ELKHART, Ind. — From humble beginnings as a family-owned business to its current role as one of the dominant OE suppliers and a growing aftermarket supplier, Lippert Components has changed many times through the years to keep up with the times.
Jason Lippert is the third generation of the family to lead the company. In 2003, he became the CEO of Lippert Components.
During Open House Week, Lippert sat down with RV PRO to talk at length about the company, the role of product innovation and acquisitions in fueling growth, and what potential still exists for growth in an RV industry that has grown exponentially in recent years.
RV PRO: There aren’t a lot of RVs that don’t have at least one Lippert product in them. How have you been able to position the company for such market penetration?
Lippert: It’s a strategy. Our strategy is to continue to innovate products that become commonplace in recreational vehicles as well as to continue to enhance our core product lineup year after year through R&D and continuous product development making great products even better and more functional.
It’s not just taking products off the shelves and putting them on the vehicles. It’s continuing to innovate features of the RV that the consumers ultimately come to want and desire. Those are the things that keep our business running. We try to keep products that we have on the shelf for a long time more exciting by changing those and developing those through the R&D process. We do a lot of business with every OE in the RV sector.
Our approximate average is $3,000 of content on every towable today. Our goal is for that to be more tomorrow. It was a few hundred dollars in con- tent just 10 years ago. For motorhomes, it’s $1,700. That’s how we measure our effectiveness in penetrating content on the coaches.
But a lot of it comes through new product development — developing things for the coaches of tomorrow that don’t exist today. We can develop a new product that either the customer is asking for or we can dream up. Our goal is to get it on a brand and then people perceive that well enough that all of the brands ask for the same component.
RV PRO: How do you achieve that recognition where people specifically want your product?
Lippert: It’s not the brand — it’s the value in the component. Take leveling, for example. Leveling didn’t exist in fifth wheels a few years ago. We developed a leveling system specifically for fifth wheels to stabilize a frame that in the past was really hard to figure out how to stabilize and level. Now, today, almost every single fifth wheel has a leveling system. People didn’t ask for the Lippert leveling system. They said, ‘We want that leveling system we saw on Brand X on our coach. How do we get it?’
RV PRO: Over both the short term and long term, what are some areas where you intend to grow Lippert Components?
Lippert: Our strategy that we talk to our investors about all the time is that we have several different buckets of opportunity. We’ve got the aftermarket — that’s a big strategic growth area for us.
We’ve got adjacent markets — those in other recreational sectors, such as cargo trailers, equestrian trailers and marine and buses. International RV space is another big opportunity. If you look at those areas and say that we’re looking for acquisitions in any one of those three major areas, then that covers a whole new opportunity for us.
Another opportunity is the North American RV market. We expect that to continue to grow. We expect to grow and innovate our content opportunity on recreational vehicles.
We’ve got a strong history of developing new products and being successful in introducing and generating great traction on those products, so there’s no reason for us to believe that with the resources we’re com- mitting to R&D we won’t continue to do that in the future.
RV PRO: In recent years, there has been a lot of consolidation across all facets of the RV industry. Within some industry circles, there is some concern over a seem- ingly shrinking number of suppliers, distributors, manufacturers, etc. How would you respond to those worried about consolidation?
Lippert: I’m not sure who is worried about it because everybody is doing it. Dealers’ expectations at the end of the day is they want the best product at the best value. Whether you’re a company that’s acquiring businesses or a company that’s standing alone and staying the course, you’ve got to have better quality tomorrow than you did yesterday. Ultimately, we want the total market to grow.
I’d say 10 years ago it was really an issue. We were one of the ones consolidating and everyone was talking about it — not so much on the dealer side, but on the (sup- plier) side. And then all of a sudden the OEMs are consolidating. It’s kind of the way of the world.
Whether we got to the strategy first, I don’t know. I just think today it’s much less of an issue because whether you consolidate or not, you still need to procure great products and competitive prices and great service in order to be relevant.
RV PRO: From Lippert’s perspective, what makes a good acquisition/ partnership?
Lippert: Our first priority with acquisitions is acquiring great people. When we acquire great people it makes our company stronger, and technically the OEMs and retail customers ought to be getting better products and services. I feel that acquisitions give us an opportunity to get stronger as a company for our OEM customers and ultimately for the dealers and retail customers. Acquisitions are just part of growth today. Everybody’s getting used to it. ...
An example of a benfit from acquisitions would be the myRV product that is a tablet to control functions in an RV. Our guys (Innovative Design Solutions) that we acquired in Troy, Mich., came up with that system. We would never have come up with that idea on our own — ever. That’s the benefit of the acquisition strategy. All of a sudden we get a significant content item for a coach that wasn’t available yesterday.
There’s no fewer options than there was 10 years ago. There’s probably more brands to choose from. Some people would argue too many.
Good acquisitions make companies stronger in the longer term. They’re better going it together than they were going it alone. It’s kind of the two heads are better than one.
If two companies come together, there’s only one best way to do things. If they’re smart, the acquiring company will say, ‘They’re doing this better over here, let’s do that.’ Then we raise our quality level, our safety level, our efficiency level. What it does is make them a better company, and ultimately that’s good for the consumer.
People, products, processes, capacity — those are the four benefits we get with acquisitions. Our competitors that aren’t acquiring, they don’t get those opportunities. Our competitive advantages in this business are R&D, our people, our service level. Things that other people aren’t focused on. They’re focused on, ‘I’ve got to have this widget and it’s got to be at this price.’ We’re focused on some of the outliers like servicing the heck out of the dealers and OEMs and providing training to the dealers. That’s a service and a value to our dealers and our OEMs.
RV PRO: Lippert Components also has formed some strategic partnerships that have created new business opportunities, such as with Furrion to distribute its electronic products. What was attractive about Furrion that drew you to that partnership?
Lippert: They’re an innovator like we are, so we were instantly in sync. Our expectation is that they’re going to bring us innovative new products every quarter.
Products and marketing are probably their two biggest strengths. The look and feel of their products is different. Their competitors aren’t looking at making things better each year. They’re looking at, ‘This television is cheapest from this factory, let’s buy that.’
RV PRO: What do you see as the future of your partnership with Furrion?
Lippert: A lot of new products. We didn’t jump into the partnership just to get a piece of the action of what they’re already doing. It’s their vision for unique products down the road. As we get a year or two years down the road, there will be a lot more to talk about.
RV PRO: You mentioned earlier the growth in Lippert content per towable RV. Is there still room for growth for Lippert in the RV market? If so, what particular areas are you looking at?
Lippert: Yes. Our customers, I feel, come to us first when they have new ideas, so the pipeline is always full. There are always new things we are working on. We’ve got 30-plus items on the R&D docket that are in one form of development at any point in time. We have a 50-person strong R&D department, so we are developing and innovating on a regular basis.
Along with home runs, there are always some strikeouts. For example, we could have developed a new product and it didn’t hit the price point, or didn’t have the look and feel the customer wanted.
We try to listen to the customers and create the products that t the customers’ constraints and design criteria. We have to meet price, look and feel and design. If we do this successfully then it is up to the customer to decide how popular the component becomes. ...
I don’t think there’s any ceiling in content for us because we’re going to continue to innovate and develop. Once in a while we’re going to get a customer who says ‘We need you to get into this business because we don’t like the way the supply chain or lack of innovation is going there and you give a much better level of service.’ We’ve done that time and again. We went to chassis; we went to axles; we went to windows and doors. A lot of those were because customers said competition wasn’t strong.
Take an entry door. That was a $130 item five years ago when we got into it. We added lights. We added keyless entry door locks. We added security systems. We added friction hinges.
What we understand is: We don’t look at a product the way it’s been for 20 years. (We look to) make it have more features and benefits for the consumer and add more value.
Chassis in general have totally changed. Some of our suspension products we’ve enhanced. There’s got to be that perceived value by the OEM/dealer/retail customer all the way through the chain or it’s not going to be a long-term item.
It’s not just about developing new products; it’s about improving existing products and making them better. Typically, when you’re improving, you’re adding value and adding opportunity for more revenue.
RV PRO: With the success of Open House and some of the other association shows struggling with attendance, what do you believe is the future role of associations in the RV industry?
Lippert: The OEMs kind of drive the agenda, which is good. We’re just there to support. I prefer not to go to a lot of shows more than we need to. Let’s do the right ones. I think the whole industry agrees there are too many, so let’s just figure it out. ...
I really think there’s value in RVIA. They spend a lot of time protecting our industry on Capitol Hill. There’s so much bureaucracy and politics that we need somebody engaged there because nobody in Elkhart County is plugged in, nor do they have time to manage that. Those are initiatives where we need someone from the industry advocating. They’ve got a good team and they know what they’re doing.
I think Go RVing does an explosive amount of good for our industry. I think there’s more we can do as an Association (RVIA) down the road, but I’d like to stop arguing about the shows and add more things to the business agenda that have more impact for us. I would appreciate a quick decision on shows and move our resources to more important topics.
RV PRO: Lippert has put more attention on the aftermarket in recent years. What is behind that effort and what are some of the things you are doing to increase that presence?
Lippert: We’ve made a very heavy level of investment of our resources and capital into servicing the dealers. We’re the supplier that is innovating out there. We’re always innovating a new bell or a new whistle. Dealers need to be trained on that so they can effectively serve the retail customer. With all the new parts ... on new RVs, we need to be out there training dealers on it so they’re competent when they get that phone call from a frustrated customer they don’t get frustrated when he or she can’t use the product the way it was meant to be used.
We’ve put a lot of resources into service because we want it to be a competitive advantage. We want to do service better than anybody out there. We want to service the dealers for our OEMs so they don’t have to get that phone call that then comes to us.
We don’t want to be reactive; we want to get out there and train and be proactive to answer questions. So we put a team of people together who do nothing but travel around to dealerships and train and ask, ‘What more could we be doing?’
We trained 1,800 dealer technicians this year. We measure that today. It’s a metric for that division. We’re training more and more dealer technicians on our products so they can answer questions more competently and answer questions more quickly so that retail customer isn’t getting frustrated when he or she has a problem. We want to help the dealer get the problems fixed fast to be sure the retail customer has a great experience.
We’re hearing good things from our OEM partners and the dealers about our service. We’ve had probably every OEM team up to our service center in South Bend. It’s a great facility and because it’s half-a-million square feet we will be able to grow service and other parts of our business. ...
We hired a lot of OEM-experienced people to run that service center. When we started, we hired a person, and one turned into two, and then to three. We were just putting out res as best we could. We had no strategy or direction. We just did the best we could.
We hired Monaco Coach’s 20-year VP of service and warranty (April Klein) after they went bankrupt and she has hired people from all walks of life in the industry that understand what the dealers want. We skipped that learning curve, and today we have 155 service professionals on that side of the Lippert house.
You have to put infrastructure out there to accomplish the goals that we have. You can’t just answer phones and give dealers and retail customers great service. You have to make sure we are breaking the problems down, solving them and make sure we are doing the training.
RV PRO: What are some of the things you are most proud of over your career? Lippert: We’ve put an all-star team together. That’s probably been the most fun thing. We’ve brought a lot of great people to the area who probably otherwise wouldn’t have come to the area. We’ve assimilated a strategy that no one else had thought of. We looked at the business in terms of supplying many products and solutions to problems — not just supplying one dimension of products or just a single product. We were one of the first that brought that strategy to the table.
We’re proud of all the innovation we do. We’re the innovator in the business on the supply side. We employ 7,000 families. We are pretty proud of that and it’s a very heavy responsibility and we take it very seriously. We don’t look at people as our employees — we look at them as family, and there is a heavier meaning to that.
We’ve come from a small family business to now being on the New York Stock Exchange and being a billion-plus-dollar company in revenue. I am very proud that our great team can carry the legacy my grandfather and father started. Those are some things that our whole management team is proud of.
RV PRO: What motivates you?
Lippert: Part of our core values is helping other people. Not just through putting fami- lies to work and giving them a means to live a better life. We get involved in a lot of organizations around town that provide services to families and children in need.
Leadership sets the example, and it’s not just my leadership. I could give you 100 examples of people in this company that lead in the community. People in this company lead boards of charities in the area and help families in need inside and outside the company. Our people and company here collectively support just about every not-for-pro t charity in the area that helps children and families in need.
These are all things that would make it hard for me to walk away from the busiess, because all that really matters in life is how much we help others, which happens to be one of our core values that is written on the wall of every facility.
We’ve got a lot of pride in the family name and we feel we have an obligation to my grandfather and dad, who worked hard to get this thing off the ground and running.
We have great people that motivate me every day. I want to work hard for them and my family. We have 15 years of average tenure with each of the 22 people on our executive staff. That’s pretty cool and that’s a lot of momentum.
RV PRO: What’s next for Lippert?
Lippert: We talked about people, products, processes, capacity. More of all that. Without acquisitions our growth potential in aftermarket, international RV business and adjacent markets is a $2.7 billion growth opportunity. Throw in future acquisitions on top of that and it’s bigger. The acquisition pipeline has been full for several years. The better our company gets the more talent, acquisition opportunities and new customers we attract. We want to do more of all that. We want to step up innovation, buy more great companies and bring more people into the company.