Continental Structural Plastics Inc. is moving into the exterior auto plastics supply business, just as that industry is overcoming major hurdles to long-term growth.
Bingham Farms, Mich.-based CSP bought the Budd Plastics Division of Thyssen Krupp Automotive AG of Bochum, Germany, for an undisclosed amount in a deal announced July 19.
ThyssenKrupp, primarily a metal specialist, has been looking for a buyer for the structural plastics unit for several months. The acquisition includes plants in Ohio - in Carey, North Baltimore and Van Wert - and in Tijuana, Mexico.
Budd, based in Troy, Mich., brings with it extensive contracts supplying sheet molding compound body panels for the North American auto industry and complete SMC truck beds for the Toyota Motor Co. Tacoma and the Ford Explorer Sport Trac.
Until now, CSP has been a player in the thermoplastic composite industry, with glass-mat thermoplastics, long-glass-fiber thermoplastic and direct long-fiber thermoplastics.
In 2005, the company received an infusion of cash from private equity group Richard L. Scott Investments and purchased Venture Industries' Conneaut, Ohio, facility. That acquisition added thermoset capabilities, with bulk molding compound and SMC.
The bulk of its parts were produced for structural and functional components such as heat shields, rocker covers and bumper beam reinforcements that are rarely seen.
Budd specializes in highly visible parts including hoods, trunks and other body panels.
Budd also helped develop a resin blend for SMC with AOC LLC - called Tough Class-A SMC - that eliminates defects in the parts that show up during the painting process, typically referred to as ``paint pops.''
That improvement, along with breakthroughs on ways composites can handle powder prime paint coats at the auto plants, have been a key to future use of Budd's products, said Dale Brosius, president of Brighton, Mich.-based Brosius Management Consultants. Brosius will chair the Society of Plastics Engineers automotive composites conference, set for Sept. 12-14 in Troy, Mich.
``Five years ago, I would have said it would be difficult for Continental to come in just because they would be inheriting a paint pop problem,'' he said. ``But a lot of those hurdles in composites have pretty much been solved now.''
Those issues may have helped prompt ThyssenKrupp's plans to sell Budd, Brosius noted.
The deal also moves Budd into a company with a plastics focus.
``Obviously the mix is good for Continental as well. Budd is a major player in SMC. Continental hasn't been a high profile player in the past. Now they are,'' he said.
The combination of Budd's thermoset capabilities with the thermoplastics already in CSP will be a key for Continental as it seeks future business, said Thomas Hilborn, CSP vice president. The firm will play on its ability to sell a ``materials neutral'' suite of structural plastic parts.
``We expect that most changes resulting from this acquisition will be transparent to Budd and CSP customers,'' he said. ``One thing that will change, however, is the breadth and depth of experience that the combined entity brings to the table.''
Now that automakers are happy with solutions to paint problems and have begun ordering more exterior parts, it is important that the industry is finding some financial stability, Brosius said.
Budd's main North American competitor, Meridian Automotive Systems Inc., of Allen Park, Mich., has been operating under Chapter 11 with the U.S. Bankruptcy Court since April 2005. It recently announced it has won approval for its reorganization plan.
CSP - now including Budd - has the fiscal backing needed for long-term health as well.
``[General Motors] and Ford especially are going to want two suppliers out there of reasonable size as they bring in more SMC,'' Brosius said. ``I have to think that this means things are getting better out there, because it's obviously been a tough time for the last few years.''