A Stable Future Q&A with Jeff Rutherford

Rutherford has nearly 35 years of experience in the RV and auto industries.

Airxcel President and CEO Jeff Rutherford spent 2021 at the RV industry’s forefront. Rutherford completed his first year as RVIA chairman and was re-elected to the post in the fall. He led one of the industry’s largest suppliers through supply-chain challenges in a record year for wholesale shipments. In September, Airxcel was sold to Thor Industries.

By RV News Staff | Photos by Jamie Chihuan Photography

Through shutdowns and slowdowns, shifting capacity and extended work hours, Jeff Rutherford has worked to ensure Airxcel’s operations met customer and overall industry demand.

As 2022 began, Airxcel’s new ownership, Thor Industries, brought stability to the company, Rutherford said, empowering it to tackle business in unprecedented ways. He added that the ability to plan and execute differently will allow Airxcel to expand capacity, add technology and pursue acquisitions.

Meanwhile, as RVIA chair, Rutherford said the return of RVs Move America Week and a new initiative to support emerging industry leaders will be among his and RVIA’s 2022’s highlights. How has Airxcel changed since the Thor Industries acquisition? Th e biggest thing under our current ownership structure, when you think about the diff erence between being part of a private equity business and a public company, is the view of investment.

The time frame for return on that investment is entirely different for the two structures. Things that were not possible to consider because of the timing we may have had in a private equity cycle are now things very much on the table for us. That could be new product development, new technologies, new equipment or new facilities.

It has really opened an opportunity to be a much more forward-looking business as it relates to innovation, product, technology, product expertise and manufacturing. That is probably the single largest change.

In a private equity world, businesses typically sell in three to five years. When you first go through that transaction, you get your wheels underneath you, and then it takes a year to pay down some of the debt. Now you are one-third of the way through your cycle. If you have a project that takes 18 or 24 months to materialize, by then, in many cases, the private equity company is already in the sale process.

So, the private equity window is much shorter: How can you get returns in six, nine, or 12 months? Now, we can look at two- to three-year returns. A construction project, for example, might take you 18 months just to get a permit and build…maybe

(L to R) Mark Brodie, Airxcel director of digital marketing; Selma Salihagic, Aqua-Hot general manager; Rutherford; and Piar Adams, Airxcel vice president of marketing, international and aftermarket sales; meet at Aqua-Hot’s Longmont, Colorado, headquarters.

(L to R) Adams and Rutherford review Aqua-Hot’s manufacturing facility. Production Technician Michael Deane.

Warehouse Manager Darren Slater.

Aqua-Hot’s 450D heating system for diesel motorhomes includes a 1.5 gallon-per-minute tankless water heater and a 65,000 BTU interior heat exchanger.

even two years. Some kinds of capital equipment have longer lead times and take 12-14 months to have specialty equipment built. All those are now open to us that were not necessarily open to us previously. They were available; they were just hard to justify and make sense.

We now have ownership stability. I tell people on our team this is the first time in 30 years of existence that Airxcel is not for sale. That is a real change. There is a certain calmness that exists today.

Thor is ultimately a holding company. The way we view it is Thor owns the paper of the business. The focus, the priority, the execution of our goals and objectives, it is on us.

Has Airxcel changed anything regarding product delivery to non-Thor-owned customers? Th ings have not changed. One of our core pillars is to be a committed partner to our customers. Th at commitment applies to all of our customers—the people who want to do business with us, as well as our employees and our suppliers.

Our expectations of supporting those customers will continue to be exactly the same as we have done during our last 30 years of doing business. If you are our customer, we are going to give you the same support.

When we went into and came out of the Covid shutdown, customers wanted products beyond our capacity. We allocated the appropriate capacity to customers based on the partner relationships we had with them before the shutdown. There was a lot of pressure from a lot of different people to put a thumb on the capacity scale in their favor. That is not how our business operates. We stayed true to our commitment and partnerships, and we treated all of our customers fairly. As our capacity increased, we proportionately increased volume to our customers. We intend to continue doing that in the same fair way going forward.

Each one of Thor’s business units operates independently. Airxcel must earn its place as a supplier with every

Rutherford was promoted to CEO at Airxcel in 2016.

Thor business, just like we have to earn our place with any non-Thor business entity. Earning our place at those companies is based on our service quality, product performance, price… the same criteria for everyone, just as it has in the past.

What kinds of business investments will you make, and have you made? Over the past six months, we made several significant equipment capital investments to improve capacity and product throughput. We do have intentions of facility expansion, again to further increase capacity and our product offerings. Our vision of Airxcel being a supplier to the entire industry is really no different today than it was before.

Those things that made us successful and grow in the past were product innovation, new product development and strategic acquisitions. We intend to continue to do all three of these. We just have more resources to do them with today than what we had available to us before.

Projected customer demand is usually the first way we prioritize investments. That could be a combination of OEM and/or aftermarket demand and our current capacity utilization. How are we doing with what we have today?

Ultimately, our investment strategy is based on our view of what the future looks like relative to product-type demands. Is there a technology shift or something coming into play that might cause us to consider doing things differently? It may be something related to electric vehicles or the more recent focus on boondocking. Does that create different product demand types that may require an investment in facilities or equipment?

How is your supply chain holding up in present market conditions? There are two sides to this. The first is the industry just got done announcing 600,000 shipments last year. That could not be done if suppliers were unable to figure out how to manage

the supply chain. It is incredible when you look at this industry that not only Airxcel but many suppliers figured out how to overcome those hurdles in very challenging environments.

Airxcel’s growth last year significantly surpassed the industry’s growth. Not only did we have to deal with the industry growth of 20%, but we also dealt with our growth on top of that in an environment where obtaining parts was a challenge. For example, some of our gas appliances use specialty-type steel. Those types of steel were just not available anywhere else in the world. Having to try and qualify and replace those materials with a different type of material that could still meet all the safety and performance criteria was a significant challenge. Quite honestly, we are still dealing with it.

The good news for us is we manufacture our own products. So, we are buying components and assembling them domestically. Back in 2018, when President Trump first imposed tariffs on products coming from China, it really forced us to look for multiple component sources in order to deal with the cost consequences of the tariffs. Because we had multiple sources for each of the components we buy, we had a lot more alternatives in the supply chain.

I think we had a little different situation than people who were just importing strictly from China, because we have more alternatives and more options available. Having said that, it was not easy.

What challenges has RVIA faced since you became chairman in 2020? By the time my chairmanship began, a lot of work was already underway, and it was really just trying to adapt to the environment or make tweaks to what existed at that time. But the heavy lifting was done prior to me taking the spot.

The industry association’s purpose is to promote the health and growth of the RV industry. The association has had to look at all these new first-time buyer entrants coming into the marketplace. …What can we do to improve repair event cycle time? What can we do to help identify, create and/or provide more qualified technicians? What can we do to help identify some of the challenges in finding repair parts?

One supplier may sell the same product to six different customers under six different part numbers. How does a dealer find access to this complex information, and how do they resolve those kinds of things? Those are things that the industry can help push.

One of the other challenges is today’s buyers are more demanding than buyers we had 25 years ago, even 10 years ago. So, what can the industry do to be a better provider?

RVIA created a lot of tutorials about how to be a good camper, how to use your product, how to be a good neighbor at a campsite and what basic protocols are.

What advocacy gains have you accomplished, and what would you like to do? The big one that occurred prior to my chairmanship was the passage of the Great American Outdoors Act. Subsequent to the act’s passage was allocating a lot of funding to the outdoor environment geared toward recreation. To the extent that we could influence how some of that funding was allocated, whether it be for campground renovations, roads infrastructure, anything to do with access to these lands, was all part of the post passage of the act.

I also spoke to different association members about the federal unemployment subsidy and the impact it had on attracting workers back into the workforce. In many states where RV manufacturers and suppliers are located, there was a lot of conversation about the subsidy not being very good for employers, because we have plenty of jobs, but we couldn’t get workers. Association members couldn’t get workers because the government was paying them not to work. When those subsidies began going away, the ability for suppliers and manufacturers to attract workers back into the workforce increased dramatically. RVIA was a voice letting state and federal government leaders know jobs were available, but the subsidies were having a negative impact on business.

We also have the traditional advocacy events…everybody going to Capitol Hill. We were unable to do it last year or the year prior, but we are planning on restarting that this year. The Supply Chain Taskforce working with RVIA was able to get information to advocacy representatives to take up to the Hill. We were able to convey what members were seeing regarding ports, containers and supply-chain concerns overall.

How important is a united industry voice on supply-chain issues? It is not only having a unified voice, but it is having actual data and facts. The great thing about our congressional representatives is they respond very well when presented with data and facts. It is very difficult for them to truly have an appreciative impact on something if you are talking in generalizations. I think that part of the task force was absolutely well worth it.

How has RVIA’s role with non-manufacturing partners evolved? If you think about the membership within RVIA, it is manufacturers, suppliers and a bunch of associate members. I have always been a strong proponent of RVIA as a membership association. It is for the members. And RVIA, in general, under Craig Kirby’s leadership took a really strong emphasis toward serving the members first.

RVIA was not always a member-first association. Under Craig’s leadership, the emphasis they start every conversation with is, “How does this help our members?” I do not think there is any different view, whether that be a supplier member, manufacturer member. It truly is all members.

Rutherford began serving as RVIA chairman in fall 2020. He was re-elected as chairman in 2021.

What role, if any, should RVIA play in increasing diversity and inclusion? Th ere is a lot of talk these days about diversity inclusion. People often think about diversity only as racial or gender inclusion, but diversity could be from people coming from diff erent geographical areas. You have economic diversity, physically abled body diversity, as well as racial and gender diversity. We do not want to push any specifi c social agenda. What we want to do is…to help people understand the diff erent kinds of diversity and how through that understanding diversity can help infl uence the industry, your business, our lifestyle.

When it comes to inclusion, I think the industry itself has done a great job. RVIA has done a great job of trying to make groups who previously did not feel welcome in certain types of outdoor recreation become more engaged. Understanding what some of those limitations or restrictions or barriers are that would make people feel like they are not included makes it easier to fix.

We are talking about having an open and welcoming industry and environment. This is partly driven by a lot of these new buyers, who are coming from different kinds of groups to be included in camping in ways that they had not been before. Whether it is the industry reacting or the industry driving it, it all seems to have come together now.

What has been the highlight of your chairmanship? I will look back and be excited about two things when the chairmanship is over. One is the progress RVTI has made. Technician training and education is something I have been involved with for nearly 20 years. I am proud of the progress RVTI is making and its ability to recruit and bring people into the industry. Th is progress has been a long time coming for our industry and was desperately needed.

The other thing I will look back on is the new Emerging Leaders initiative. How do we embrace some of the younger folks who are identified as up-and-comers? How do we get them involved in what is happening in their business and the industry? We want to use this new initiative as a platform to help mentor and enhance their skills and knowledge. That is pretty exciting.

In March we had our first Emerging Leaders Conference in Palm Desert, California. The emerging leaders did all the work to make this conference happen. They brought in guest speakers. We encouraged attendee networking at the event. We also invited attendees to attend and participate in the RVIA board meeting. During the board meeting, we had an open roundtable forum where we discussed global/industry events as they relate to the RV industry. We encouraged and received feedback from the emerging leader attendees’ perspectives. As the conference wrapped up, I feel like we have a good idea of who our industry’s future leaders may be. Seeing the conference take place and what I believe will be very positive results as time continues is certainly a highlight for me.