Accrotool expanding after acquiring MTEC's silk screening business
Premium content from Pittsburgh Business Times - by Malia Spencer
Friday, December 10, 2010, 6:00am EST
After the purchase of a Jeannette company, Buck Helfferich, president and COO of Accrotool Inc., said he expects more deals to follow in the coming months.
Accrotool Inc. is acquiring the silk screening business of Jeannette-based MTEC and has plans to expand its New Kensington facility.
The deal is designed to position Accrotool as a more attractive supplier by bring an added capability - the use of silk screening - in house.
Terms of the MTEC deal were not disclosed. Accrotool only acquired the silk screening aspect of the business. However, according to MTEC's sole employee, David Brinley, MTEC will cease operation.
Brinley, who has been in industrial silk screening for 20 years, will head up the Accrotool silk screen division.
“For me, and for Accro, it's a good marriage,” Brinley said. “It's all positive and something Accro needed. (So) it's a perfect opportunity to merge the two.”
The silk screening is expected to be operational at Accrotool by Jan. 1.
The acquisition is part of a strategic transformation the metal enclosure manufacturer is undergoing that is expected to more than double the company's facility by next year, as well as streamline processes, said Buck Helfferich, president and COO of Accrotool.
He said more deals are expected in the next several months, including adding vacuum molding capability.
“With the industry in such a reactionary (mode), having some of these functions internal makes us very, very agile,” Helfferich said. “That is why we are doing this.”
To house the expanded business, the company is adding 120,000 square feet to its existing 100,000-square-foot facility. The project is being built in 20,000-square-foot increments as space is needed.
By next year, the company will have invested $2 million to $3 million in equipment and building expansions as part of these transactions, and the 120-person company is expecting to see its head count grow by 30 to 40 people, but whether those are from M&A activity or new hires remains to be seen.
“The market is good and we are doing some things the competition is not, and we are getting opportunities and shifting gears,” said Helfferich, who was hired in August and already has completed a project to streamline the company's shop floor communication process.
That project will make it easier to drop in an acquisition without huge changes to internal processes, he noted. He already is seeing gross margins improve as well as cash flow and profitability.
During the recession, companies did pull back and focus on core competency, said Don Westfall, research and council director for the Manufacturers Alliance/MAPI, but now there is focused expansion - meaning strategic acquisitions and not acquisitions for acquisition sake - as business begins to return.
“It's this whole idea that you can provide a solution to a customer, and you can do it faster and cheaper,” Westfall said.
“In aerospace, a number of companies made acquisitions to go from being a supplier of parts to a supplier of components.”
This strategy makes a manufacturer more necessary to a customer, he said, and the supplier becomes a platform to build upon. It also makes use of lean manufacturing ideals by removing the outsourcing steps in a production process.
Other local companies have begun to adopt this strategy. In early December, for example, Saxonburg-based optics manufacturer II-VI Inc. announced it will acquire Philadelphia-based Max Levy Autograph Inc., a supplier to one of II-VI's subsidiaries.
Westfall expects to see more M&A activity, since many companies have the cash on hand as a result of recession cost-cutting, and there are attractively priced opportunities.
A quick survey of roughly 1,000 participants in a recent Deloitte webcast found that 45 percent of the manufacturers involved expected their company is “highly likely to” or “definitely will” contemplate M&As in the next 12 to 18 months. Participants were midsized to large firms, and two-thirds said they are likely to go after targets with similar product lines or a competitor.
