Reviva Inc.

How an engine rebuilder rebuilt itself for faster growth.
Reviva Inc.

Six months after Josh Stahl became president of his family business, the bottom dropped out of the economy.

Stahl’s company, Fridley-based Reviva Inc., remanufactures engines for commercial-grade diesel trucks smaller than 18-wheelers. It replaces worn-out or obsolete engine components to extend the life of the engine and thus of the vehicle itself. But the lion’s share of its revenue had, until relatively recently, come from a relationship it had since its founding as Dealers Mfg. in 1944: it was the area truck parts distributor for Ford Motor Co.

As part of its recovery from the Great Recession, Ford ended that relationship in 2010, and within six months, Reviva’s annual revenue plunged from nearly $70 million to less than $20 million.

“It takes a lot to kill a company,” Stahl says. “But at that point in time, with all of the overhead associated with a $70 million business, we really had to dig in and figure out how we could manage.” All the family members in the business took “significant pay cuts,” Stahl recalls. But that was a short-term fix, not a cure for its long-term problem.

Things are a little better now. Strike that—a lot better. Last year, Reviva posted revenue of $62.3 million, and the company expects about the same in 2016. And since 2011, its labor force has doubled, from 101 to 203.

You can credit a lot of factors. But most of it is due to a family that pulled together and agreed on what it needed to do to rebuild—or remanufacture, if you prefer. The business needed to grow. Fortunately, Stahl’s stepfather, second-generation owner David Goodwin, had installed some sturdy parts during his tenure at the helm—notably, lean manufacturing techniques and new-product development capabilities. Working with his technically skilled employees, Stahl has revved Reviva’s engines, and the company has come back roaring.

Timeline

1944 – Founded as Dealers Mfg. in Minneapolis, a Ford-authorized engine remanufacturer and parts distributor for the Twin Cities; it later expands throughout the Upper Midwest.
1960 – William Goodwin acquires Dealers Mfg. with a $75,000 SBA loan; the company soon expands into greater Minnesota and the Dakotas.
1975 – Goodwin’s son David takes over the company.
1995 – David Goodwin’s stepson Josh Stahl joins.
1996 – David Goodwin's son Ben Goodwin joins.
1998 – Ford drops Dealers Mfg. as an authorized remanufacturer, but it remains a parts distributor.
2002 – The family changes the company name to Reviva to help it stand out as a brand, with the tagline, “Revitalize, Retrieve, Recover.”
2008 – Reviva acquires North Dakota-based Engine Rebuilders, which opens up new markets; launches a third-party logistics business in Illinois focused on tire distribution.
2009 – Stahl named president of manufacturing; Ben Goodwin named president of distribution.
2010 – Ford drops Reviva as a distributor and the company must find a new source of business; Reviva launches FreightBuddy, a less-than-truckload (LTL) freight quotation and scheduling business.
2015 – With the introduction of new products and the addition of new customers, Reviva expands its national fleet business.
2016 – Reviva now solely focuses on manufacturing, divesting its distribution-related businesses.

 

One advantage Reviva had: It could actually take advantage of the recent recession. During the slow times, “a lot of people weren’t inclined or weren’t able to purchase new vehicles,” Stahl says. After the recovery began, remanufacturing engines in existing or surplus vehicles was less expensive than buying new engines, and certainly cheaper than buying new vehicles.

Another factor driving Reviva’s revival was what Stahl terms an “aggressive product development plan.” The foundation was laid in 2008, when Reviva acquired a North Dakota-based rebuilder of small diesel engines for industrial applications. This opened new markets, including tractors, skid steers and other equipment used in agriculture and construction. “We wanted 30 percent of revenue to be driven by products that we developed in the last two years,” Stahl says. “That was a key metric during our growth period.”

One example of a new product that Reviva has added to its portfolio is rebuilt low-emission engines for refrigeration units. These became a particularly strong seller in California, which in 2011 required refrigerated trucks to reduce emissions. “We’ve sold thousands,” Stahl says.

Another new product, now under development, is the engine Reviva is re-engineering for medium-duty Mercedes Benz trucks. The company is developing remanufactured Mercedes engines that will incorporate parts that have been updated and re-engineered by Reviva technicians. The engine will be available at a significantly lower price than a new Mercedes engine. Reviva will offer these remanufactured engines through its national distribution channel. All told, Reviva now handles 1,054 different part numbers for nearly 20 different engine makes (a list that includes Ford, by the way).

Roughly a decade ago, Reviva began to incorporate lean manufacturing techniques to speed up production. Back then, a remanufactured engine required 45 days to get through the plant. “Right now, we’re at about 2.36 days on average,” Stahl says.

To reach that kind of speed, Reviva needs to find skilled employees. “We don’t like turnover,” says Goodwin, who is also chairman and CEO. Stahl says that the company has been striving to increase wages and provide benefits “that [workers] can’t get anywhere else.” One of those is a tuition reimbursement program for employees across the company, whether it’s a middle manager looking to earn an MBA or a shop-floor employee who wants to learn a high-tech manufacturing skill.

In fact, Goodwin adds, “we have never really looked at the business as a family business.” True, his family owns Reviva and holds the top leadership jobs. But the company has succeeded in large part because “there are a lot of people [here] that have tremendous investments in their families and their careers,” Goodwin says. “They don’t move. They stay with us because they love working for our company.”

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Keeping employees, and keeping them happy, has long been one of Reviva’s fundamental principles. “Our major values have been the same for the last 40 years,” says Stahl’s sister, Lisa Stahl-Crosby, who handles communications for the business. One of those values is a commitment to the environment. “We’re considered a green company,” Stahl-Crosby says, pointing to Reviva’s reuse of materials that would otherwise go to landfills. The company’s values also are reflected in its donations of money and employee time for organizations such as Free Bikes 4 Kids, which collects and repairs used bicycles for distribution to needy children.

With Stahl as president, Reviva has continued to travel the same road. “The transition from me being president to Josh was one that went very well with all of the management,” Goodwin says. “They knew Josh. There was no conflict between him and our values. So it’s allowed the company to witness a transition that gave them the confidence that they’re going to have the same family owning the business for years to come. In an era with a lot of private equity coming in and buying up companies, they don’t have that fear in our company.”

Has that transition been a smooth ride? Mostly. As with any family business, there can be differences of opinion between the generations. “I can think of a couple of instances where we didn’t necessarily agree with a tactical process,” Stahl says. “We might have gotten a little heated in the exchange. But there was never anything that lasted or impacted the value I get from talking with [Goodwin].”

Succession planning is a complex matter in any family business. In 2012, Reviva hired Steve Coleman, a partner with the Platinum Group, an Eden Prairie-based business consultancy, to help craft its succession plan. Coleman’s sense of Reviva was of “a very well-defined and interesting niche business,” and one the family ran very well. But that family needed to more actively prepare for transferring leadership. Besides working with financial and legal experts to put a detailed plan in place, “they have now taken steps to bring new board participation from outside directors,” Coleman says. “And they are very conscientiously seeking directors that would bring specific skills to their board.”

Coleman adds that “underlying the trappings of a successful company is a very loving, caring family. They have not parted from a clear respect and a willingness to hold the needs of the family foremost. Have they ignored the business and financial aspects? No. But they have not compromised on the family dynamic in order to achieve business results.”

And they’re achieving them. This rebuilt company looks ready to keep rolling for many more miles.

 

Reviva Today

The family members currently running Reviva are David Goodwin, Reviva’s chairman and CEO and the second-generation owner; and Josh Stahl, his stepson and president. Stahl’s sister, Lisa Stahl-Crosby, handles the company’s communications work. (Dave’s son Ben Goodwin now runs his own company, Brooklyn Park-based FreightBuddy, which provides shipping and distribution for Reviva and numerous other customers. He remains a part-owner of Reviva.)