Even in a struggling economy, the fortunes of Lippert Components Inc., (LCI) continue to rise as the OEM rehires employees, makes more acquisitions and prepares to enter the motorhome market. At the core of its success, according to the founder’s grandson and LCI president/CEO, is the ability to listen to its customers.

Although Lippert today is a well-known name to RV manufacturers, the Goshen, Ind., company that began life in 1956 welding steel for manufactured houses is a relative industry newcomer. Until 2000, LCI made towable chassis only for Skyline and, later, Fleetwood. In just a decade’s time, Lippert’s components can be found on practically every towable made today, as well as some motorhomes.

“Our business model has always been take care of the customer,” says Jason Lippert, who grew up the in business and now leads LCI after stints as a production line worker, management trainee, and division head. “Over the years, when we did a good job on travel trailers, we had people asking if we’d build them fifth wheels. That turned into building slideout mechanisms and it kept rolling forward every time we did a good job.”

As manufacturers leaned on LCI to make more parts, such as jacks, steps and axles, Lippert says the process went beyond just building something to customer specifications.

Focused on Value-Added Features
“There’s a lot of products that have developed strictly because we’ve had customers come to us and say, ‘You’re doing this, why don’t you do that?’” he says. “We’d be quick to market and we’d never just copy something. We’d bring it out with some more value-added features to it that didn’t exist before.”

The company entered the RV business just that way: as a vendor to Skyline’s mobile home division, it was natural for the Elkhart, Ind., manufacturing giant to consider an bigger role for LCI, he says, which happened in 1994. That, in turn, led to even more business.

“We started in Texas and Pennsylvania with their RV chassis, then eventually expanded to do all their facilities. We were building RVs in the Pennsylvania division, and at the time, Thor, Sunline, Fleetwood and other manufacturers were there, so we started building for more of those,” he says. “We also developed some higher-level relationships with Fleetwood and started putting up plants all over the country for their RV manufacturing facilities. The more we did, the more known we became, so we eventually went to Elkhart.”

Drew Industries, a shareholder-owned company based in White Plains, N.Y., also noticed the value Skyline saw in LCI and purchased LCI in 1997. Lippert says the transition from family to public ownership brought with it a big advantage: the ability to more easily bring other assets into the fold.

“The acquisition process is pretty simple,” Lippert says. “If I see, or my team sees, a company out there – whether it’s got talented people or good product ideas, or they’re innovative – we bring that to Drew and say, ‘We want to pursue this company, we’ve already had some initial dialogue and here’s where they’re at.’ They take it from there.”

Acquisitions Pay Off for Lippert
During the last 10 years, Drew has made 13 acquisitions and more are in the works, Lippert says. Financials for the third quarter in 2009 revealed Drew had a net income of more than $7 million (on sales of $122 million), or almost three times what it had in same quarter a year earlier, thanks, in part, to increased sales in the RV market. The recent purchases of Seating Technology, an RV furniture maker, and QuickBite Coupler, a radical trailer hitch design, for example, helped make those numbers higher.

“We’ve made acquisitions that have allowed us to increase our content on the RVs. We’ve had our eyes out for innovative products that add value. Over time, we’ve made small acquisitions like QuickBite over the years,” he says. “They’re not big when you buy them, but your hope is they’re good enough products that are well received in a three- to five-year period that 40 to 75 percent of the market will move to them and that’s where you see the pickup.”

Last year proved to be a minor one for acquisitions, Lippert says, but 2010 may prove differently.

“Our conversations with companies we’re looking to acquire definitely heated up in the last several months because nobody’s talking about crazy multiples anymore,” he says. “Those days are over. People are more realistic about selling their businesses and there’s a lot of them who need to sell their businesses out there, so our activity’s heated up quite a bit.”

To make those deals happen, Lippert and his team takes much into consideration.

“It’s hard to quantify how they get done. It depends on the product and the value there. Some companies we acquire have products that are in the middle of their lifecycle, some toward the end and some, like Quickbite, that are not even in the beginning stages,” he says. “A lot of it depends on the seller, too, and how realistic they are about their product and their business.”

Individual products often get rolled into LCI’s existing offerings, while company purchases such as Happijac – which Drew acquired in 2006 – are usually left alone, Lippert says, unless a management change is needed to improve sales or productivity.

The benefit of such acquisitions to its customers is plenty, he says.

“I think they know anytime we get into a product through acquisition, we’re going to make that product area and the group of vendors that service that area more competitive, whether it’s through price or innovation or design,” Lippert says. “They know we’re going to improve life for them.”

Doing More With Less
What helped boost Drew’s recent financials even more was that age-old method adored by accountants and shareholders everywhere: cutting costs. The other Drew subsidiary is Kinro, a top maker of windows for RVs and manufactured housing, and it and LCI were merged to save money, says Lippert, who was promoted to the top spot at Kinro after David Webster retired in late 2008 as its chairman, president and CEO.

Of course, horrible economic conditions spare no one, so even LCI recently had to lay off employees.

“Our workforce was down probably close to 40 percent in a 16-18 month period. That’s come back up quite a ways. We’re still not back to where we were in 2006-2007, but we’re somewhere in the middle there,” he says. “We’ve hired back about 800 employees since July.”

Today, Drew employs 2,750 among 27 factories across the U.S., with about 1,800 working for LCI. The products made by the Drew brands cover almost everything from axles to wireless remote systems. LCI will be emphasizing several value-added products for 2010, Lippert says, that should be appreciated by retail customers.

“The big ones that stick out would be the plane latch baggage doors that are going to quickly take the place of those doors with the little thumb locks,” he says. “We’re doing entry doors for towables and motorhomes with keyless entry on them, and we’re doing power packages on towables with electric stabilizer jacks for travel trailers and fifth wheels, as well as power tongue jacks for trailers.”

Lippert also is excited about a project co-developed with Keystone that centers on a remote control. “It allows you to control awnings, slideouts, the front and rear jacks on your fifth wheel, and lights,” he says. “It’s just a little handheld fob that’s smaller than a Blackberry that allows you to control all those functions. That’s huge.”

A Strong Focus on R&D
What Lippert has noticed during his career is once a manufacturer or two pick up such convenience items, a trend get started and the rest of the industry follows suit. Not surprisingly, LCI depends on a strong research and development effort to create those advancements.

“We’ve got a small team of guys who spend all their time in R&D and then we’ve got other guys who wear multiple hats. Some are in the R&D side but then they also work the customer side to get feedback and make sure the project they’re overseeing is going to exceed the customer’s expectations,” Lippert says. “It’s a lot of investigative work because we have to find out what customers don’t like about it and we’re generally not just asking one customer, we’re asking all of them. We take all that feedback and start with a blank sheet of paper and take what we know has worked and try to add new value and new features into those products.”

Oftentimes, a manufacturer’s service and warranty department will tell LCI it has ongoing problems with a component, which will begin a product improvement process.

“It also comes through sales. The end user talks to their dealer, who talks to sales, who talks to the company’s purchasing department, which winds up talking to us,” Lippert says. “Take entry doors, for example. We weren’t even building entry doors this year. We bought some assets last year in a small asset acquisition. A company (Philips Products) that built entry doors went out of business. We bought some equipment and hired a couple of really good guys who were overseeing the manufacturing there and today we’re building 475 entry doors daily.”

High production levels are needed to sustain the towable component market domination LCI and Kinro have established over the years. Lippert estimates his companies have 75 percent of the chassis business, 85 percent of the windows and 80 percent of the slideouts.

Cracking the Motorhome Market
The next target: motorhomes. Drew is already making inroads there, according to Lippert.

“We’re really trying to break in there, so, for motorhomes, we probably have 30 percent of the slides and maybe 10 percent of the leveling systems and 10 percent windows, but we’re working on increasing our motorhome share big time,” he says. “I don’t think it’s going to come back to 40,000 motorhomes a year, but I think it’ll come back to 25,000 or 30,000. There’s plenty of opportunity for us just with the market that exists today at what’s projected for 2010.”

With LCI’s track record, becoming a commonplace name among the motorhome segment should be no more challenging than developing a wireless remote system.

“The challenges aren’t as big as what it would be for us to move into the utility market or heavy truck market because we already sell to Coachmen and Forest River, for example,” Lippert says. “They already know who we are. It’s just showing them that we have proven products and making that leap from the towable mentality to the motorhome mentality.”

Lippert acknowledges LCI will stay away from making certain products.

“We couldn’t make the leap to motorhome chassis or axles or anything like that,” he says. “There are certain things that we’re limited to and the total content might be smaller on motorhomes, but we can compete in other areas such as mattresses and furniture and windows.”

If the past is any indication, the motorhome component business is in for a ride.