Channell Commercial Corp., a molder of thermoplastic enclosures, is riding the telecommunications growth wave and undergoing major operational changes. The firm recently expanded into a 100,000-square-foot building in Temecula, Calif., and completed an initial public offering.
``Our focus is to adapt business strategies around each of the new technologies,'' said William H. Channell Jr., president. ``We have the best chance of any manufacturer to adapt our enclosure skills to the four or five different technologies being elevated as a way to go in the future.''
The company makes precision-molded enclosures that house and protect telecommunication electronics and provide access to transmission systems.
Channell's vertically integrated operations include design and development of dies, tools and molds. Manufacturing processes include injection, structural foam, rotational, transfer and compression molding as well as metal and terminal block fabrication and rubber injection. Channell expects ISO 9001 certification in early 1997.
In 1995, cable television operators accounted for 86.4 percent of Channell's sales, and telephone companies 13.6 percent. Both industries compete to expand, rebuild and upgrade networks and deal with the deregulation aspects of the Telecommunications Act of 1996.
Historically, the phone companies have used metal enclosures. Channell pioneered the use of thermoplastic enclosures with the cable industry and now is pushing to increase plastics' market share in the phone company market.
Channell received net proceeds of $15.8 million July 8 and Aug. 6 from an initial public offering of 3.1 million shares of common stock. The proceeds are helping Channell boost employment, fund $7 million to $8 million in product development and reduce about $3.5 million in debt.
The offering also allowed the company to convert from an S corporation through a $12.5 million dividend to former shareholders and, for $3.1 million, purchase patents held by William H. Channell Sr., chairman and, since 1966, chief executive officer. Following the offering, he and members of his family own 64.3 percent of the company's 9.2 million shares. The stock trades on the Nasdaq National Market.
As of Aug. 31, Channell employed 262. In July, the company expanded into a new 100,000-square-foot facility that is adjacent to its 160,000 square feet of manufacturing, warehouse and office space in Temecula.
Channell competes principally with Reltec Corp.'s Franklin Park, Ill.-based Reliable Electric Division. The unit operates plants in Milwaukee, Greenville, S.C., and Toccoa, Ga.
New York's Kohlberg Kravis Roberts & Co. holds a major stake in the privately owned Reltec.
All of Channell's enclosures are plastic; Reliable's enclosures are metal. In sales of enclosures to the cable industry, Channell claims to lead the market, and Reliable Electric follows. In enclosure sales to the phone industry, Channell is building on a small base, and Reliable Electric is the dominant player.
Cable operator Tele-Communications Inc. accounted for 17.5 percent and Time Warner Inc. for 15.6 percent of Channell's 1995 sales of $41 million, which includes $6.1 million in international markets. Channell has grown at a compounded annual rate of 26.7 percent since 1991, when sales were $15.9 million.
Channell reported profit of $3.7 million on sales of $13 million for the quarter ended June 30. The comparable 1995 quarter had profit of $2.8 million on sales of $11.8 million.