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Topics Mergers & Acquisitions, Automotive/transportation, Recreational/sporting goods, Thermoforming
Chasing growth in the recreational vehicle industry, Drew Industries Inc. plans to boost its stake in thermoformed RV components through an acquisition.
Drew announced Feb. 27 that its Lippert Components Inc. subsidiary has agreed in principle to buy certain assets and the business of Star Design LLC.
Star Design of Elkhart, Ind., thermoforms components for the RV, bus and specialty vehicle industries. Its annual sales are about $10 million.
Drew’s subsidiaries have been on an expansion spree riding recent and projected growth in RV markets. In the past several months the companies have made acquisitions in metal and electronic RV components. In mid-2012, Drew bought Agile Vehicle Modifications Inc., a plastic parts and tooling operation in Elkhart, to complement its Kinro Inc. subsidiary, a Goshen, Ind., producer of vinyl and aluminum windows and doors, and acrylic bathware for RVs and manufactured housing.
Drew is based in Elkhart, arguably the center of gravity of the U.S. RV manufacturing industry. RV retail sales grew 14 percent last year and further growth is forecast for 2014. Drew, which derives more than 85 percent of its sales supplying a wide range of RV components, saw that market drive a 12 percent sales increase last year to a total of $1.02 billion. Drew’s sales to the motor homes sector alone rose 30 percent in 2013.
Last summer Drew moved some of its thermoforming capacity from Waxahachie, Texas, to Elkhart, where it renovated a 103,000-square-foot building to house the thermoforming assets. The new Elkhart facility makes wheel-well liners, storage boxes and bathware for Lippert and Kinro customers. Drew said the Elkhart location will support thermoforming growth. The Texas plant now has more space for axle production but it continues making windows and thermoformed parts for non-RV markets.
Manufactured housing is the other key market for Drew’s subsidiaries. Drew also is a player in boat trailers and components for buses and specialty vehicles. Overall, Drew now runs 32 factories in the United States.
Drew expects the purchase of Star Design will close within 30 days. The purchase price will be about $12 million in cash and borrowings. Drew did not disclose which Star Design assets Lippert will buy or whether Star Design’s Elkhart plant will continue running. Lippert also is based in Elkhart. Star Design President Kevin Gipson will continue with the business but Star Design Chairman Kelly Rose will not.
Drew President Scott Mereness stated in a news release that Star Design will help Drew’s growth in RV and specialty markets.
“Star Design has experienced strong growth in the past few years, and we are confident Lippert Components will continue to strategically drive the business forward,” Rose said in a news release.
Star Design buys sheet made from thermoplastic polyolefins, ABS, polypropylene and polyethylene for thermoforming. It also does blow molding in its 44,000-square-foot manufacturing facility. It has been in the thermoforming business for more than 70 years.