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March 1, 2004

5 Min Read
Reorganized, reenergized, reemerging

Its molder-as-contract-manufacturer business model was initially held as a new paradigm for the industry, but was seemingly debunked after the 2000 Tech Wreck. Now resurrected following bankruptcy, Trend Technologies is proving again that value-adds add value to a processor''s bottom line.

Earl Payton isn''t interested in discussing Trend Technologies'' bankruptcy a little more than one year ago.

"After being over [the reorganization] for one year, I''m not much on dwelling on it anymore" Payton, chairman and CEO of the reorganized molder/stamper/valued-adder, explains. "I''d like to forget it," he admits matter-of-factly. "It wasn''t a lot of fun—but it was a function of a business that was cyclical, and the ownership more or less riding that wave of the late 1990s."

In the detritus of that wave''s crash, Payton and a group of Trend employees joined to purchase the company for $70 million in January 2003, with Payton as the primary shareholder. Now, as he leads the reorganized company, he doesn''t have to talk about its low point or even remember it, if for no other reason than he has more important business matters to focus on at present.

As MP spoke with Payton, an automated paint and powder-coating line was starting up at its Elk Grove, IL plant; its Longmont, CO facility was gaining FDA approval for its new cleanroom, and Payton himself had only days before returned from Suzhou, China where work is underway for Trend''s latest operation: A greenfield facility that will offer Trend''s core competencies—injection molding, tool and diemaking, metal stamping, painting, and assembly—and should be in operation by August.

"We think without China we should still grow our business 25% to 30% in 2004 over 2003," Payton says. "Well, I''d like to do more, but that''s what it looks like right now."

"Today it''s a new Trend," says Dale Behm, Trend''s new VP Plastics Technology Group. "It''s emerged from bankruptcy, and we believe we''re well positioned for growth."

Behm joined Trend at the start of the year, bringing 20 years of molding experience to his new mantle as well as firsthand knowledge of companies emerging from reorganization. He''s largely tasked with helping create business opportunities for the company''s 214 molding machines worldwide. Part of that includes supporting Trend''s core electronics enclosures'' business, but it also entails broadening clientele and markets—insurance against one sector''s vicious cycle that was already fatal.

Metal meets plastic

By integrating molded parts and stamped metals into enclosures, as well as installing wiring, chassis, and circuitboards as a level three integrator, Trend offered big savings to customers like Hewlett-Packard, Dell, and Sun Microsystems, leading to bigger business as the computer market exploded. Trend even built a 250,000-sq-ft plant in Dell''s backyard of Round Rock, TX in 1998-1999 to supply the computer leader.

Earl Payton, then the owner of Cowden Metal Specialties Inc. (Chino, CA), also appreciated the potential synergy between plastics and metals as his customers requested this capabiity, and began shopping for an injection molding facility. Trend was in the market for a metal stamper, and in late 2000, Trend purchased Cowden and installed Payton as vice chairman.

Earlier in 2002, Doughty Hanson & Co. (London), a European equity funds firm, bought Trend and voiced its desire to grow the company and reach $1 billion in sales. In 2000, Trend posted sales of $308 million, enjoying an average annual growth rate of 30% from 1995 to 2000, making the "B" plateau a seemingly realistic target, but soon, the electronics market, and the once invincible personal computer sector, shorted out.

For the first time ever, personal computer sales fell in 2001, and an ever-increasing amount of their components were sourced from China. On Nov. 7, 2002, slightly more than two years after acquiring Cowden and a series of other transactions that grew Trend to 15 plants, 2.5 million sq ft of production space, and 250 molding machines globally, the company declared bankruptcy.

It''s a small world after all

When Trend and Payton originally targeted fully integrated enclosures, with other value-adds like painting and assembly, the cost benefits it offered to customers were widely presented as a new paradigm for the industry—molders as contract manufacturers. Now, as Trend reemerges, its strategy again promises growth after the computer market tallied record revenues for 2003; for 2004 it is targeting sales increases of 11.4%.

Trend is again in the mix with a global network that includes 13 plants (14 counting the under-construction facility in China), with locations in the U.S. (California, Illinois, Colorado), Ireland, Mexico, Malaysia, and Singapore. According to Payton, the company has the equipment assets to produce $1 billion in products, and an attractive offer to customers. Taking into account the logistics, packaging, handling, and markups that clients would be subject to if they sourced Trend''s various competencies from individual contractors, Payton says they can offer a discount of 30%.

"Every company out there wants to deal with fewer people," Payton says, "and by dealing with Trend, they can have one name on their approved vendor list that can now support them. Our tagline is that we''re your global source locally because we absolutely need to have a footprint that matches up to our customers'' needs." With Trend''s footprint spread prominently across three continents, it matches up to a wide variety of needs. "[Our global offices] are all talking to each other just about every hour of every day. It''s a very small world we live in nowadays."

Moving forward with the difficult lessons learned in bankrupty court, Trend emphasizes one aspect of its business strategy to spur future growth.

"As you take care of your customers," Payton says, "and they see you do a good job, they''ll grow their busines with you. It takes on a life of its own, and it grows because you''re doing a quality job."

Tony Deligio [email protected]

Contact information

Trend Technologies LLC   

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