Consolidating cultures and strategies: Turning five companies into one

By: 
December 31, 2000

It's no easy task using the M&A process to go from a $3 million-a-year company to a $120 million-a-year company in just more than a year. Many firms stumble over the consolidation process. Some even fall flat on their faces. Yet, after the acquisition of five companies, Clarion Technologies (Holland, MI) appears to have the technique down to a science.

With corporate offices in Holland and seven plants in three states, Clarion could have had a recipe for disaster if it weren't for the guidance of President Bill Beckman and a skilled board of directors. Clarion serves the automotive, heavy truck, furniture, and consumer products markets with plants in Greenville, South Haven, Caledonia, and Jenison, MI; Montpelier, OH; and Anderson, SC.

Potential acquisitions should have good cash flow, a strong customer base, and a strategic market fit.

Beckman, former cfo for the Interiors Div. of Johnson Controls Inc., believes wholeheartedly that consolidation in the highly fragmented injection molding industry will benefit the industry long-term. He prefers the "pure"consolidation model to "roll-ups," a method of gathering companies under a single parent company, but allowing each company to function autonomously. (For more detail on this consolidation method, see "Consolidation, Integration Unite Moldmakers," November 2000 IMM, pp. 65-69.)

Beckman says that he looks for three qualities when acquiring a company: good cash flow, a strong customer base, and a strategic market fit. He adds that with OEMs unloading more product development and manufacturing responsibilities onto suppliers, only molders with strong financial resources and broad capabilities will be in the running for new business. 

He says one of the keys to Clarion's successful consolidation efforts is that the company's business and operations methods are installed into each new acquisition. "We centralize certain functions and operations to reduce costs," he explains. "Each plant has to be the best it can be, but we take out all the operation costs that we can by having one way of doing business." 

Currently, the facilities are in the process of installing real-time production monitoring systems from DTR Software International. This will allow Clarion to centralize the data from all the facilities company-wide, plant-by-plant, or by business segment.

Although each facility has its own strengths, the plants benchmark off of one another, adopting the best practices of sister plants to create uniform manufacturing methods. This puts all the companies on the same page. "If we can"t get everyone pulling in the same direction, it won't be successful," says Beckman.

Another factor that contributes to uniformity is the name change. With each company purchase, plants immediately become Clarion Technologies. "We won't protect a name because it won't pull the companies together," he emphasizes. 

There's a big push at Clarion to track sales per associate at its plants, and to increase annual sales per associate through automation. Beckman points to one Clarion facility that reduced the number of people from 293 at the time they were purchased to 175, boosting sales per associate by 50 percent. This was done through normal attrition, without layoffs. 

The firm also leverages the expertise and capabilities of each individual plant. For example, when Mito Product Development in Jenison, MI was purchased by Clarion, it provided new product development capabilities to the group. With a large engineering staff, model prototype capabilities, and moldmaking expertise, the Clarion Tech Center provides these services to all the plants rather than each plant having to incorporate these capabilities individually.

"We want to be a major player in each of our chosen markets," says Beckman. "We want to add more value to our customers' businesses in the markets we serve. The best way to do that is through consolidation of resources."

Contact information
Clarion Technologies Inc.
Holland, MI
Bill Beckman
Phone: (616) 494-8874
Fax: (616) 494-8888
Web: 
www.clariontechnologies.com
E-mail: [email protected]

 

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