Midwest Tooling Group in Chagrin Falls, Ohio, is laying plans to create one of North America's largest mold-making companies that will serve as a one-stop tooling source for plastic parts manufacturers. The holding company last year attracted a new group of private investors, who expect to acquire as many as five mold producers during the next few years as part of an effort to consolidate companies in the highly fragmented tooling industry.
"We want sales to be north of $50 million, but we are not halfway there yet," said founder Joseph G. Teague, who bought his first tooling company in 1990, five years after leaving as president of the former Technicare Corp., a maker of medical imaging equipment in Solon, Ohio, that was sold in 1985 to General Electric Co.
Midwest Tooling already employs 220 at four companies, and could make two more acquisitions by the fourth quarter of this year, Teague said. He would not identify potential acquisition candidates.
The company's acquisition strategy was defined a year ago, when members of five wealthy Cleveland-area families became investors and acquired a majority stake in Midwest Tooling, said Executive Vice President Michael C. Adams, whose family is among the new shareholders.
Teague remains chairman and chief executive officer of the company, and his family still holds a significant ownership stake. His son, Mark W. Teague, is an executive vice president of the company. Mark Teague said a total of seven families have invested in the company, but he declined to reveal the size of the investments or the identities of the families.
Adams said the group is looking in Ohio and several other Midwestern states for small to midsize tooling companies with sales between $3 million and $20 million. Adams said there are more than 1,200 tooling shops in the several states around Ohio, and noted that Midwest Tooling Group may take a "hard look" at about 20 companies a year as it goes about finding the right acquisitions.
There appear to be abundant opportunities for Midwest Tooling to fulfill its acquisition ambitions. William Overton, president and chief executive officer of Edison Polymer Innovation Corp., a nonprofit plastic research group in Fairlawn, Ohio, said the mold manufacturing business is fragmented and characterized by small companies, many of which were started by toolmakers.
"There needs to be a consolidation of the mom-and-pop tooling shops," Overton said. "I think the [Midwest Tooling Group's] plan to put together tool shops for critical mass is a strong idea."
Joseph Teague got into the plastics tooling industry a decade ago, when he acquired Crown Mold & Machine in Streetsboro, Ohio, a producer of injection molds.
In 1992, Teague bought Fremont Plastic Molds, in Fremont, Ohio, a company he described as "sleepy," but one he believed would grow as the auto industry began using more fuel tanks made of plastics and fewer made of steel. The intricate molds Fremont Plastic produces for plastic gasoline tanks make up a major portion of the company's $10 million in annual sales.
Teague acquired Deep Hole Specialists Inc. in Chagrin Falls in 1995. The small machine shop provides specialized drilling services to mold manufacturers and other metalworking companies.
Last year, Midwest Tooling Group added to its portfolio again when it bought Penco Tool Inc., a small Ashtabula, Ohio, company that designs and manufactures compression and injection molds.
The companies acquired by Midwest Tooling operate autonomously and are independently managed. The small Chagrin Falls office provides the companies with management services, including banking and workers' compensation.