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IMM’s 10th Anniversary series: Ten years of change: The SPM saga

February 1, 2003

8 Min Read
IMM’s 10th Anniversary series: Ten years of change: The SPM saga

The past decade wrought big changes in the plastics industry, primarily in the game of mergers and acquisitions. Some worked. Some didn’t. But one thing is certain: It changed the face of the industry forever. Although most molding companies remain family-owned businesses, many can relate to SPM’s evolution over the past 10 years.

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NOW
Purchased by United Plastics Group Inc. in July 2000, SPM is now part of an 11-facility, $300 million operation. UPG opened a new lean manufacturing plant in Suzhou, China last October, pictured here.

When Larry C. Noggle started Southern Plastic Mold in 1954, he couldn’t possibly have foreseen how the company would evolve. Two of his sons, Larry E. Noggle and Michael K. Noggle, purchased SPM from him in 1977. Another son, Ed Noggle, ran the moldmaking operations. Charles Finkbiner, VP of sales for SPM, also held an ownership position in the company. And that’s the way it was for nearly two decades more.

1980 Anaheim, CA-based SPM hitched a good ride during the 1980s with the growing personal computer industry and the prolific Southern California medical industry. The Noggles and Finkbiner nurtured the company into a thriving, nearly $30 million/year company from the $1 million in annual sales SPM had the year the two sons bought out their father.

1990 The 1990s ushered in a decade-long boom, in which molding companies sprouted like spring dandelions, and the industry became ripe for the merger and acquisition frenzy that peaked around 2000.

1991 SPM was on the leading edge of that movement. In 1991, it announced a merger with BACE Plastics Group Inc. (Denver, CO), which created a $46.5 million operation to be headquartered in Anaheim. BACE had big plans, and with Michael Noggle at the helm as president and CEO and his brother Larry as executive VP and COO, the company’s goal was to reach $100 million in annual sales within five years.

1992 BACE had two facilities in Colorado, which it planned to combine into one newly built, 100,000-sq-ft plant in 1992. Another BACE plant in Fremont, CA had just moved into a new 35,000-sq-ft facility. And the six buildings housing SPM’s operations in Anaheim would be consolidated into a new 145,000-sq-ft plant, also in Anaheim.

Those were heady times, and the sky was the limit.

1993 They were also times of change. SPM/BACE moved quickly to establish plants in the Pacific Northwest in 1993, where business equipment manufacturers like Epson Printer and Hewlett-Packard seemed to offer limitless opportunity. To accommodate anticipated growth, BACE purchased Grant & Roth from Automatic Technologies Inc. The new operation, located in the Portland suburb of Hillsboro, was renamed SPM/Portland and was the fifth plant operated by what would become BACE Mfg. Inc.

1994 In 1994, SPM/BACE spent $9 million building plants for two of its biggest customers, Northern Telecom Ltd. in Calgary, AB and Compaq Computer Corp. in Houston, TX. It was the beginning of the era when molders went where their customers needed them in order to provide better service. By the end of the year, BACE would report sales of $110 million. The company had topped its original goal and had done it in less than three years. During this time, the company also put a plant in Monterrey, Mexico.

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THEN
In April 1997, IMM toured SPM/Dynacast Houston’s facility, which had been built in close proximity to its largest customer, Compaq Computer Corp. By this point, the Noggle family had made its exit, and annual sales for the company exceeded $237 million.

1995 In 1995, BACE took another giant leap forward when it merged with Dynacast Inc.’s plastics businesses, creating a company with annual sales of about $185 million. Dynacast’s parent, Coats Viyella plc, paid $102.9 million for BACE. Although its primary business was in metals, Dynacast had five injection molding facilities. Both Noggles and Finkbiner had held majority interest in BACE, and stayed on with the new entity in management positions.

1996 Coats Viyella and Dynacast were already global entities, and the custom molding business was fast being forced into the global marketplace as well. In 1996, SPM/Dynacast went on a building spree, constructing a custom injection molding plant in Wales and retrofitting a leased facility to do molding in Montreal. Another foreign plant was located in Malacca, Malaysia.

Shortly after the merger, Dynacast’s parent’s management began restructuring the North American operations of SPM/Dynacast. In April 1996, COO Andre LeBlanc, a Dynacast executive, was named VP of operations for SPM/Dynacast and sent to Anaheim. But if 1996 was a good year for SPM/Dynacast, it was the end of the road for the Noggles and Finkbiner. By October of that year, all three were out, having been asked to resign over a difference of opinion in how the company should be structured and run. SPM/Dynacast was doing $237 million in annualized sales at the time of their departure.

For a while, it looked like the company might move ahead with the plastics business in spite of the upheaval. The company held together for two more years, and then Coats Viyella announced that it would spin off the SPM plastics business.

1999 In 1999, a group known as Cinvin acquired the plastics business from Dynacast. The combined operations were doing approximately $275 million in sales, but that arrangement didn’t last long. In January 2000 Cinvin put SPM up for sale.

By this time the company had closed SPM/Calgary due to a downturn in Northern Telecom’s business (now known as Nortel), as well as SPM/Puerto Rico; SPM/Easly, SC; and a plant in Hickory, NC. In addition, Hewlett-Packard began in the late 1990s its departure for Mexico and eventually Asia, leaving behind many empty-handed molders.

Still, SPM operated plants in Anaheim and Fremont, CA; Hillsboro, OR; Houston, TX; Minneapolis, MN; Kirkland, WA; Quebec; Montreal; Las Pintas and Apodaca, Mexico; and Mountain Ash, Wales.

2000 In July 2000, United Plastics Group Inc. (Westmont, IL) agreed to purchase SPM in a deal that would bring UPG to 16 plants and $400 million in annual sales. It would be UPG’s fifth purchase in a series of roll-ups to create a powerhouse molding company. UPG purchased several more plants, some of which it closed down. The company also closed the Hillsboro plant, but recently opened a new lean manufacturing facility in Suzhou, China (see photo, opposite). A decade-long evolution left SPM a very different animal.


Corporate Darwinism

Looking over my shoulder at the old days certainly creates a sense of nostalgia,” says Mike Noggle. “We were in a growth mode during the BACE days, and at that point one of the leaders, actually being successful in the area of tying [purchased] companies together and growing organically. We did it by keeping common controls, maintaining the McDonald’s philosophy of providing the same quality and service to our customers no matter which SPM facility they did business with.”

Noggle is convinced that the SPM/BACE business model was successful primarily because SPM’s focus was built on true “customer intimacy.” “We worked closely together so we knew what our customers wanted and also what they needed,” he says. “Often we would make a recommendation for improving the customer’s product because we looked ahead to the ultimate use or user. Too often today, companies quote what they see on a computer screen and have no idea how the product is to be used.

“How much business is done that way today?” Noggle adds. “We did millions of dollars of business on the word of our customers because we knew them intimately. It’s too time-consuming to build relationships today.”

With regard to SPM’s expansion through purchases as BACE, Noggle says it involved more than simply collecting companies in roll-ups, which often fail. “It just isn’t as easy as everyone seems to think it is,” Noggle muses. “We wanted good companies that fit with our goals, our customer base, and our vision of where we wanted to go as a company.”

If that model was working, why the decision to sell to Dynacast? “We wanted facilities on the East Coast since we were mainly in the west,” explains Noggle. “Dynacast offered that opportunity. It looked like a good deal. They made us a substantial offer and a three-year contract to stay on in management. It didn’t work because [Dynacast management] didn’t let us do what we were hired to do.”

Noggle believes it all could have worked. Still, he has no regrets. “I wouldn’t change anything,” he says. “It looked doable, we had a great crew—the right team in place. We never wanted to be the biggest—just the best.”

Today, Mike Noggle maintains ties to the plastics industry through a consulting business, Engineered Solutions (Newport Coast, CA), through which he helps other molders develop a business model. His love for the plastics industry is still evident in the passionate way he speaks about it. “I love every minute I spend at work, and love the time I have to work on my golf game,” he quips. “God knows I need work on my golf game.”

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