We met Fred Bentley, President and Chief Executive Officer of DexKo Global, in Salt Lake City. Our interview turned out immediately to be very concrete and the US manager presented his vision of today’s and tomorrow’s markets in great detail, illustrating the strategies of the DexKo Group.
Words Antonio Mazzucchelli
Fred Bentley (53) has held the position of President and Chief Executive Officer of DexKo Global since January 2016. He oversees the Dexter Axle and AL-KO Vehicle Technology global operations. Additionally, he started serving on Dexter’s Board of Directors in 2014. Mr Bentley has significant experience running global operations and growing businesses while working with world-class companies. Prior to joining DexKo, he was the CEO of Maxion Wheels, a $2.4 billion global automotive equipment supplier and the world’s largest wheel company. He oversaw the $1.2 billion European operation and lived in Germany for three years prior to becoming CEO of Maxion. He held the position of COO and President of International Operations of Hayes Lemmerz, leading the company’s sale process (to Maxion) and the divestitures of non-core businesses while significantly globalizing the core business. Prior experience also includes six years running an international business with significant operational experience at Honeywell/Allied Signal and seven years in operations, finance, and strategy at Frito Lay. Fred has a BS in Industrial Engineering from the University of Cincinnati, and attended the Harvard Business School Advanced Management Program.
Aboutcamp BtoB: Could you explain the main driver behind the decision of forming DexKo through the merger of Dexter and AL-KO?
Fred Bentley: When we were looking at AL-KO, we were incredibly excited about the opportunity to put Dexter and AL-KO VT together. Both companies have a tremendous history – AL-KO since the early 1930’s and Dexter since the early 1960’s. They are recognized brands with great products, service, delivery and technology. Instead of having just a North American-focused company, we became global. We knew the combination would not only give us an opportunity to get better, but it would also give us an opportunity to build on a strong platform. Not many companies have the position we have.
Aboutcamp BtoB: What balance can be drawn for the merger between Dexter and AL-KO three years after the signing of the agreement? Is the integration of Dexter and AL-KO now complete?
Fred Bentley: We knew both groups were made up of talented people and had a broad product offering where taking care of the customer was a priority. When this exists, you’re likely to have a good company. We have now completed the acquisition and have added new companies with great products to our industry leading offering. We have a company that has a strong position, great products, a diverse customer base where we serve multiple end markets and geographies.
On the integration specifically, our last big item was our IT which was still under a service agreement with the prior owner. At the end of last year, we put the infrastructure in place and we are off of the service agreement. It took three years to do the work. We took our time and we focused on product and customer first and then the administrative processes over the last couple of years. We are continually improving how the two organizations are working together, learning from each other, and building on what each does well. I don’t know if we will ever be done with that. We will continually work to get better at AL-KO and Dexter and, as importantly, at the new companies which are now part of DexKo.
Aboutcamp BtoB: Are America and Europe two independent markets, or are there similarities that allow an exchange of products?
Fred Bentley: I think there are some similarities, but each market has many different customer preferences. We have products that can serve both markets and we use our capability to develop those products. That capability is really a differentiator for us as a global supplier. We can take the best from around the company and customize it to better serve the different requirements of our customers.
Aboutcamp BtoB: Is DexKo worried about the future demand for axles and chassis if OEMs change the production techniques for RVs and motorhomes?
Fred Bentley: Here’s what I worry about: I worry about having great people who can make great products and I worry about making sure our service and quality are the best in the market. I believe, if we can do that, there’s a reason for our customers to buy from us. In our Dexter business, you can call us today and our commitment is to get that order delivered in five days. Think about that, we produce 25,000 SKUs globally and we commit to having incredible speed in our service with a high 90 percent order fill. By giving this level of service, it helps our customers serve their customers. Our focus on this is a big benefit for them, and we think that is huge.
In addition to differentiated service, we also want to have great quality. We make sure we are building products that our customers will not have to worry about. Finally, we focus on innovation. In Europe, we are introducing the Vario X chassis which will take 25 to 35 percent of the weight out of a chassis. We can develop this innovative product because our business is focused on making a chassis and it is core to our business. We have the manufacturing equipment and capability and are able to innovate better than others.
We want to offer a total value chain proposition where we offer great products with brand recognition, differentiated service, great quality and innovation. This allows us to help our customers create value in their businesses. We know everyone makes choices on allocating capital and I know our customers want to be focused on making great products. We want to make sure that we are helping them make the choice easier and we are offering something that is better.
Aboutcamp BtoB: DexKo has recently expanded through acquisitions, for example in Australia. Do you have plans for more global growth?
Fred Bentley: It’s been fantastic. Over the last three plus years, we completed 16 transactions, we have been very busy. Last year, we bought a company in New Zealand, Australia, Italy, Germany, the Netherlands, and one in the US. Not a bad global expansion. In addition, we are close to completing two acquisitions this year. Not only did we expand geographically but we also expanded our industry leading product offering: CBE produces electronics and wiring products; E&P, produces a hydraulic load-levelling system; and in the Netherlands it was VB Air Suspension. Each of these provide a new product category for us to grow. In the case of VB, we bought a minority position in a company that is the leading producer of air suspension components. The air suspension was the last piece we needed to provide the fully integrated system. Now we are making the axle, we make the brake and suspension, we have the chassis, so we can offer the customer a one-stop-shop for the whole system to make their job a little easier. To answer your question, are we continuing to grow through acquisition? YES! We believe we will. We will also continue to grow our business organically where we have had success.
Aboutcamp BtoB: Do you have any plans to go public in the future?
Fred Bentley: My plans are to make sure we have a great company and that the owners of the company are satisfied with what we do. Right now, our job is to make the company as good as it can be by offering innovative products and to make sure we have employees that love working for DexKo.
Aboutcamp BtoB: What differentiates DexKo from your competitors?
Fred Bentley: I think there are several things that are different about DexKo.
First, we are a global company and most of our competitors are regional. We want to have a strong position wherever we are. We are seeing a change where a few of our customers are becoming more global (e.g. the Thor acquisition of Hymer). We are prepared to handle this shift with the product offering and geographical coverage we have. We are doing it today. As a global company we are better suited to handle this change. But we never forget a large part of our business is still to support our very important local customers.
Next, we have the broadest product portfolio in the industry. We produce over 25,000 SKUs. When our customers come to us and ask us to make a product for them, we will do it. We provide engineering services for design; we offer quick delivery; and we give them great quality.
DexKo has approximately 20,000 customers. Our biggest customer is about eight percent of revenue. This is different from our competitors where their customer concentration is much different. We have a large number of great customers. We offer our products to a lot of different industries and that gives us the ability to handle ups and downs in the market. For instance, in the 4th quarter when the RV industry had a bit of a slowdown, we still had growth in our business because of the other markets we serve. The diversity of customers and end markets served differentiates us.
Those are the macro things that are different: global, big product offering, large customer base in multiple markets.
Operationally, we give better service in the sense that we are supplying largely customised product to our customers faster than our competitors do. That is a big deal to our customers.
The third thing is our leading innovation and quality. As you’ve seen on your recent visit to our technical centre in Germany, we take innovation and quality very seriously and have incredible capability. We have this capability in each of our geographies. We innovate and develop new products in each place. This allows us to develop and introduce great new products, such as our sway control, new axle applications, and the upcoming light chassis (Vario X). We are also developing new products for E-applications that we are going to launch in 2019. We are incredibly excited about the new E-products which are customized chassis applications for an electric vehicle. This ability to innovate with quality products is incredibly important and we lead in this area. We invest a significant amount of resources in staying a leader in innovation.
One final thing that is different is that we have great people. A lot of companies say that, but we really mean it. Our difference is we take a significant amount of employee input to make improvements in our business which allows us to get better. It goes back to the question about the integration and the benefit of it, we get a lot of best practice sharing from really talented people. Our team is doing a wonderful job of helping DexKo run really fast and to get a lot done.
Aboutcamp BtoB: The RV markets in most economies have experienced strong growth, but how do you see the markets continuing over the next few years?
Fred Bentley: There are a lot of influences supporting continued growth. The demographics of an aging population looking for new leisure opportunities and having a more care free way to travel is a big plus. There is an effective effort in attracting younger people. There is a huge opportunity to expand into this part of the population. Both age groups are looking for a different travel experience. This provides the opportunity to attract more participants and our customers are doing a good job of drawing them in. The negative experience of air travel is also helping. As air travel is becoming more difficult, people are looking for alternatives. Each of these opportunities is a positive which is encouraging. We’ve seen the benefit of this focus over the last few years and there has been really good growth in all of our main markets and they seem to be lining up for growth to continue.
The final thing is the consolidation that has taken place in the industry during recent years has made it stronger. The industry is definitely stronger today than it was during the last big downturn. Today there are good macro influences and a better industry structure. All of the influences have resulted in a more robust industry and that bodes well for everyone.
Aboutcamp BtoB: With the recent acquisition of OEM manufacturers forming their own conglomerate groups, will these affect your business?
Fred Bentley: It affects the business in that there are fewer customers. Remember we still have 20,000 customers and while a consolidation of a couple gets our attention, we still have a large number of customers to support. All of our customers are very important to us.
In both the US and European market, there has been consolidation for the last several years. The recent one (Thor) happens to be bigger. It gets back to the point that we have to provide great products for our customers and when we do our customers are going to want our products. It is our job to make them want our products.
Aboutcamp BtoB: In Europe the end of diesel engines seems inevitable. How do you see this situation?
Fred Bentley: This is on everyone’s mind – what happens to the industry as combustion engines convert to electric and how fast does it happen. With most changes it can be a problem or an opportunity, we are working on several new solutions to make it an opportunity. The new solutions are really exciting for us. We are starting a new programme in a few months where we are actually building the chassis and integrating it on E-vehicles. The challenge of where you put the battery and how you fit that into the vehicle fits our strength of customized chassis production. Our ability to customise is something we do well and that we are focused on.
We are also focused on other innovations around connectivity. Our idea behind acquiring CBE is not only to get a great company but to also explore how we improve the connectivity of the different products we offer. I love the capability of our company which allows us to be forward thinking and to invest in new technology. This capability is something our smaller competitors are not able to do. We will be ready, just like AL-KO has been for 90 years now and Dexter for 60 years. Both Dexter and AL-KO have the brand recognition today because they have been innovative and on the forefront of new product development. We’re excited about the changes, and like anything, we want to make sure we understand it and are well prepared.
Aboutcamp BtoB: Is the acquisition of CBE in Italy the first step towards a concentration on electronics and do you plan to completely expand your business beyond the axle and suspension?
Fred Bentley: CBE is a new segment for us and we believe there are some creative things that we can do with the business, which by the way is a great business. The team running CBE has done a fantastic job being innovative, handling product complexity and being competitive.
As far as getting out of our core segments, we like highly engineered products and we like products that have a reason to be bought by the customer. When we are looking at companies, we want to make sure they fit in those two categories. We are incredibly disciplined in where we invest. We want to make sure we are investing in the right place to help our customers for both today and tomorrow.