A financial group plans to create a large injection molding supplier for the automotive industry with its acquisition of a Maryland company to form Peake Plastics Corp.
Morning Calm Holdings Inc. of Plymouth, Mich. - backed by Wynnchurch Capital Partners Ltd. - purchased Old Line Plastics Inc. of Forest Hill, Md., on April 30 for an undisclosed amount. The company, now part of Peake Plastics, produces a variety of interior trim components. It specializes in in-mold decorating and laminating.
Manufacturing will remain in Maryland, with corporate offices for Peake in Plymouth.
Now the investment group will be looking for a cross-section of small and midsize molders capable of helping Peake become a large second-tier supplier, said Mark Lee, Peake's chief executive officer.
``We are developing our company based on the critical needs of the Tier 1 suppliers going forward,'' he said during a May 7 telephone interview. ``Our focus will really be in developing our capabilities and niches needed to make our customers shine in the eyes of their customers.''
New acquisitions will not necessarily come with the same processing capabilities as Old Line, Lee said. Instead, Peake could look to pick up a low-cost shoot-and-ship molder, if that is what customers need, or an operation with a clean room needed to produce functional components.
``We're willing to look at each opportunity presented to us going forward,'' he said.
The bulk of the businesses will be small, privately owned operations similar in size to Old Line, with annual sales of $25 million and 300 employees. That plan should play into the increasing emphasis for family-owned shops supplying the auto industry either to grow or sell out as manufacturers seek to consolidate their own supply base.
``We've seen that in the marketplace there are limited exit opportunities for mom-and-pop operations that want to sell out,'' Lee said.
While Peake is new, the product capabilities within Old Line bring it a solid market base. Lee, meanwhile, has experience in both plastics and automotive operations, including a stint with GE Plastics and with Conway, McKenzie & Dunleavy, a Birmingham, Mich., turnaround consulting group.
Wynnchurch of Lake Forest, Ill., is a private equity company focused on small to midsize operations for ``long-term investments in partnership with management.'' It already has one other automotive company in its portfolio. Troy, Mich.-based AxleTech International Inc., formed in 2002. Other Wynnchurch investments include companies working as supply chain specialists, manufacturing cable and wire assemblies and supplying nutritional supplements.
``It's an interesting play for Wynnchurch,'' said David Eberly, senior managing director of Beringea LLC, a Farmington Hills, Mich.-based consulting group.
Lee's group is actively seeking other companies, making a solid effort at creating another strong automotive supply group in injection molding, and he is familiar with the way the industry operates through Conway, McKenzie & Dunleavy, Eberly said.
``The interesting challenge will be in translating that expertise into running a real business,'' he said. ``That's the ultimate test.''