In a strategic move to expand operations to the West Coast, Tuscarora Inc. of New Brighton, Pa., has acquired two California companies and plans to build a facility in Tijuana, Mexico.
One of the companies, Allgood Industries Inc., makes protective packaging, including foam products. The second, Thermoformers Plus, is a small, thin-gauge thermoforming operation.
Terms were not disclosed.
The firm's purchase of Allgood Industries of Hayward, Calif., is scheduled to be complete by the end of the month. The companies have been in talks on and off since the beginning of the year, said Brian Mullins, vice president and treasurer for Tuscarora.
``[Allgood] has good market position in the Bay area of San Francisco,'' Mullins said. ``The current owner is retiring and it's a good fit.''
Allgood's 128,000-square-foot plant employs about 55 and serves the high-tech consumer, electrical and automotive industries. Tuscarora plans to add employees with the growth of the business.
As a custom fabricator, the firm deals with polyolefins, polyethylenes and some polyurethanes. In addition to foam plank and corrugated/foam packaging, Allgood makes wood and corrugated paperboard packaging. Currently, the firm's equipment includes saws, wire cutters, die cutters and printer/slotters.
``Eventually we plan to add foam molding machines,'' Mullins added. Allgood reported sales of about $6.5 million last year.
Tuscarora closed the sale of Thermoformers Plus, located in Chula Vista, Calif., in mid-April.
``With our first thin-gauge thermoforming acquisition last September, we were looking for another location for business on the West Coast,'' Mullins said. ``Initially, the owners of Thermoformers Plus were selling their equipment because they wanted to get into other things. It has a nice book of business and until we add capacity, we actually are turning down business,'' he added.
``It's just a good fit with being on the West Coast and being a thin-gauge operation.''
The leased 20,000-square-foot facility will ramp up to 12-15 employees, from the current two, and custom thermoform for a broad range of industrial customers. Products include packaging, material handling and trays. Thermoformers Plus runs one machine. Tuscarora initially plans to add one or two more.
Thermoformers Plus had sales around $1 million last year.
Coincidental with the acquisition of Thermoformers Plus, Tuscarora won a $1 million contract to produce thermoformed packaging for a West Coast company.
``Essentially, we are entering the market with nearly $9 million in new business,'' John O'Leary, Tuscarora president and chief executive officer, said in a news release.
The 75,0000-square foot Tijuana plant should open early next year. Tuscarora will break ground in a few weeks, after the plans are approved, Mullins said.
``There's a large concentration of consumer electronics business there,'' he added. ``It's a very active market and we wanted to participate in Tijuana. We'll also be able to serve certain customers in California as well because of [North American Free Trade Agreement].''
Tuscarora will initially invest between $4 million and $5 million with a lease-purchase arrangement. The expanded polystyrene foam molding operation will be launched with five machines and about 25 employees. In addition, the Tijuana plant has the ability to expand to double its size.
``We'll ramp up as we build our book of business,'' Mullins said.
``Prior to this we had nothing on the West Coast. There's a strategic element to these acquisitions,'' he added.
Tuscarora custom designs and manufactures interior protective packaging, material handling solutions and components from a range of products. The firm makes products using foam plastic materials, corrugated paperboard, molded and die cut foam plastics, thermoformed plastics and wood.
With 33 plants in North America and the United Kingdom, Tuscarora serves the consumer, high-tech, appliance and automotive industries. The publicly held company reported sales of $183 million last year, including about $10 million in thermoforming sales.