IPL Inc. has gained some much-needed capacity by acquiring a custom injection molder in eastern Quebec. IPL bought Plastiques Gagnon Estrie, a Lawrenceville, Quebec, molder that mainly supplies components to Bombardier Inc.'s recreational division in nearby Valcourt, Quebec. Plastiques Gagnon Estrie has annual sales of about C$7.5 million (US$5.1 million) and runs nine injection presses with clamping forces of 300-1,500 tons.
The purchased firm will allow IPL to bring in-house about C$4 million (US$2.7 million) a year of molding work it has been contracting out to other custom molders, said Alain Ferland, IPL president and chief executive officer.
The deal brings with it about 80 well-trained operators and technicians, saving IPL considerable time and expense to train unskilled workers, Ferland added in a telephone interview.
The Lawrenceville operation mainly molds parts for snowmobiles, personal watercraft and all-terrain vehicles made by Bombardier. Ferland said IPL eventually will consolidate all IPL's Bombardier business in Lawrenceville, but first it will transfer repatriated molding there. The Lawrenceville operation currently has spare injection molding capacity, but IPL eventually will expand it to a 12-press plant.
The Lawrenceville capacity will free up space at IPL's main St. Damien, Quebec, plant and allow it to expand production of industrial packaging such as pails, according to Ferland.
Officials did not disclose terms of the May 15 sale.
Francois Gagnon, majority owner of Plastiques Gagnon Inc., said his firm sold the Lawrenceville operation to diversify and get higher capacity utilization at the firm's other two plants.
At one time Bombardier accounted for 80 percent of Plastiques Gagnon's total sales. Gagnon said that was too much emphasis on one customer, especially given the ups and downs of Bombardier's recreation products. Plastiques Gagnon's main injection molding facility is in St. Jean Port Joli, Quebec. Three years ago it established a smaller molding plant in St. Romuald, Quebec, near Quebec City.
Gagnon said Lawrenceville was profitable and has modern machinery and equipment. It is ISO 9002 registered.
Ferland estimated the purchase will improve IPL's operating efficiencies and boost cash flow from operations by C$0.15 (US$0.10) a share and profit by C$0.07 (US$0.05) a share.
IPL reported custom injection molding sales of US$85.1 million for the year ended Feb. 9. Its total sales of US$90.7 million included extruded products. Its five plants are in St. Damien, Lawrenceville and St. Lazare, Quebec; Windsor, Ontario; and Edmundston, New Brunswick.