The consolidation drumbeat continues in the RV industry – a fact about which most RV industry observers were reminded Friday (May 1) when Thor Industries Inc. announced the $144 million acquisition of Elkhart, Ind.-based Postle Operating LLC — dba Postle Aluminum Co. – from private equity owner Strength Capital.
Postle is a key 500-employee vendor of aluminum extrusions, powder coating, painting services and specialized components for the RV, cargo, specialty trailer, fencing, and marine markets.
In a press release, Bob Martin, president and CEO of Thor, also headquartered in the northern Indiana city of Elkhart, lauded Postle’s “longstanding reputation for quality and service” and underscored Thor’s consistent managerial style of allowing its divisions to operate independently. He stressed that Postle’s current management team, led by Postle President and CEO Kevin Robinson, would remain in place and that the newly acquired company would continue servicing competitive RV manufacturers.
Of equal interest to many in the RV industry, of course, was the fact that Thor for the first time was acquiring a substantial supplier, a company with three plants in Elkhart and one in Cassopolis, Mich., posting $220 million in 2014 revenues. Martin took a few minutes today to chat with RVBUSINESS.com about the Postle acquisition.
RVB: We’ve noticed that Thor intends to keep Postle’s management team in place, much like you have with several other recent acquisitions.
Martin: Many times when we buy a company, we look at how we can help it and this is a case where we can really help them reach their growth possibilities through being a strategic and financial backer. And Kevin (Robinson) has got great ideas. We both think that the business can grow with the industry – and with the other industries that it’s involved in – markets we haven’t been in before. But, once again, Kevin understands the business and the customers, and we plan on having minimal changes.
Obviously, when a public company buys a private company, there are changes in accounting and things such as that. But Kevin’s got a great team, and I just want to work more with them and learn their business and see how we can help them.
RVB: That being said, Bob, you realize you surprised the heck out of the industry by buying a supplier this time around. While everybody talks about consolidation, this is a different kind of consolidation.
Martin: Well, Postle was owned by private equity, and private equity inevitably reaches a point where they’re going to sell the company. And for us as a customer I learned that that point was coming, and it can make you a little bit nervous because so much of our content is aluminum. And if it were to sell to a larger private equity, you never know what can happen.
You don’t know, but someone could have come in and had a rollup strategy where, maybe they pulled some of their production out or they changed management. It could have been a disruption, not just to Thor, but to the industry. And, of course, my job is to protect Thor. But Friday morning, the day of the announcement, I called many of my competitors in the industry and just let them know that our intent was to let Postle run, you know, business as usual – no big changes.
Kevin has agreed to stay on and, to us, that was a key component to the acquisition. And they’re adding capacity. In the May/June time frame there’s another press coming on in Cassopolis that is just a state-of-the-art piece of machinery that will help support the industry even more. For us that was one component. We didn’t want to have any business disruption.
So, we talked to many of our competitors and let them know that because we’re so decentralized, this is possible – that I will be involved, but just kind of from the outskirts like I am with most of our companies on the RV side and just help them with their growth goals.”
RVB: It’s a move toward verticality, is it not?
Martin: It is, but it’s a little different. If this was true vertical integration, it would only supply our companies, and then we would integrate it into Thor corporate. This instead is a case where we bought a very good company that supplies most of the Thor companies, but supplies many of our competitors as well. So, people see it both ways. It’s somewhat of a vertical integration move, but being that they’re a supplier to other industries and other RV manufacturers, it’s not a true vertical integration move.
You know there are companies out there in the RV industry that produce their own aluminum extrusions in-house and they only supply their own, and that’s true vertical integration. This is a little bit of a different spin on that.
RVB: Q: Did your division heads like this move?
Martin: Yeah, they did. You know, everyone that I’ve talked to has looked at Postle as a company, realizing that they understand the business. And the way the RV businesses runs, they (manufacturers) need quality, consistent deliveries, service and a relationship they can trust, and those are things they’ve always had with Postle. Of course, there are always bumps in the road at different times. But, for the most part, they’ve (Thor divisions) had very strong business relationships. And I think you’ll find it’s true with other companies within the industry. Now Postle also supplies the cargo trailer sector, something we’re not involved in, but we want to continue their presence in those other markets and, if anything, help them grow that even more.”
RVB: Last question, Bob: How’s your business right now?
Martin: Everybody’s waiting for the spring and summer season. But, overall, we’ve experienced strong retail shows, record attendance with dealers’ retail continuing to trend up. The health of the dealers is very strong. With regard to the driver’s situation from last year, they’ve (transporters) done a great job of hiring drivers, and delivery is quite quick this year. So, there’s many positives going into this year’s summer season. The dealer optimism continues to be high. And as we look at business going forward, we think this is going to be another strong year.”