Cambridge Industries Inc. has continued its voracious buying binge by purchasing the Brazilian automotive molding facility of Owens Corning.
The purchase of Owens Corning's Rio Claro, Brazil, plant hands Cambridge, based in Madison Heights, Mich., its first presence in South America and adds fuel to its acquisition-minded growth strategy. Terms of the deal, which closed Aug. 29, were not disclosed.
Cambridge, the largest producer worldwide of auto parts from sheet molding compound, plans to expand further into thermoplastic parts, Cambridge President Kevin Alder said in a Sept. 3 telephone interview. The Brazil plant will provide a base for that expansion, he said.
The privately held company also is considering a public stock offering as early as late next year or the first quarter of 1999, Alder said. The supplier has grown steadily, from sales of $2.9 million in 1990 to a projected $510 million this year.
Next year, the company hopes to break the $1 billion sales barrier, primarily through more purchases or new plants, he said.
``We want to build a strong foundation around the world,'' Alder said. ``Once we felt we've done that, we'll look closer at going public. There are no formal plans, but we've had a lot of discussions on the subject.''
In Brazil, Cambridge plans to transform a 100,000-square-foot plant currently producing compression molded, glass-fiber-reinforced parts into a broader-based plastics parts plant. The plant also will make composite materials for Cambridge products.
``Despite [Cambridge's] recent acquisitions of SMC companies, [it wants] to respond to opportunities from automakers to become more of a full-service supplier,'' said consultant Joseph McDermott of Composites Services Corp. in Cresskill, N.J.
Initially, the company plans to ship six to 12 injection and compression presses to the plant from other Cambridge facilities. Most of the presses will have clamping forces of 1,500-2,000 tons, with at least one larger, 4,000-ton press slated for the plant. The company also plans to have some extrusion work there, Alder said.
The plant, which is scheduled to run at full capacity by 2001, records less than $10 million in annual sales, Alder said. Potential contracts could push that total to $40 million by the year 2000, Alder said. The facility employs about 100.
Many automakers, including the Big Three, Volkswagen do Brasil SA and Mercedes-Benz do Brasil SA, operate plants in the country. The company is discussing potential contracts in structural, functional and under-the-hood components, Alder said. That work could include compression molding, injection molding and structural reaction injection molding.
``It was difficult to talk to potential customers without being [in South America],'' Alder said. ``We can go after any business now that we have prior commitments there.''
Cambridge hopes to use that plant as a springboard to expand to other South American sites, Alder said.
The 26-year-old plant makes compression molded fenders, engine covers and trim parts for several automakers, said spokesman Bill Hamilton of Toledo, Ohio-based Owens Corning. In 1995, Owens Corning expanded the plant by adding a fourth furnace that increased glass-fiber production by 44 million pounds per year.
The plant was Owens Corning's only facility that performed compression molding, Hamilton said. Although the plant was profitable, Owens Corning decided to sell it to a company more familiar with molding work, he said.
``The molding of composite parts is not our speciality or a core business for us,'' Hamilton said. ``We were happy to have Cambridge take it over and run with it. It frees up capital for us to chase other opportunities in our established operations.''
Cambridge has chased opportunities in SMC this year. In July, the company spent $75.5 million to purchase the plastics division of Cincinnati-based Eagle-Picher Industries and an SMC parts-making plant owned by Goodyear Tire & Rubber Co. of Akron, Ohio. Earlier this year, Cambridge also launched a 50-50 joint venture with Menzolit-Fibron GmbH, an SMC parts producer in Bretten, Germany.
Cambridge, which had considered consolidating the three Eagle-Picher plants, has decided to keep the plants open, Alder said. The company will expand production at the Huntington, Ind., plant, which had been operating at less than full capacity.