Commercial Vehicle Group Inc. (CVGI-NASDAQ)
Interview with:
Mervin Dunn, President and CEO
Chad M. Utrup, Chief Financial Officer
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interior systems, vision safety solutions and other cab-related products for the global commercial vehicle market, including the heavy-duty (Class 8) truck market, the construction market and other specialized transportation markets.


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CVG: Blazing a trail toward supplier dominion in the commercial vehicle market

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Commercial Vehicles

Commercial Vehicle Group Inc.

6530 West Campus Way
New Albany, OH 43054
Phone: 614-289-5360

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Mervin Dunn
President and CEO

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Chad M. Utrup
Chief Financial Officer

Interview conducted by:
Lynn Fosse, Senior Editor
August 25, 2005

Mervin Dunn - President & CEO

Dunn has been with the Commercial Vehicle Group (CVG) of companies since 1999, and has led the company as president and CEO since 2001. Dunn has over 25 years of experience in the automotive and heavy- duty truck industry. Prior to joining CVG, he was president and CEO of Bliss Technologies, a heavy metal stamper.

Dunn also served in various roles, including president of Arvin Ride Control, during his career at Arvin Industries from 1988-1998. While at Arvin Ride Control, Dunn formed a joint venture with Kayaba to create the leading global ride control company. In addition, he led the development of the Arvin Total Quality Production System, which was implemented in six languages, 13 countries and 50 operations. Dunn served on the Board of AP de Mexico and Arvin Venezuela and received extensive training in Japan from Toyota and Toyota suppliers.

From 1985-1988 Dunn was employed by Johnson Controls Automotive Group, the leader in automotive trim. At JCI, he helped establish the first North American Just-in-Time seating plant, which supplied Toyota. Prior to 1985, Dunn held various engineering and quality positions at Hyster Corporation, a manufacturer of heavy lift trucks.


Dunn holds a master’s degree in operations management from Eastern Kentucky University.

Company Profile:
Commercial Vehicle Group is a leading supplier of interior systems, vision safety solutions and other cab-related products for the global commercial vehicle market, including the heavy-duty (Class 8) truck market, the construction market and other specialized transportation markets.  CVG products include suspension seat systems, interior trim systems such as instrument and door panels, cab structures and assemblies, headliners, cabinetry and floor systems, mirrors, wiper systems, controls, switches and wire harnesses specifically designed for applications in commercial vehicle cabs.   CVG is headquartered in New Albany, OH with operations throughout North America, Europe and Asia.

CEOCFO: Mr. Dunn, what attracted you to CVG and how has it changed under your leadership?
Mr. Dunn: “When I joined Commercial Vehicle Group it was a small company with a few product lines and it was struggling financially. I was attracted the company, however because it had a great platform to build on and offered a lot of opportunity. When I joined we were about $70 million in sales and today we are on a pro forma run rate of a little over $700 million.”

CEOCFO: CVG became a public company about a year ago. Why was that the right time and how has that changed the company?
Mr. Dunn: “We went public on Aug. 4, 2004, and what that did was allow us to implement an aggressive strategy and grow the business. We’ve completed three acquisitions since going public.”

CEOCFO: CVG is a global company in eight countries with 30 locations; what are your major product lines?
Mr. Dunn: “We have two major product lines. Our truck cab product line is focused on products on the inside and outside of the cab itself. That would include the seats, wipers, interior headliners, door panels, flooring and then the cab structure itself. The second product line focuses on construction vehicles; the wire harnesses, the seats and the wipers.”

CEOCFO: Whom are you selling to and how do you sell?
Mr. Dunn: “We sell through two methods in the commercial vehicle sector. We sell first to the OEM (Original Equipment Manufacturer); PACCAR International and Volvo/MACK. We also sell to fleet companies, which are the largest buyers of commercial vehicles. We’re proud to say that of the top 100 fleets, 83% specify that our seats go into their products.”

CEOCFO: Why are your customers choosing to buy products from CVG rather than the competition?
Mr. Dunn: “We’re a driver solutions based company. We spend a lot of time understanding driver physiology, psychology and comfort. Our teams of researchers create intuitive products that mold to the key ergonomic points in human body and complement the driving experience.”

CEOCFO: Are there any other items, such as in the cab itself?
Mr. Dunn: “We have a group of designers who can carry the same theme throughout the entire inside of the truck, whether it is the headliners, moldings into the A-pillars or the B-pillars, or molding into the door panel. In the past, it may not have been so streamlined.”

CEOCFO: You indicated that CVG is moving more into the construction area. What do you need to do to accomplish that goal?
Mr. Dunn: “We just accomplished that when we acquired the Monona Wire Corporation (MWC). Monona Wire’s largest customer is Caterpillar Inc. (NYSE: CAT), who is in construction. We are the largest supplier for construction vehicles outside of North America, but in North America, we had not penetrated the market. Therefore, we are looking to penetrate the North American markets and if you look at our heavy truck business, it is all in North America. In addition, we’ve just announced a partnership with Volvo AB responsible for developing and the purchasing of Mack Trucks Inc., Renault V.1 and Volvo Truck Corporation.”

CEOCFO: So you are expanding in a variety of places.
Mr. Dunn: “Yes we are! We are looking to expand our commercial vehicle business into Europe and Asia and we are looking to stay in the construction business.”

CEOCFO: As CEO, how do you manage such a large operation?
Mr. Dunn: “I think the key to anything, whether it is local or far away, is to have good people who have the ability to communicate with you.”

CEOCFO: What is the competitive landscape like?
Mr. Dunn: “If you look at the landscape of our niche industry, it is fragmented and there is no one competitor that has a complete cab system business. This is because our strategy has remained consistent. We have managed to stay the course with our goal to be a highly sought after global supplier of complete cab systems.”

CEOCFO: Please tell us about the financial position of the company?
Mr. Dunn: “After our secondary offering, we have no major equity shareholders left in the company as part of management. Even after the acquisition, they were leveraged at less than half the amount of their EBITDA.”

Mr. Utrup: “We have a pretty good capital structure. We have flexibility in terms of having gone through a high yield offering, with the equity offering. We only have about $40 million of term bank debt or secured debt above the bond that we issued and we have got about a $100 million revolver availability that is totally undrawn. As a result, we have some flexibility in terms of pursuing our growth opportunities and we have designed it that way. We have been through the downturn and levered in the range of three to four times so we definitely have a commitment to the company and to ourselves to stay at or below the 2.5 times range, even in a down cycle.”

CEOCFO: CVG develops innovative products. Please give me an example of a unique offering?
Mr. Dunn: “An example of something that is unique to CVG is our BackCycler product. Our product, which is placed in the driver’s seat, might be considered more passive. It inflates and deflates the back of the seat in different regions and makes drivers feel like they are being massaged while driving. When a driver has to sit for long periods of time it constricts the flow of blood to different parts of the body. Our product allows the blood vessels to be awakened and where blood flow is not constricted it flows more freely.”

CEOCFO: How big of a part of the business is research and development?
Mr. Dunn: "R&D is an important part of our business. We are constantly striving to find innovative solutions that meet the needs of our customer base. Our goal with R&D is to cater to the customer-to anticipate their needs by performing research at the source-the driver."

CEOCFO: Are you looking to get into other industries beyond the truck and construction markets?
Mr. Dunn: “The same technology that we use to make a truck dashes can be transferred to technology for a marine dash or the armrests on slot machines. What we try to do is think creatively and transfer our technology across industries where possible.

CEOCFO: So the possibilities are almost limitless?
Mr. Dunn: “They really are, but we try to stay in our  niche markets. We are not looking to compete in the automotive market; the only automotive product that we have ever done is to design the interior for the SSR for General Motors.”

CEOCFO: Are your contracts project by project or long term?
Mr. Dunn: “They are most all long term contracts, usually three to five years.”

CEOCFO: Please address potential investors. Why should they be interested and what should they know about CVG that doesn’t jump off the page when one first looks?
Mr. Dunn: “I think that the main thing to remember about our company is that we’ve got a lot of avenues for growth. Our growth is not isolated to economic fluctuations and market cycles. We have avenues of growth regardless of cycles and that is one thing that we’ve positioned our company to do. If we operate in several different markets, a downturn will not affect us as significantly. I think a key element to our company success is that we are poised for growth and even in the worst of times we’ve paid good numbers; double digit return on investment capital and double digit EBITDA.”

CEOCFO: Does the investment community recognize CVG?
Mr. Dunn: “I think that they are starting to take note after our last secondary. The trouble was that when we did our primary offering, our IPO still consisted of a lot of equity ownership from the original sponsors. As a result, there wasn’t much float of our stock available. However, since the equity offering we’ve started trading very well -at a couple of hundred thousand shares a day. The financial community is starting to become much more aware of us and that is reflecting in our stock price.”

CEOCFO: In closing, on a day-to-day basis, what is your focus as CEO?
Mr. Dunn: “Much of our time is spent on strategy and acquisitions, but the single biggest thing that I do is talk to customers. We are spending a lot of time working on customer programs for 2006 and 2007. I am very positive about out future. We have a good team in place and good processes for adjustment strategy should fluctuations occur in the market.”


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“If you look at the landscape of our niche industry, it is fragmented and there is no one competitor that has a complete cab system business. This is because our strategy has remained consistent. We have managed to stay the course with our goal to be a highly sought after global supplier of complete cab systems.” - Chad M. Utrup


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