LCI Industries Chief Relies On Culture To Help Weather Storms

The recreational-vehicle industry is creaky right now, and the UAW strike against the Detroit Three automakers has introduced uncertainties that no company in the nation’s transportation supply chain is welcoming. But Jason Lippert remains unruffled.

The main reason is that, while he understands the vagaries that business cycles and labor disruption can bring, the president and CEO of LCI Industries is confident in the company’s business model, approach to battening down the hatches, and culture and workforce. Lippert and the company have worked especially hard on that last element, and manufacturing chiefs facing their own uncertainties right now can learn from his approach.

At the moment, Lippert is dealing with the fallout from a rather dramatic decline in RV sales that began late last year and has continued this year, as RV manufacturers slash demand for LCI products such as highly engineered steel chassis, axles, suspension systems, leveling systems, windows and bath units for those vehicles. The $5.2-billion manufacturer based in Elkhart, Indiana, also makes those and other components for related forms of transportation including buses, boat trailers, trucks and trains.

“Execution on diversification has continued to pay off,” Lippert said in the company’s second-quarter financial report last month, “with strength across our aftermarket, international, marine, transportation, and housing markets helping partially offset softer sales in North American RV.”

In fact, Lippert said, through some cost-cutting, re-sourcing, “continuous improvement projects,” investments in automation and other measures, LCI experienced “another quarter of sequential margin expansion” even as second-period sales declined by 34% year over year, following record annual sales for 2022.

Throughout, Lippert has stressed the importance of flexing staff and maintaining the worker-friendly culture that has won LCI acclaim from manufacturing-management guru Robert Chapman, CEO of Barry-Wehmilller and author of a philosophy he calls “truly human leadership.”

“It all starts with culture and leadership, and safety is in the mix, too, just given the nature of manufacturing,” Lippert told Chief Executive. “And ultimately, training is really important. People want to stay longer when they feel like they’ve got a development path, whether they’re a welder or an aspiring leader of some sort.”

With more than 120 facilities employing about 14,000 manufacturing workers around the United States, here are some ways Lippert leads an effective culture at LCI:

• Make compensation a non-issue. “Our goal is to be competitive” when it comes to compensation, Lippert said — and that has been no mean issue in, for instance, LCI’s home northern Indiana labor market where a decade of torrid output of recreational vehicles and components meant extreme worker scarcity.

“It all boils down to this: Team members get to vote whether they come back every day or not,” Lippert said. “It’s their choice. They’re comparing us to past jobs.”

• Value retention. “The more and longer people stay in their jobs here, the more ideas they generate, and the better they make their jobs and their environment,” Lippert said. “You can’t get that if people are coming and going all the time. Retention is the pinnacle of what we try for, and [important to] having a life here and having the best life in manufacturing they can have.”

Retention and low turnover also, he said, “make people more familiar with their jobs and create a safer working environment.”

• Implement simple amenities. Not everything to benefit workers has to be elaborate or expensive. LCI plants, for instance, lately have “painted a lot of things and added color,” Lippert said. “That makes a difference. You don’t feel like you’re in a dungeon, the way a lot of manufacturing places look. We’ve also cleaned up our break rooms and made them very nice, and fixed up bathrooms and clean them multiple times a day. We’re hiring extra cleaning resources.

“We have really great food choices. And we have a mobile medical unit that travels to facilities and helps people keep track of their health.”

• Break down “purpose.” At a time when “jobs with a purpose” are all the rage, it may be difficult for manufacturing chiefs to align factory jobs with some sort of ethereal motivation. But for Lippert, something as simple as enlisting his plant employees in philanthropy can provide some of that meaning.

“We present three to four ‘serving’ opportunities a year to our employees, and on average we have a participation rate of 75%,” he said.

There are other things. For example, LCI addresses the challenges of front-line relationships in factories by providing leadership coaches for supervisors and requiring even low-level managers to spell out how they plan to improve their leadership goals.

“Ultimately, if [employees] are getting compensated fairly and like the leaders and culture of the business, they’ll decide if this is the place they want to be over the long term,” Lippert said. “Our job is to make sure the answer is yes by the experience we provide them.