Editor’s Note: The following profile on Lippert Industries Inc. CEO Jason Lippert, appearing in Chief Executive’s “Masters of Manufacturing Series,” details the company’s diversification strategy as the industry headed into a downturn.
Jason Lippert has headed into a downturn in the recreational vehicle industry this time around much better prepared than last time. LCI Industries, a $2.5 billion supplier of components to the leisure-vehicle and mobile-transportation industries headed by Lippert, now relies on RV builders for only about 58% of its revenues compared with 90% when LCI lost about 60% of its sales in the wake of the Great Recession.
“Our diversification plan is working, helping to mask a pretty significant downturn in the RV business” recently, Lippert tells Chief Executive. “If you’d asked me a couple of years ago, before any downtick [in RV sales], what a tough downturn in that industry would look like, I would have said ‘20%.’ And that’s what we have seen over the last 12 months.
“But our operating profit for our last earnings release is better than our historical average, so our diversification plan is working,” he adds. “We’ve got a double-digit operating profit, so we’re operating pretty well even in a tough environment. And we have a better capability of lasting through some kind of cycle, be it recessionary or economic or an inventory cycle.”
Growing up as the grandson of Lippert Components founder Larry Lippert, Jason Lippert was a recent graduate of Miami University in Ohio when he joined the family company in 1994 – as a welder at one of its mobile-home chassis plants. Eventually it was he who pushed for the company’s diversification into RV components in the first place. “They’re just smaller houses on wheels,” he says.
Tapping into the burgeoning RV-assembly industry in northern Indiana, Jason Lippert developed strong relationships with industry stalwarts, and soon LCI was making not only chassis but also slideouts, awnings, axles – “there was nothing that we weren’t willing to try,” he says.
Meanwhile, LCI became a publicly traded company in 1997, just as the transition between Doug Lippert, the CEO, and son Jason Lippert was taking shape. Jason Lippert continued to help build the company into the largest supplier to the RV industry — and had moved the headquarters to Elkhart, Indiana, the world capital of the recreational-vehicle industry — when the bottom fell out.
“We had gotten the business to about $700 million from about $100 million” when he became CEO in 2003, Lippert recalls. “Then the recession hit and took 60 percent off our top line, and that made it challenging to move the needle.”
Coming out of the recession, Lippert says, he pledged that “we can’t have 90 percent of our sales in RVs.” So he focused the company on a massive diversification effort that included incursions into the original-equipment bus, marine and specialty-vehicle-parts markets, as well as the aftermarkets for those businesses. He expanded geographically as well, into Europe. Now LCI makes hundreds of separate products that range from leveling systems to mattresses, horse trailers to luggage doors, with more than 9,000 employees in more than 70 manufacturing facilities.
“RVs are still a pretty substantial part of business, because the RV business has grown every year for the last nine years,” Lippert says. “So we’ve experienced big growth in other parts of our business.”
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