In line with an aggressive plan to boost its plastics business to $100 million in three years, Summit Plastic Solutions Inc. acquired Presto Plastics Corp., a Stamford, Conn., custom molder for the display market. To reach that three-year goal, SPS must double its current $50 million in injection molding sales. Although Presto makes up only $8 million of that total, the company moves SPS into a brand-new market, adds 13 presses to its stable and equips it with in-house toolmaking, a critical capability, since de-pending on outside shops can cut into a tight timetable, said Terry J. Min-nick, SPS chairman and president. Terms of the April 29 deal were undisclosed.
Chicago-based Mesirow Private Equity Investments Inc., which holds the biggest piece of SPS, wants to turn it into a major U.S. plastics molder, mainly by acquiring a couple companies a year. So far it's on target, having made its first buy, Pro Corp. of Florence, Mass., in December 1994, and its second, Apogee Plastic Technolo-gies Inc. of Daytona Beach, Fla., last April. This year may pan out in much the same way, Minnick
said last week by telephone from SPS' headquarters in Daytona Beach.
``It's certainly not unrealistic that by the end of the year we have another [acquisition],'' Minnick said.
That outcome depends on tracking down plastics firms that can offer SPS what it does not have already in geographies, capabilities and markets - notably markets on the upswing, such as Presto's point-of-purchase display market, which is ``very hot right now,'' he added.
Plus, Minnick noted, there are other constraints: ``You have to put your system in place to handle the growth. The economy has to cooperate.''
To reduce overhead, SPS will move most of Presto's 13 injection presses, and its assembly operations, from two leased Stamford sites to SPS' Florence plant, which also can absorb most of Presto's 100 employees, Minnick said.
``We're offering all of [the hourly workers] jobs. We don't know how many will take it, because it involves a relocation,'' Minnick said.
Presto's president, Ladd Miklos, who also held a major stake in that firm, will stay in Stamford as vice president and general manager of the new Presto division. One leased Stamford plant will continue to house toolmaking, engineering and sales.
By merging Presto's molding into the Florence operation, its customers will gain the resources of a much larger company, Minnick said. While Presto's presses have clamping forces of 100-700 tons, SPS' biggest machine is a 2,500-tonner, he said.
``The combined operation will be a stronger, healthier one,'' Miklos said.
SPS took its name late last year while consolidating the injection molding operations of Pro Corp. and Apogee. It took that restructuring a step further by appointing SPS Chairman Minnick as president and chief executive, roles filled by William Esther until Feb. 20, when he left to pursue other interests. Cost was a factor in merging those responsibilities, according to Minnick.
Despite some overlap of markets and customers, the Pro division, with 23 presses and 200 employees, is a lower-volume, higher value-added outfit, with large-part injection molding and more assembly, while Apogee specializes in high volumes of smaller parts, including thin-wall molding. It runs 17 presses and employs 250.
By far, electronic enclosures are SPS' largest market, and business, telecommunications and medical equipment manufacturers its main customers. It makes cellular phones and modems for Motorola Inc., laptops for IBM Corp. and Texas Instruments, and medical diagnostic equipment for Polaroid Corp. and Behring Diagnostics. Those markets are waxing, by roughly 15 percent a year, according to Minnick, and SPS hopes to copy that growth rate.
That is why this year it spent $175,000 on a 200-ton Engel, specifically designed for thin-wall molding of parts for cellular phones and laptop computers.The company has an option in place for two more Engels, but those buys hinge on convincing more customers to try thin-wall molding.
SPS bought the Engel to mold a 0.025-inch cellular phone housing for an undisclosed customer.
It also offers comprehensive shielding and plating operations for those enclosures, including vacuum depostion and electroless nickel and copper plating. Jim Plemmons, SPS' plating manager, has developed an electroless plating process, dubbed Impasse, that he says adheres to a wider variety of plastics than other electroless processes, and uses biodegradable chemicals in the pretreatment, or pre-etching, stage. Minnick claims that Impasse, yet unpatented, could save the company $250,000 a year in chemical costs alone, though so far SPS is using it on a limited basis.
All SPS' services, which also include structural foam and gas-assist molding, hot-stamping, silk-screening and painting, add up to making itself indispensable.
Minnick said, ``You're trying to make yourself so valuable to your customers that they don't have any choice but to do business with you.''
The company likes to keep its customers close, preferably within a 700-mile radius to allow for overnight delivery. Because SPS had no plant near Tijuana, Mexico, it recently lost longtime customer JVC Manufacturing Co., when the firm moved its television manufacturing from Elm-wood Park, N.J., to Tijuana, Minnick said. Last summer SPS almost bought an El Paso, Texas, molder that was reorganizing under Chapter 11, but was outbid in the final moments, he said. That company also had a plant in Juarez, Mexico.
``All the big television guys are in Tijuana or Juarez right now,'' he said. ``[JVC] told us if we had a facility in Tijuana they would continue to buy from us.''
SPS still plans to set up shop in Mexico - ``the sooner the better,'' he said - and also has targeted Europe as a place to be, probably through a partnership or joint venture. The company ships only 10 percent of its products, mainly electronic enclosures, into Europe, but it hopes to cash in on the growing European ``appetite for things like cellular phones and laptops,'' Minnick said.
