In a move that’s sure to make waves in the RV industry, Elkhart, Ind.-based Lippert Components Inc. has reached a six-year exclusive distribution agreement with fellow supplier Furrion LLC — a Hong Kong-based technology component vendor with U.S. headquarters and a service center on the north side of Elkhart from which it markets power systems, audio-visual equipment and kitchen appliances to the North American RV industry.
LCI CEO Jason Lippert told RVBUSINESS.com that the new agreement, effective in July, grew out of talks with Furrion co-founder and CEO Aaron Fidler, an Australian native who resides in both Elkhart and Hong Kong.
“Everything we do when it comes to merging with other businesses or acquiring other businesses always comes down to people,” observed Lippert, whose closely held, 6,500-employee firm, a unit of Drew Industries Inc., currently does more than a billion dollars in annual revenues through both RV OEM and aftermarket channels. “I met Aaron several months ago and we started talking about products and opportunities and where they were going and where we’re heading.”
In the process, Lippert said, he soon realized how similar their companies are in terms of their aggressive natures and product-related “idea trains,” which led to the joint strategy.
“Yes, we’re both aggressive growers and heavy innovators,” said Lippert, the nation’s leading RV OEM supplier. “The innovation is probably the biggest thing that draws us to Aaron and their company, just the fact that they are passionate about innovation and so are we. And that’s ultimately what wins in the market — coming up with new products that excite the OEM’s, the dealers and the consumers, and that’s what we’re all about. We’re too closely in line not to try to figure out how to put this thing together.”
In connection with the new agreement, LCI acquired Furrion’s current inventory, as well as Furrion’s deposits on inventory scheduled for delivery, for approximately $11 million.
Underscoring the impact of the Lippert/Furrion alliance for the two firms – and the industry at large – is the sheer breadth of product involved when combining Furrion’s portfolio of interior componentry with Lippert’s depth in OEM and aftermarket products, most notably towable RV chassis, slideout systems, axles, windows, furniture and leveling and stabilizing systems plus plastic, steel and aluminum fabrication.
“We’re drawing more people into the RVing lifestyle just from what they see on the inside of the units,” Lippert added, “and they (Furrion) also bring that to the table. Our furniture and mattress products have completely changed interiors for the better, and Furrion adds even more eye appeal and cool aspects.”
One potential outgrowth of the new partnership, both confirmed, is the introduction of a joint R&D innovation center in Elkhart where the two firms can co-develop products for a U.S. market that Furrion, which sources and sells its products globally, first entered seven years ago with an eye toward products exuding more European design cues. According to Fidler, by 2014 Furrion’s sales to the RV industry had exceeded $35 million.
Overseeing sales of Furrion’s products for LCI will be Lippert Vice President of Operations Ryan Smith.
Furrion is looking to grow its reach into the RV sector and other markets by accessing Lippert’s current distribution channels and giving Furrion “boots on the ground” with regard to U.S. distribution.
“Basically, we’re looking at expanding our supply chain, our reach into new markets and new potential sales channels,” said Fidler, who co-founded the company with his brother, Vice President of Marketing Mathew Fidler, and Vice President of R&D Steve Bell. “By accessing Lippert’s infrastructure, we feel we’re able to grow our company faster than we would trying to set up our own infrastructure, giving us the ability to put our resources and our energy into what we do best in terms of innovation and product design. As a result, we’ll be able to access more technology, develop products faster and then push it through Lippert’s distribution network.
“The ultimate goal for this relationship for us is to supply our customers with better products and, because of a more efficient supply chain to market, do so through our Lippert partnership at better prices,” said Fidler, whose company employs about 100 people.
Not only does the new distribution agreement offer Furrion the ability to leverage LCI’s 20-year relationships with RV industry customers, says Lippert, it also provides a potential entry for Furrion into “adjacent” markets like marine, manufactured housing, specialty vehicles, equestrian and cargo trailers in addition to heavy trucks and buses – niches that Lippert, to an extent, already serves.
Establishing a U.S. distribution network also gives 12-year-old Furrion the flexibility and management leeway to better grow its global book of business. “We don’t have the infrastructure at this point to go into those markets aggressively, whereas we’re also looking at consumer-based markets outside of our current reach,” noted Fidler. “Our goal is to take Furrion to the consumer level to become a brand that is recognized in general households.”
Together, the two executives told RVBUSINESS.com, Furrion and Lippert already have “dozens of products in R&D that they are prepared to launch together in the coming quarters.