Closure and container maker Portola Packaging Inc. has bought Tech Industries Inc., a company that offers Portola a variety of options.
``One of the areas we looked at over the past year is how we grow as a business,'' Jim Taylor, Portola president and chief operating officer, said Sept. 20. ``One of the growth markets in our future was cosmetics and skin-care packaging. That was the attraction of Tech Industries to Portola.''
Tech, a company with bloodlines extending back 50 years, injection and compression molds specialized closures and containers for cosmetics and personal-care uses. Although the company twice has attempted to open plants internationally, it now runs from a single, 500,000-square-foot site in Woonsocket, R.I.
The value of the acquisition comes more from Tech's product lines and technology than in its market size, Taylor said. Tech recorded sales of about $31 million for fiscal 2002, but is a leader in its niche segments, he said.
Tech started as a metalizing company and has developed the use of ultraviolet metalizing and special coating technology, said co-President Bill Nast. The company plans to use the development resources of Portola to expand those processes globally, Nast said.
``Our coatings business for UV containers is exploding right now,'' Nast said. ``It's great technology, transferable into the cosmetics business and beyond. We're in the stage of seeing how that will play out.''
Tech had reached a logjam in its growth. Owner Herb Wang had ventured to Ireland, where Tech had a plant for 22 years, and more recently to Jundia¡, Brazil, where the company opened a facility in 1998.
However, in the latter case, a glut of suppliers moving to the country fueled overcapacity and the undercutting of prices by Brazilian producers, Nast said. The devaluation of the Brazilian currency, the real, was the final straw, Nast said. The company pulled out of the country little more than three years after entering it.
Portola, meanwhile, has a large global footprint. The injection molder has plants in the United Kingdom, Mexico and China and three facilities in Canada. With the greater capacity of San Jose, Calif.-based Portola, Tech will have the resources to grow faster than it could by itself, Nast said.
Wang had decided to retire earlier this year but was selective about a buyer, Nast said. He did not want to sell to a direct competitor who might close the Woonsocket plant and buy the assets, or to an investment firm that wanted a short-term return, Nast said.
``One of Herb's directives when starting the process was to sell this facility to someone who was not going to rip it apart,'' Nast said. ``We wanted to take the time to find the right partner.''
Portola could fit that description. The larger company - Portola recorded $210.8 million in sales for fiscal 2002 - is a major supplier of closures and containers for noncarbonated beverage applications. But it had not expanded much beyond that segment.
Tech, with 400 employees in Rhode Island, pioneered the use of compression molding for heavy-wall closures for fragrance markets. The company also is a leader in polypropylene and glycol-based PET jars, Taylor said.
The company has a large site, about half of which is used for warehouse space. The Tech facility also could start making products for the higher-volume skin-care market, an area that Tech has not entered, Nast added.
The facility has 44 injection molding presses and a research and development center that will be used to find new applications for Portola's packaging business, he said.
``Longer-term, we might move some production of [cosmetic and personal-care products] to other Portola plants,'' Taylor said. ``But we plan to fill up the Rhode Island plant fairly quickly.''
The purchase was completed Sept. 19 for undisclosed terms.
Portola has had a trying year, with flat sales and a reported loss of $2.75 million for the first nine months of 2003. Portola also said in July that it would shut three U.S. plants.
But the company expects to see an upward trend in closures and containers, Taylor said. The purchase will help the company capture some of that head wind, he said.
``It's starting to get a little better,'' Taylor said. ``Tech works for some of the top-name customers in the world, and some of them want the company to expand globally. There are many positive reasons for the two of us to join together.''