surprised by the news as the company’s lines have been selling well.

”Monaco has been one of our mainstay lines,” said Jim Hubbard, sales manager of Olinger Travel Homes, Inc., in Portland. Since the dealership moved to its new location there 10 days ago, it has sold three Monaco coaches, a strong number for the dealer.

Surpassing Fleetwood Enterprises to become the nation’s largest producer of top-line motor coaches, known as Class A, Monaco was named by Smart Money magazine to a list of 10 best stocks for the next 10 years based on the company’s pattern of earnings and growth from 1998-2002.

But investors may see tougher days ahead. The recent performance of Monaco’s stock, which has fallen 45 percent in the past 12 months to close at $15.11 per share on Friday, indicates the company may be finally feeling the lagging tremors of a weak economy.

While the company maintains it’s still doing well across the board – its 4th quarter report will not be released until Jan. 28 – certain product lines, including Beaver Coaches, have not performed as well as others, said Duncan.

Responding to a weaker market for the product, Monaco made the decision early last week to shrink its Bend work force.

”It’s tough in an industry where the demand changes frequently,” he said.

”Not all of our production facilities build all of our products, with Bend being a good example. Overall, certain lines have higher demand.”

The company offers coach models under the Monaco, Holiday Rambler, Safari, Beaver, McKenzie and Royale Coach brand names. In addition to Bend and Coburg, the company has operations in two Indiana cities, Wakarusa and Elkhart.

Whether or not Monaco will eventually rehire is unclear. It is also uncertain whether demand for the company’s motor coaches will warrant additional lay offs.

”I don’t want to say yes, because we don’t have firm plans to do that,” Duncan said, referring to additional lay offs. ”But I don’t want to say no, because we’re always making adjustments.”

Lisa Rosetta can be

reached at 541-617-7812 or lrosetta@bendbulletin.com.