Ultra Tool Co. has bought the mold-making division of Triquest Precision Plastics, the first sale by Triquest's parent company in its quest to jettison its plastics business.
Ultra, based in Grantsburg, Wis., purchased the Triquest Precision Tooling plant in Baxter, Minn., on Jan. 5. Terms were undisclosed. Ultra plans to shift one of its two plants to the Baxter site during the next several months, said Ultra President Patrick Finn.
Although Ultra needed the extra production space provided by the Triquest purchase, Finn expressed some reservations about buying a new facility during a soft economic period for toolmakers.
"It's a real scary time in the industry right now, and some companies are in dire straits," Finn said. "But we also needed the space to reduce costs and remain competitive. It seemed like the right thing to do, considering our options."
Ultra had considered opening a plant in the Chicago area, Finn said. But the opportunity to buy a plant near its existing Staples, Minn., facility made more sense financially, he said.
Officials at Triquest, based in Vancouver, Wash., had approached Ultra about the deal. Triquest's parent company, Sealaska Corp., began soliciting offers in October to sell off the entire plastics operation.
The Juneau, Alaska-based company, owned by a group of Native Americans, told stockholders in December that it would report significant losses in 2000 for the first time in 17 years. It partly blamed the red ink on its Triquest operations, which it purchased in 1997, claiming the capital required and the operation's relatively small size thwarted profitability.
Triquest, which reported 1999 sales of about $91 million, molds precision parts and housings for the telecommunications and appliance industries. It runs two molding plants in Mexico and a prototype division in Redmond, Wash.
In October, Triquest set up a joint venture at its Vancouver molding plant with Puget Plastics Corp., based in Tualatin, Ore.
Sealaska, working through investment bankers, plans to sell all those operations, including Triquest's stake in the venture, said Sealaska spokesman Ross Soboleff. The company will retain its logging, mining, wireless-telephone and gaming businesses.
Ultra found Triquest's tooling plant a good fit with its existing business in the telecommunications, electronics and medical sectors. The Baxter plant makes tools for cellular phones and other high-precision products.
The company plans to use the Baxter plant to help continue its expansion into molds for specialty areas, such as two-shot and insert molding, metal injection molding and thixotropic molding, Finn said.
Ultra plans to close its 5,000-square-foot Staples plant and shift workers and equipment to the Baxter facility, which is only 3 years old and twice the size of the Staples site, Finn said. The two plants in central Minnesota are about 25 miles apart.
The Baxter plant will employ about 41. Ultra plans to invest about $500,000 at Baxter in new equipment, much of it automated, during the next three months, Finn said.
Depending on the economy, the company plans to make a similar investment in its Grantsburg plant in the first half of 2001, he said. Finn did not disclose sales for the privately held toolmaker.
Currently, slim profit margins and the shortage of skilled labor have hurt toolmaking, Finn said.
"We're making some major investments," he said. "They'll help us compete in lead time and survive. But for many companies, the economy hasn't helped out."