Opportunities After Acquisition at Met2Plastic
by Dianna Brodine, managing editor
Photos courtesy of Met2Plastic
Photos courtesy of Met2Plastic
Photos courtesy of Met2Plastic
Photos courtesy of Met2Plastic
A host of reasons exist for selling a company, even if or because its been in the family for decades. But, what happens when the acquisition is over? Can a company retain its identity, culture and values through the uncertainty and change a new owner can bring?
Met2Plastic, Elk Grove Village, Illinois, can look back, 2½ years after its acquisition by French company Dedienne Multiplasturgy® Group, and answer emphatically, Yes.
We are transforming as a company, said Met2Plastic President Mike Walter. Its a completely different game were playing right now because we are able to offer services we didnt have access to before the sale, and we have a much stronger engineering base that we can utilize. But, at our core, were still a family-owned company. That was important to us.
Originally incorporated in 1970 as MET Prototype Molding, the company specialized in building aluminum molds and injection molded parts for prototype applications. MET quickly developed a loyal customer base made up of Illinois technology giants of the era, including Bell & Howell, Motorola and Zenith Radio.
When the company moved its operations to a larger facility in 1982, it expanded into mold building and injection molding operations. Even though the company positioned itself as a prototype injection molding house, METs customers increasingly awarded production molding business to the company. By the mid-1990s, much of the companys business had transitioned to high-mix/low-volume injection molding production work.
The company was started by my father and two partners, both of whom had left the company by the mid-1980s, said Walter. I worked at MET Prototype Molding (renamed MET Plastics in 2000) on a part-time basis through high school and college in a range of capacities, from sweeping floors and operating machines to clerical work. After college, I spent a few years outside of the plastics industry selling packaging equipment. One day, I made a sales call to a plant that processed packaging peanuts, and I smelled the sweet smell of molten polystyrene. I realized how much I missed that smell, and shortly thereafter made the move back to MET Prototype Molding.
Walter initially held a number of roles, from working in the toolroom (where he claims he was kicked out because his workpieces kept flying across the room) and developing a quality structure to integrating an ERP system.
At that time, we had only 15 employees, he explained, so it was a great experience because I was able to wear many different hats and learn all facets of the business.
Walter soon took on the role of general manager and was tasked with developing a plan to grow the company. At the time, much of our work was in functional prototype development work, he said. We saw the risk of that business being overtaken by the rapid prototype industry, and simultaneously, we saw the risk of high-volume work being moved overseas, so we decided to shift our focus to low-volume production molding. Thats when we really started to grow.
The company now has 50 employees, and many of the key staff members started as machine operators before working their way up the ranks. Those employees are armed with a solid understanding of each facet of the facility, which allows Met2Plastic to operate nimbly in its chosen markets.
The business focus is on the manufacturing of metal-replacement components using high-performance thermoplastics and thermoplastic composite materials, hence the name Met2Plastic. Capabilities include thermoplastic injection molding, mold building, machining of plastics and assembly, and volumes can range from 100 to 1,000,000 pieces per year.
A number of investments have been made recently, including two new molding presses and a RocTool induction heating system to allow further development of the companys ability to lightweight components by improving material flow to reduce wall thickness and part weight. (Dedienne was one of the early adopters of this technology in France.) Two new CNC machines were added to handle increased capacity requirements in secondary machining operations, and a new stand-alone ISO Class 8 cleanroom was designed with Met2Plastics highly precise customer base in mind.
Our goal has always been to work in aerospace and medical markets to maintain some diversification, said Walter. We feel the industries complement each other very well because the quality organization structure needs to be similar, and the volumes are close to one another. Also, both markets play to our expertise in high-performance materials.
Met2Plastic was guided in the direction of high-performance material use when the company moved to its current specialty as a low-volume/high-mix production molder, which then pushed the company into niche industries such as aerospace and medical. In aerospace, in particular, we realized that to compete and grow, we had to build on our expertise in materials, Walter said. We made a conscious effort to develop that knowledge base, upgrading our skills through new hires and research and development activities.
The aerospace industry offers significant growth opportunities with its push to incorporate thermoplastic and thermoplastic composites into the aircraft. Weight savings is the name of the game in aerospace the more that is saved in aircraft weight, the less fuel is consumed, so theres a huge push to transform traditional metal parts with new materials, he continued. But, plastics offer a lot of other advantages as well, including cost savings in materials and an increase in corrosion resistance.
Prior to being acquired, much of what we were doing was on the me too end of things we were being pulled into development to meet customer requirements, rather than actively pursuing research, Walter said. However, after acquisition, weve been able to combine the expertise we have in tool building and high-performance materials with the processing expertise of our parent company. Now, were able to work on very complex components utilizing high-performance materials, such as PEEK and Ultem. Weve expanded the programs we work on to include almost every area of an aircraft.
For Met2Plastic, one of the benefits of its acquisition has been the expansion of potential service offerings. Sister companies in Dedienne have expertise in the stamping of composite materials, thermoplastic molding and a variety of other spokes in a wheel that now can be offered to Met2Plastic customers. In addition to that, said Walter, the companys toolbox has expanded with Dediennes independent R&D department.
Were focused on being able to reduce weight for our customers, he said. That doesnt necessarily mean choosing a lighter material, but also enhancing our processing techniques to be able to fill parts with thinner walls.
Being a part of a group has changed our marketing approach and our sales approach because now were not just one small company offering its wares were able to offer a plethora of services through our overseas sister companies as well. We have a much stronger engineering base that we can utilize, while still providing a North American presence for our US customers.
The acquisition by Dedienne was finalized in December 2015.
We werent actively marketing ourselves, explained Walter. We were approached by a representative for Dedienne after our company exhibited at an aerospace tradeshow. Dedienne was looking for a partner that could help grow operations in North America. What attracted them to us was our capability to mold high-performance polymers, combined with our cleanroom capability, which allowed Dedienne to expand its Multiplasturgy® offering.
While Walter hadnt been seeking the sale of his familys company, he also was aware that challenges were on the horizon for a small company in a big industry. At the same time conversations began with Dedienne, we performed a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis that revealed two issues, he said. First, we had aerospace customers with operations in North America and Europe and, because we are based in Illinois, we were only able to access 50 percent of their operations. Additionally, we realized with the consolidation of the aerospace industry, it was likely a matter of time before our small company was squeezed out by larger players.
Several options were considered to address the concern, including organic growth or growth through acquisition of another processing company, but the challenge still remained that members of the family ownership structure would someday have an interest in selling their shares. This was an opportunity for them to exit the company.
We got calls about potential buyouts all the time, but the approach wasnt very targeted, Walter explained. Part of what intrigued us about Dedienne was that there was a reason the company was interested in our company, so I agreed to meet. What was supposed to be a one-hour meeting turned into four. Immediately, we saw potential for what we could become if we partnered.
The potential synergies in market share werent the only appealing aspect of the Dedienne partnership. During conversations, Walter quickly realized the two companies had similar values. One thing Ive always wanted and, my sister Heidi Weiner (Met2Plastics vice president and human resource manager) has felt the same was to treat everyone like family, Walter said. Dedienne has a similar philosophy the group is one big family. Its one of those things that cant have a number put on them, but it made a difference to feel we shared the same ideals. Dedienne wasnt a company that was just looking for quarterly returns but was playing a long game that had the potential to help us do big things.
The transition process began in February 2015. It was not a fast process, Walter said. And, thats the European way to get to know people thoroughly before doing business with them. As it was my first acquisition, there was quite a bit of learning to do, so we consulted with a number of people in the MAPP community, including Harbour Results, Plante Moran and Ice Miller, he continued. We also had to get a few of our key customers to sign off on the proposal since we had contracts in place, but we had no issues getting those approvals.
While Met2Plastics customers were pleased with the growth potential as a result of the acquisition, Walter wasnt sure how the companys employees would react. Initially, we didnt provide too many details to the team because we didnt want to raise expectations, he said. We were very aware that everyone would be sensitive to what would happen to their jobs, and that was a concern Dedienne had, too. As we were going through the process, we assured our team this was a strategic acquisition to ensure the long-term security of the business. We wanted to do what we could to ensure the legacy of the company and solidify everyones job security.
After nearly 50 years of independent operation of a family-owned company, some small irritations might be expected with the sale to an overseas group. But, when asked, Walter struggled to come up with specifics. He attributed this to the mutual benefit found by both companies with the combined abilities to better serve their customer bases.
From a commercial perspective, many of our customers have operations in both the US and in Europe, and we are now able to leverage the ability to support their sites on both continents, which has created a number of new opportunities for us, he said.
As noted previously, one of the reasons Dedienne was interested in acquiring Met2Plastic was to support its aerospace customers with operations in the US. The aerospace industry is driven by Airbus and Boeing, said Walter. If youre only operating on one continent, then youre only able to support half of the commercial aircraft market. The acquisition has created new opportunities for both Dedienne in Europe and Met2Plastic in the US with Tier 1 suppliers across the industry.
Access to technology also has made a critical difference in Met2Plastics offerings, Walter explained. The term Multiplasturgy® was coined by Pierre-Jean Leduc, Dedienne Multiplasturgy® Groups CEO, and it reflects the companys mission of simplifying our customers projects by offering multiple plastic processing capabilities. To achieve this, the organization spends a considerable amount of resources on research and development of processes and technology. As a smaller organization, MET Plastics didnt have the resources to develop technology on our own.
This has led to collaboration with Dediennes engineers on various programs, allowing Met2Plastic access to vast expertise in high-performance plastics and composites while sharing its knowledge to help implement best practices.
And yet, despite the companys new ownership structure, the small, family-owned atmosphere remains. We may be part of a larger group, but we still try to treat our employees as if they were part of a small family business maybe because this is the only way we know how to operate, Walter said. Were a pretty tight-knit group, and we try to make all employees feel like theyre part of the Met2Plastic family. Our group CEO also refers to the group as a clan or family, which aligns with our core values. When visiting the Met2Plastic facility, he always makes a point of walking the production floor and shaking everyones hand, which shows that he genuinely cares about the team.
Employee reaction to the acquisition has been mostly positive, particularly as they are now seeing some of the growth opportunities that have resulted from the acquisition. Customers responses have been positive as well, especially those with operations in Europe. Prior to the acquisition, size was a concern for some of our customers, especially in the aerospace industry, where consolidation of Tier 1 suppliers is taking place at a frenetic pace, said Walter. Those customers are focused on consolidating their supplier base, and we are now in a much better position to support their objectives than we were as a stand-alone organization.
And on a personal level, Walter has found opportunities for growth, too. One of the big benefits that I saw in the business sale is that I was tired and ready for a change, he said. I knew I couldnt have a change with our existing business without completely abandoning it, which wasnt an option. This created an opportunity to be part of something different while still staying in the same business. Its been a tremendous learning experience, and Ive picked up a lot of knowledge.
The acquisition has provided resources far beyond the technological including those offered from a business planning perspective through marketing, long-term planning, focus and vision. Its increased our bench depth, not just on the executive management level, but throughout the organization, Walter said.
From a best practices standpoint, one thing Ive always enjoyed with the MAPP association is the ability to share with people who understand exactly what challenges Im facing. Now, the acquisition has allowed us to take best practice sharing to a different level because we can be completely transparent with our sister companies. Were not competing with them were working on growing together.