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Reaping the RV Riches at Lippert Components

Almost all of the Indiana company's products are made in the US—and most of the steel it buys is domestic, too.
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The past few years have been very good for the recreational vehicle industry, and good for Lippert Components Industries (LCI Industries). The Elkhart, Indiana-based manufacturer is the No. 1 supplier to the U.S. recreational vehicle industry, manufacturing awnings, doors, adjustable beds, reclining armchairs, shock absorbers, axles—just to name a few.

About two-thirds of Lippert’s business is RV components; the final third is components for specialty vehicles like school buses, delivery trucks and cargo trailers.  

From 2014 to 2017, Lippert’s sales doubled. In 2017 alone, revenue grew 27.9%. It ranks No. 4 on the 2018 IndustryWeek 50 Best, down from No. 2 in 2017. 

In a speech at Notre Dame University in April, Lippert President Scott Mereness said that since 2015, 22% of the company’s revenue growth has come from acquisitions. “We’ll typically do four to five acquisitions per year,” he said. The rest is organic growth (31%) and industry tailwinds (47%).

Mereness, a graduate of Miami University in Ohio, began his career at Lippert 24 years ago as a welder. Back then, Lippert did $80 million in sales and had 400 employees. In 2018, projected revenue is $2.7 billion and the workforce numbers 11,000. Lippert now has 66 operations facilities, all but 10 of them in the United States.

Mereness said that the RV industry could “almost be described today as the automotive industry back in either the ‘70s or the 80s. You’ve got arguably too many brands and too many floor plans, but that’s the nature of the situation we work in. We consider ourselves a world-class job shop. We have to be very good and very responsive and producing very low runs … and very flexible in terms of changeover. That does not allow us to always have the tooling and robotics and flexibility as far as being able to stamp out thousands of parts like the automotive industry.

“One thing we really feel we’re good at is producing a lot of different parts, as the No. 1 supplier in low-quantity runs, and having very quick changeover as part of our production process,” he said.

Tariff Tangle

The steel and aluminum tariffs on imported goods have been an issue for Lippert, which buys 300,000 tons of steel every year and 50,000 tons of aluminum—all of it domestic. Jason Lippert, the company’s CEO, told CNBC last April that Lippert has had to figure out creative ways to absorb a 25% increase in steel prices: from stepping up its lean tactics to recontenting its products with lower-cost technology and components.

Finding new talent is also a challenge. With the labor market in the RV capital of Elkhart one of the tightest in the nation (IW 50 leaders Patrick Industries and Thor Industries are also based there), Lippert has made automation a priority, but still forecasts growing its global workforce to at least 20,000 by 2028.

“The Lippert of the future is going to be much more automated,” Mereness told the Notre Dame crowd. “It’s going to have many more lean employees that are going to be busy working on increasing efficiencies and lowering the need for the next couple thousand of employees, so we don’t struggle as much as the average company.”

At the same time, Lippert has been developing its existing workforce with a program called Everyone Matters. Lippert designated nine leadership coaches in upper management to provide leadership training to more than 800 front-line supervisors throughout the company.  

Mereness sees growth opportunities for the company in areas including sewn goods, motion technology and electronics. “We don’t’ do a whole lot of importing of finished products,” he said. “The majority of this manufacturing happens 20 to 30 minutes away to the east.”

Mereness’ tenure at Lippert is typical of the company’s top leadership, which on average has 17 years under its belt at the company. “We finish each others’ sentences,” he said.

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