Canadian mold maker Reko International Group Inc. has agreed to buy a 49 percent stake in a small, minority-owned toolmaker in the Detroit area, expanding Reko's presence in the United States.
Reko, based in Oldcastle, Ontario, will launch a joint venture with The Mold Co., an automotive injection toolmaker in Romeo, Mich. The Mold Co. President Ken Potter will retain 51 percent of the company, to be renamed TMC.
The sale gives Reko access to minority sourcing from automakers and Tier 1 suppliers, a priority for those companies since the late 1990s. TMC received certification from the Detroit-based Michigan Minority Business Development Council in 2001, Potter said in a Dec. 4 telephone interview.
Potter and partner Joe Richardville bought a majority interest in TMC in 1999 and have attempted to grow the seven-employee firm. But even with minority status that has been difficult for the company to do on its own, Potter said.
The company will record about $1 million in sales this year at its 4,000-square-foot plant. TMC specializes in tooling for smaller presses, prototype parts, special machining and fixturing.
``Major automotive companies and Tier 1's are looking to minority contracts, but they don't want to deal with a seven-man shop,'' Potter said. ``If we get two tool packages in here, we're loaded. It takes capital to grow, and Reko should open a lot of doors for us and expand our capabilities.''
Terms of the joint venture were not announced, but the deal is to close by Jan. 31.
Reko, a publicly held company, has expressed interest in growing aggressively and may expand TMC. The company ended fiscal 2002 with sales of C$75 million (US$48 million), up C$20 million (US$13 million) from the previous year.
The Canadian toolmaker will use TMC on some existing projects, said Mark Garcia, Reko vice president of sales and marketing for its plastics operations. Some molds will be made at TMC's facility and then shipped to Reko for finishing, Garcia said. Doing that will give Reko minority status on certain projects, he said.
Several nonautomotive customers also have minority sourcing programs that can use TMC, he added.
``We'll be their marketing and sales arm,'' said Chief Operating Officer Gordon Young. ``And since they provide lower-cost prototype capabilities, it gives us a development arm on smaller tooling projects that we would not otherwise have.''
The venture also gives Reko its first U.S. tool shop. The company has a metal-stamping and hydroforming facility in South Lyon, Mich., in addition to plants in Canada for molds, equipment and other services.
Reko is looking at potential Asian partners, and the venture allows molds to be shipped directly from the Pacific Rim to the United States, he said.
Potter has a long relationship with Graham Shorter, president of Reko's tool and mold business. He had served as both an apprentice and then foreman at a Rochester, Mich., tool shop that Shorter once ran, Potter said.
But for Potter, the reasons for the venture go beyond personal relationships. ``Reko has a sales force,'' he said. ``We have myself and my partner."