Federal Signal Corp., a publicly held maker of stamping dies, plans to buy PCS Co., a family-owned maker of mold components, and transform it into a stronger tooling competitor. PCS, based in Fraser, Mich., is regarded by analysts and competitors as a well-run company with growing sales.
But PCS President James Ramge said the company needs more financial backing to play on the same stage with such competitors as D-M-E Co. and Progressive Components Corp. The firm plans to open more distribution outlets both in North America and overseas, he said.
"Our goal is to make PCS a more dominant player in the industry," Ramge said in a Feb. 24 telephone interview. "[The acquisition] is certainly going to make our presence better known."
Federal Signal, traded over the New York Stock Exchange, could help with that. The company — which recorded more than $1.1 billion in 1999 sales — has a strong direct-distribution network for its cutting and stamping tools for metal parts, said investment analyst Shawn Narancich of D.A. Davidson & Co.
The acquisition will broaden Federal Signal's product portfolio and help PCS reach more customers and distributors, said Narancich.
"It's still the disposable tool market, whether it's for plastic or metal parts," said Narancich, based in Great Falls, Mont. "This market shares a lot of the same channels. It should expand the business of PCS well beyond what they have on paper now."
PCS recorded sales of more than $25 million last year, Ramge said. The sale price was not disclosed, but Narancich said the transaction was for less than $25 million. The acquisition is scheduled to close by March 1.
PCS makes a variety of mold bases, injector pins, sleeves and other products and uses about 20 distributors in the United States, said marketing manager Dwight Zahringer. PCS stands for pins, cores and sleeves.
Distribution through independent sources increases the company's costs, which some customers could be unwilling to absorb, said Glenn Starkey, president of Wauconda, Ill.-based Progressive Components.
Both Progressive and D-M-E work through in-house distributors, similar to that of Federal Signal.
PCS also needed to become more global to compete, Starkey said.
"PCS's presence through the global tooling market is virtually nonexistent," Starkey said. "It's either a matter of growing it yourself or have someone grow it for you. This makes sense as a painless means to do that."
Federal Signal officials were unavailable for comment before deadline. The company operates a tool group for metal parts and also makes safety and signaling products, custom signage, and emergency vehicles.
PCS has been on a growth tear. A year ago, the company added 30,000 square feet to its Fraser factory and has seen sales rise by 10-15 percent annually through much of the 1990s, Ramge said.
The company was founded by Ramge's father, Joseph Ramge, and James Stuart. In December 1980, James Range and Stuart's son, James Stuart III, took over the company.
Ramge and Stuart plan to stay with the company, which will keep the PCS name and become a Federal Signal subsidiary. The company's 100 employees also will remain.
The company had heard other offers to sell, and it spent the past two years discussing the arrangement with Federal Signal, Ramge said.
"A month wouldn't go by without half a dozen letters or phone calls from companies wanting to buy us and make us instant billionaires," Ramge said. "It rivals what happens on ABC [television] with Regis Philbin. Even so, we didn't have to sell the business."