Timing is everything.
When AirBoss of America Corp. purchased Flexible Products Co. for US$51 million from the Reid family in late October 2013, it proved to be an extremely astute move.
Both companies have made out well thus far.
Flexible Products is growing steadily and plans to add more machinery and boost capacity this year. Its vibration control products are used by most of the top auto makers, Tier 1 and Tier 2 suppliers in North America, both domestic and transplant, and the company is looking to expand further globally, said Doug Reid, who remained as president of AirBoss Flexible Products after the deal closed.
AirBoss was able to branch out and become even more diversified with Flexible Products in the fold. The addition gives AirBoss another growth platform with a strong presence in the rubber compounding; engineered products, including defense and first response; and automotive sectors.
A 38-year veteran of Auburn Hills-based Flexible Products, Reid said in a recent interview that both AirBoss and the rubber components maker have experienced growth during the last year and a half, in Flexible Products’ case principally because the automotive industry continues to do well.
That’s Flexible Products primary market and as it goes so goes the anti-vibration product manufacturer. “Last year was a very good year,” he said. He’s hoping for another good year in 2015.
Big contribution
In AirBoss’ 2014 annual report, the Newmarket, Ontario-headquartered company’s top officials said the deal has exceeded their expectations, noting that the firm anticipated incremental revenues of about US$110 million and EBITDA of US$10 million from the acquired company.
Flexible Products soared past those estimates, finishing with US$124.9 million in incremental revenues and US$13.4 million in EBITDA in 2014.
It also fits well with AirBoss’ other divisions with its problem-solving talent, in-house capabilities—especially in engineering, molding and tooling—and its ability to respond rapidly to the most demanding challenges in the automotive industry, AirBoss said.
With Flexible Products on board, AirBoss’ 2014 sales shot up 28 % to US$303.2 million and net income increased more than two fold to US$13.7 million from US$6.3 million in 2013.
“Flexible Products recorded US$64 million in sales in 2010,” Reid said, “and doubled it to about US$125 million in four years.” A prime factor in 2010’s results, however, was that the automotive sector wasn’t doing as well as it has been for the last three years.
A molded and metal-to-rubber bonded parts maker, the company operates three plants in Auburn Hills that together span 310,000 square feet and employ 400 employees, all members of the United Steelworkers of America, and 75 in management.
It also is a partner in a joint venture in Malaysia.
Flexible Products currently runs two of its plants 24 hours a day, seven days a week, Reid said. The third factory is at two shifts a day and will add a third shift in the near future. “We have a continuous operation because we don’t like to shut our presses down and business has been very good, so the need is there.”
When demand wasn’t as high, the firm purchased presses at an auction and refurbished them in 2010 and 2011 in anticipation of an upswing in the economy. The risk paid off and the company was prepared when the automotive industry turned around.
Flexible Products now has 70 injection presses that use uniform processing measures.
It plans on expanding capacity further in order to meet customers’ needs by the end of 2015 with the addition of five presses, Reid said. “We have plenty of space to install the new machinery.”
The injection molded rubber component producer’s industrial and mechanical engineers design a variety of low-cost, high performance anti-vibration products covering everything from molded chassis isolators to multiple rate bushings and frequency tuned dampers.
Starting from scratch
Founded in 1946, the business was floundering in the 1970s. Glenn Reid, Doug’s father, was picked by Michigan General Co. to operate three companies that were losing money in 1976 and four years later he used an option to purchase the Flexible Products operation with a US$35,000 down payment.
It proved to be a small investment that resulted in a big payoff.
After buying the firm in 1980, he immediately set out to turn the business around, his son said. He changed the customer base, repositioned the company and moved it into the automotive industry, Doug Reid said, and Flexible Products grew to become a significant supplier of injection molded rubber parts used by the Detroit 3 and other auto makers.
Doug Reid joined the firm in a part-time capacity while attending high school in 1976 and later during his college years. “That’s how I put myself through school,” he said. He remained with the company in a full-time capacity after he graduated.
As Flexible Products grew, so did Doug Reid’s responsibilities. He eventually replaced his father as president of the business.
Glenn Reid passed away in May 2013 at the age of 81. He had spent 65 years in the automotive industry.
During the last 20 years, “we’ve moved from being a shoot-to-ship company to a tight engineering, quick-to-respond company,” Reid said. “There’s a lot more assembly and engineering now than there was in the past. We’ve become a smart product manufacturer.”
Customers keep returning to Flexible Products because “we’re competitive, easy to work with and fast to react,” he said. “The whole quality thing is a given. … You have to be a quality manufacturer anymore. And we are a high quality manufacturer.”
Reid decided to sell the company to AirBoss mostly because there wasn’t another generation in the Reid family interested in running the business.
In addition, during the 2009-10 recession, two of the firm’s largest customers declared bankruptcy, which had a dramatic negative impact on the company and the family wasn’t prepared to take the business global. “And if you don’t, you aren’t growing,” he said.
“Customers aren’t forcing you to be a global company, they’re just telling you that’s what they’re doing and if you want to come along you can … or they can find someone else,” he added.
AirBoss had been a supplier of specialty rubber compounds to Flexible for about 12 years and Reid knew the company well. “We did a cash deal and it’s been a win-win for both of us.”
Reid elected to remain with AirBoss Flexible Products “because part of the deal was that I stay for at least three years. And, frankly, I don’t know anything else but this business.”
Looking down the road, he anticipates AirBoss Flexible Products will expand its global footprint, its customer base and its product line.
That’s how the company will get bigger and better, he said. – Rubbernews.com