ORLANDO, FLA. - Home at last. That is how proprietary plastics processor Elkay Products Inc. feels under the wing of CIT Group Holdings Inc., its fourth owner in the past six years. CIT/Venture Capital, CIT Group's acquisitions arm, bought a controlling stake in the Shrewsbury, Mass.-based injection molder, blow molder and extruder one year ago. Now, under the direction of recently installed President and Chief Executive Officer David A. Fleck, Elkay has set its sights on a prolonged period of stability, re-investment and growth.
Fleck, 48, who came aboard last October, said recently that Elkay's mission is to become ``the leading independent manufacturer of liquid-handling consumables for the collection, transfer, processing and storage of samples for clinical, industrial, research and educational use.''
CIT also intends to use Elkay as an engine for more medical plastics-related acquisitions, according to Kevin Falvey, vice president of CIT/Venture Capital.
``We have a strong desire to get this company [Elkay] to three or four times the size it is,'' said Falvey in a March 4 telephone interview from his New Jersey office. While there is no time frame set for this planned growth spree, Falvey said, ``In the next couple of months, we'll start to look at acquisitions more aggressively,'' particularly for plastics companies that make products similar or complementary to Elkay's.
Elkay, founded in 1964 by Louis Kane, currently generates about $21 million in sales annually from plants in Costelloe, Ireland, and in Shrewsbury, Fleck said in a Feb. 24 interview at the SPI Molders & Moldmakers Divisions' joint annual conference in Orlando. The firm uses some 800 independent distributors to sell its products worldwide.
The 200-employee Shrewsbury operation includes an 81,000-square-foot plant running 27 injection molding machines, three Rocheleau blow molding machines, and two Davis-Standard tube extrusion lines, plus a 40,000-square-foot warehouse.
The 60-employee, 16-year-old Irish operation, known as Elkay Eireann, is located in the midst of peat bogs in west-central Ireland, near Galway Bay. It comprises a 20,000-square-foot factory housing 15 injection presses and six Ro-cheleau blow molders, and a 13,000-square-foot warehouse.
Most of El-kay's medical products are made of commodity resins and all are noninvasive. The tubes it extrudes attach to clinical instrumentation. The firm also serves a growing industrial market, supplying parts, for example, for use in water-treatment plants and to milk producers for testing milk samples.
Elkay runs primarily Nissei and Van Dorn injection presses, plus three aging Husky systems, with clamp forces ranging from 50-200 tons. Fleck said he recently bought three new Nissei machines - 120- , 160- and 200-tonners - to replace older, inefficient presses in Shrewsbury, and expects all to be delivered by the end of April. He also is looking to replace two presses in Costelloe.
In addition, the firm recently installed a new, computerized manufacturing information system in Costelloe, and plans by mid-year to install a computer system in Shrewsbury that will be linked to the Irish operation.
It is precisely these types of investments that stalled while Elkay bounced back and forth among several owners since 1989, Fleck said. He stressed, though, that one key factor in his decision to accept the Elkay post and relocate from California was that, despite this volatility, the firm managed to continue doing quality work, and maintain its good name in the industry.
``This had been a troubled, but not a bad company,'' Fleck said. Once CIT Group stepped in to offer ownership stability, ``All they needed was some leadership back in the company - someone to provide some vision.''
Two years ago, the Massachusetts facility earned ISO 9001 quality-systems certification, and the Irish plant earned ISO 9002 certification, he noted.
Fleck, recruited to Elkay from his post as vice president and general manager of custom injection molder Trend Plastics/Tool Tech Inc. in San Jose, Calif., spent the bulk of his career in senior management positions at Costa Mesa, Calif.-based custom injection molder and compounder Cimco Inc.
So now, Fleck is faced with the challenge of jump-starting a firm with a twisted history.
Louis Kane and his brother, Benson, started making their own disposable plastic products for sample handling and testing as a means of supplying such items to the network of clinical laboratories they had founded. Eventually they sold the labs to concentrate solely on disposables manufacturing.
Then, in April 1989, after Ben had retired, Labsystems Oy, a Finnish maker and distributor of clinical test equipment that used the type of disposable plastic tips made by Elkay, bought the firm. It was a rocky marriage.
The plastics firm, renamed Elkay Labsystems, set up a new, 40,000-square-foot molding/distribution/warehousing facility in Tempe, Ariz., primarily, Fleck said, to serve the disposables needs of a major original-equipment medical products maker. But that contract ``didn't work out as planned,'' he explained, and the Finns sold that plant (now occupied by a unit of the Tech Group). In June 1993 Labsystems sold Elkay to a British firm called Life Sciences Inc., which held it for less than seven months.
On Dec. 31, 1993, Life Sciences sold the company back to Lou Kane, who died in April 1994.
That brought Ben Kane out of retirement to run the company. Then, last March 30, the Kane estate concluded a deal to sell 79 percent of Elkay to CIT Group. Exeter Venture Lenders L.P., CIT's partner in the deal, owns the other 21 percent. Ben now serves as chairman emeritus of Elkay.
Fleck expects its current owners to hold and oversee Elkay for some time. ``CIT has a five- to 10-year horizon'' for the company, he said.
Elkay joins the growing plastics portfolio of CIT Group, which owns stakes in injection molder Berry Plastics Corp. of Evansville, Ind., and film extruder Rex-Rosenlew International Inc. of Thomasville, N.C.
Fleck said Elkay, a mature company, has a ``realistic'' plan to increase sales and profits by roughly 10 percent annually. He said the firm is on target to hit its 1996 goals.
He said his No. 1 priority now is to provide his employees with the tools they need to do the job right - including better molds, newer presses and enhanced computer systems.
``Too often, in the past five years,'' he said, Elkay's workers were expected simply ``to put a patch'' on problems, Fleck said.