Jabil buying Nypro and its reputation

By Bill Bregar
Senior Staff Reporter

Published: February 8, 2013 2:35 pm ET
Updated: February 8, 2013 2:50 pm ET

cartoon

Image By: Rich Williams

Related to this story

Topics End Markets, Medical, Mergers & Acquisitions, Processes, Injection Molding, Electrical/electronics, Injection molds
Companies & Associations Companies & Associations, Nypro Inc.

The plastics world changed Monday Feb. 4, when the news came out that Jabil Circuit Inc. will buy Nypro Inc.

Everybody knows Nypro. That fact alone is noteworthy in an industry as fragmented as plastics. And it shows that what Jabil is buying from Nypro's Employee Ownership Stock Plan is more than a collection of skilled plastics people, injection molding machines and factories spread around the world — it's an admired and respected institution.

Nypro is a $1.2 billion custom molder and contract manufacturer. Former Nypro people are sought-after plastics manufacturing experts. Many have started their own companies.

Nypro Chairman Gordon Lankton is a living legend in the plastics industry. A mechanical engineer, he graduated from Cornell University in 1954. In a Plastics News profile when he entered the Plastics Hall of Fame in 2000, Lankton recalled a job interview when he first saw injection molding: "To have something very complex like that, and to see it falling out of a molding machine every 20 or 30 seconds. It was just an amazing new process."

Nylon Products Corp. was founded in 1955 by Nick Stadtherr and Fred Kirk. Lankton bought half of the company in 1962, then bought the rest in 1969. He soon started sharing ownership with key employees through a stock ownership plan and profit sharing.

Lankton combined a restless, adventurous spirit — he took a motorcycle trip from Germany to Japan in 1955 — with a knuckle-down approach to work, spending long hours in the factory and visiting customers around the globe.

Nypro grew by becoming international and teaming with key, large customers. Nypro was a pioneering U.S. custom molder to set up shop in Asia and Europe.

In blue-collar Clinton, Mass., Nypro took a hulking old carpet mill and turned it into a manufacturing showcase. It's one of the most impressive plastics factories in the United States.

In 1998, Lankton's egalitarian streak led him to turn over Nypro to its employees. Jabil will buy Nypro from 1,900 ESOP members and another 200 key international employees who have an ownership stake.

ESOPs have many advantages. Employee owners pull together to make a company successful and profitable. But ESOPs aren't perfect. In the case of a Nypro — needing money to make acquisitions and to invest in high-level equipment for the demanding molding and assembly of medical, packaging and consumer electronics — an ESOP can make it more difficult to obtain major forms of financing. Employees that retire, are laid off and quit get their ownership stake paid out.

"In my mind, ESOPs are great tools when you have a steady-growth company. But when you require money for rapid growth, or if you have to contract and get smaller, ESOPs are not the best structure to have," said Jeff Mengel, partner with Plante & Moran PLLC.

Mengel said the ESOP structure is a major factor driving the sale. The consolidation trend in medical is fairly new, but Mengel said other molders should not read too much into the Nypro-Jabil story.

"There's still an awful lot of niche players. So I don't think it has any impact on the small guys, but this may be a harbinger of consolidation for medium-sized companies."

Terry Minnick, president of Molding Business Systems, who advises smaller plastics companies, agreed. "There is a place in the market for huge molders, and there's a place in the market for medium-sized molders. But there's a lot of small guys out there that make nice living and do a good job for their customers," he said.

Bregar is an Akron, Ohio-based Plastics News senior reporter.


Comments

Jabil buying Nypro and its reputation

By Bill Bregar
Senior Staff Reporter

Published: February 8, 2013 2:35 pm ET
Updated: February 8, 2013 2:50 pm ET

Post Your Comments


Back to story


More stories

Image

Mission Plastics brings new automated work cell on line

August 26, 2014 4:17 pm ET

Custom injection molder Mission Plastics Inc. and a customer have created a $1.5-million automated work cell for a medical diagnostics product.    More

Image

Canadian thermoformer ICI gets new financial backing

August 26, 2014 3:11 pm ET

Innovative Composites International Inc. (ICI) will get a $1.5 million infusion in the form of a loan and equity funding to cover a corporate...    More

Image

Plastic bag ban stalls in California Assembly

August 26, 2014 6:00 am ET

The California Assembly could not muster the bipartisan votes needed to approve the first state-wide plastic bag ban in the United States.    More

Image

Nova expanding PE research center

August 26, 2014 1:36 pm ET

Nova Chemicals Corp. has broken ground on an expansion of its polyethylene research center in Calgary, Alberta.    More

Image

Kayak maker Confluence taking on a broader outdoor products business focus

August 26, 2014 12:54 pm ET

Canoe and kayak rotational molder Confluence Watersports Co. has a new owner and a new name — Confluence Outdoor Co. — that reflects a bro...    More

Market Reports

Thermoformed Packaging 2014 Market Review & Outlook North America

This in-depth report analyzes economic and market trends, legislative/regulatory activity impacting supply and demand, business opportunities and threats, materials pricing, manufacturing technology, as well as growth strategies being implemented by thermoformed packaging companies.

Learn more

Pipe, Profile & Tubing Extrusion in North America 2014

U.S. demand for extruded plastics is expected to grow by 3 percent in 2014, with PVC remaining the largest segment.

Plastic pipe will post the strongest gains through 2018, continuing to take market share from competing materials in a range of markets.

Our latest market report provides in-depth analysis of current trends and their financial impact on the pipe, profile and tubing extrusion industry in North America.

Learn more

2014 Injection Molding Industry Report

GROWTH, OPPORTUNITY IN SIGHT FOR INJECTION MOLDERS IN 2014

In the wake of the economic turbulence earlier in this decade, molders today find themselves in much better shape. Molders are gaining a competitive advantage by investing in people, equipment and seeking inroads into new markets on a global scale.

Growth in the injection molding industry is going to be driven by low financing costs and a continued move to reshore some business.

Learn more

Upcoming Plastics News Events

September 10, 2014 - September 12, 2014Plastics Caps & Closures 2014

January 14, 2015 - January 14, 2015Plastics in Automotive

February 4, 2015 - February 6, 2015Plastics News Executive Forum 2015

More Events