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The lowest moment came when Leigh J. Abrams worried that his paycheck from Drew National wouldn’t clear the bank.
According to a report in the Journal News, White Plains, N.Y., he had little choice but to hold the check for two weeks until adequate funds were available in the company’s account. Such were the pitfalls of working at a financially troubled company laboring through bankruptcy reorganization. That was the fate of Drew National from 1975 to 1977.
“I remember walking into meetings with creditors for two years,” recalled Abrams, who was then assistant controller. “They would never say ‘Hello, Leigh.’ They’d simply say ‘The debtors are here.’ ”
The outlook often seemed bleak.
“There were days when it seemed like there was no hope,” he said. “Except the former president of the company was very good at one thing. He said ‘Never give up.’ No matter how bad things got, when everybody said we were dead, we sat down and said, ‘All right, what do we do now?’ We really focused on how to survive.”
Nearly 30 years later, the White Plains-based company, now known as Drew Industries Inc., has quietly staged a remarkable turnaround marked by soaring revenues, rising profits and a surging stock price under Abrams, the chief executive officer since 1979. Long gone are the unwieldy collection of Drew assets that once included quilting, chemical and dress companies, hotels, shopping centers — and even a casino in Atlantic City.
“It was terribly unfocused,” Abrams said. “There was no cohesive plan on how to operate.”
Without the distractions of those unrelated businesses, Abrams, 64, has focused the company on just two areas — components for recreational vehicles and manufactured homes.
Drew, parent of suppliers Lippert Components Inc. and Kinro Inc., has 4,600 employees working at 50 plants around the country, making windows, screens, doors, chassis, showers, axles and other components. The average RV included $1,037 of Drew components last year, up from $243 in 1999, according to the company. The typical manufactured home included $1,507 in Drew parts, an increase from $548 in 1999.
Much of that growth in market share has come as the result of new products and 19 acquisitions by Drew during the past 10 years. From 2001 to 2005, the company’s net income jumped from $8.9 million to $33.6 million.
Investors have done well, too. Shares of Drew climbed more than 455% during the five years ending Aug. 31, four times the gain for the S&P 600 Small Cap index.
“The key has been knowing to operate businesses in good times and bad times,” Abrams said. “We have great operating management. We have introduced close to $1 billion in new products over the last five years. And we have constantly taken market share from competitors.”
Despite Drew’s recent successes, the memories of the Chapter 11 filing in the 1970s have shaped Abrams’ management philosophy.
“I probably learned more in the two years that we were in bankruptcy than during the rest of my career,” Abrams said. “It taught me the importance of keeping overhead low. And I learned to focus on cash flow.”
Low overhead starts with the company’s modest headquarters on the third floor of a low-rise building in downtown White Plains not far from a Subway sandwich shop. Only 10 employees work at the headquarters that features inexpensive furnishings.
“As you can see, we don’t have very fancy offices here,” Abrams said. “We are very, very frugal in the operation. … We have no airplanes. We have no country clubs. We have no limos or drivers. If I send a Fed Ex from this office for personal reasons, I reimburse the company for that $15.”
Abrams makes about 50 business trips a year, always flying coach rather than first class.
“My secretary spends a lot of time trying to find the cheapest price,” he said.
Basak Tece, tax manager for Drew, said that Abrams is a good boss to work for.
“He is very generous with his time,” Tece said. He takes an interest in you and your family. A lot of employees have been here 25 years. There is a lot of dedication.”
Drew benefited last year when the government bought thousands of RVs and manufactured homes to serve as emergency shelter for victims of Hurricane Katrina and other storms.
Hurricane-related sales slowed in the second quarter but “the company expects to see an increase in demand for its manufactured housing products in late 2006 and early 2007, due to the anticipated permanent rebuilding of the hurricane-stricken areas,” Michael Infranco, an analyst at Standard & Poor’s, said in a research report.
This year, higher fuel prices are a major issue for the RV industry. If the cost of fuel remains high, will people be less likely to buy RVs? Wholesale orders for towable RVs, a major market for Drew, have been strong. But retail sales have been flat. Abrams, optimistic that the industry won’t be hurt severely, quoted an industry study that found that 89% of existing RV owners planned to use the vehicles as much or more than last year.
“We think that if there is a downturn, it will be a short-lived downturn,” Abrams said. “People adjust. I can remember when gas prices went above $2 a gallon. Everyone asked ‘How will we survive?’ But they survived. Now it is even higher, and people are adjusting again.”
Abrams said that people may take shorter trips in RVs because of higher fuel prices, but they won’t cut out trips entirely. About 68 percent of Drew’s business is components for RVs.
“RVs are used to go to sporting events like NASCAR races and college football games and professional football games,” he said. “People go to these events, park in the parking lot and enjoy their weekend. Nobody is going to take that away from them. I don’t care what the price of gasoline is.”