By Rhoda Miel | PLASTICS NEWS STAFF
Posted February 18, 2009
SOUTH BEND, IND. (Feb. 18, 2:10 p.m. ET) -- Fortis Plastics LLC has added an injection molding shop in Mexico to its holdings as part of a plan to create a “new business model” for plastics.
With its purchase of Dallas-based Moll Industries Inc.’s Moll Ramos facility in Ramos Arizpe, Fortis is plotting a strategy through a series of acquisitions to be a regional custom molding specialist that can work with a variety of customers in their own back yards, rather than the more traditional consolidation model of buying companies focused on one or two industries.
“A lot of people in the past have acquired [molders] and then put all their back offices — all their engineering, all their technology — in one location,” said President and Chief Executive Officer Joseph M. Mallak in a Feb. 9 telephone interview. “What we’re trying to do is look at this as a regional molding play. We plan to keep things in the region, so they’re close to their customers, close to their needs and our engineers will know their plants and know their tools.”
Fortis was created in 2008 when private financial group Monomoy Capital Partners LP of New York purchased the injection molding unit of Atlantis Plastics Inc., then added L&P Plastics LLC to its portfolio. It has a corporate headquarters in South Bend, Ind., and 10 plants with injection molding and extrusion in a belt across the center of the U.S., ranging from Elkhart, Ind., and Jackson, Tenn., down to Booneville, Miss., and Brownsville, Texas, and now extends into Mexico, Mallak said. It closed some plants to consolidate operations in Brownsville and Elkhart, but remains on the lookout for other potential sites.
The companies did not disclose the purchase price for the Ramos Arizpe plant. The 136,000-square-foot injection molding facility supplies parts to Mabe Mexico, a Mexico City-based appliance maker, and it is close to other major manufacturers including Whirlpool Corp., Deere & Co., Carrier Corp. and Black & Decker Corp.
Fortis wanted to go to Mexico to work with companies already in Mexico, Mallak said. It does not want to supplement U.S. jobs with work in Mexico, but rather build up a chain of regional molders.
Regional capabilities are very important to customers who need expertise from their suppliers, but don’t want to spend hours on a plane to meet with engineers or mold designers at a single technical center, he said.
Fortis will boost its regional molding purchases with additional improvements in-house through a companywide lean manufacturing focus, led by George Pucci as vice president of operational excellence, and by leveraging its knowledge of materials and tooling. Those improvements will be key for Fortis and its customers.
“We don’t want to do this just for us,” Mallak said. “If we can do more cavitations in a tool and shorter cycles with automation and less labor involved, that helps us and helps them.”
Fortis already has contacts in a variety of industries through Atlantis, which molded parts for home appliances, and L&P which had injection molding and structural foam molding for power tools, the medical industry and auto industry.
Fortis, with backing from Monomoy, is in a good position as a buyer now not only because it has ready access to funds that some of its competitors do not, but also because its strategy gives it more flexibility in finding the right target firms.
There are deals being discussed throughout the industry, but there is more demand for acquisitions within the medical and packaging fields, said one merger and acquisition consultant. That means that Fortis will have wider range of companies to pick from, and have fewer competitors for those companies that they want to buy.
“[Monomoy] was very smart about being conservative three or four years ago,” Mallak said. “They kept a lot of cash back. That’s given us a luxury as good deals come about.”
The company will consider both individual plants and firms with as many as 10 different plants, if they have the right locations and a good customer mix, he said.
“It’s exciting that we’ve got a lot of potential for growth in front of us,” he said.
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