Mark Stephens had known he needed to start making long-term plans for his family-owned injection molding business, Ironwood Plastics Inc., and during the summer of 2010, he approached another entrepreneur for advice.
The idea, Stephens said, was to set up Ironwood for potential acquisition in about three years.
But the more Stephens and Victor Mancinelli, president and CEO of agriculture industry supplier CTB Inc., talked, the more a new plan began to take shape. The plan led to Ironwood's acquisition in December by CTB, a wholly owned subsidiary of Warren Buffett's Berkshire Hathaway Inc.
This really came out of left field, Stephens said in a Dec. 28 telephone interview.
The deal, for an undisclosed price, sets up Ironwood for long-term stability for both employees and customers, provides an avenue for international growth for Ironwood's existing customer base and also opens a new line of business possibilities within Ironwood and CTB of Milford, Ind., Stephens said.
At first glance, you wouldn't think there is much common ground with Ironwood and CTB, Stephens said. They were looking for something that could help them in the plastics arena, but what they really wanted was someone that could bring expertise in new-product development and injection molding.
Ironwood has two plastics molding facilities, in Ironwood, Mich., and Two Rivers, Wis.
Stephens will now oversee the new Engineered Components Group within CTB, which will cover both Ironwood and CTB's existing Value-Added Processing unit. Rich Faustich, vice president of operations for Ironwood, also will be part of the new business.
Ironwood specializes in close-tolerance molding and reel-to-reel molding of precision parts for the automotive, electronic and medical markets.
Mark Stephens co-founded the company in 1979 with his father, Gordon, and has been co-president with his brothers Robert and Scott since Gordon Stephens retired.
Robert Stephens stepped down from the business in August to run an alpaca farm, while Scott Stephens has a second business running tours. At 55, Mark Stephens said he was not ready to retire yet, but needed to think about long-term plans for the business for the customers and employees.
At the same time, Ironwood's customers have been eager to see the company expand internationally, Stephens said.
Faustich had connections within CTB, which gave Stephens the ability to approach Mancinelli for advice.
CTB, as Stephens noted, would seem to operate in a completely different business climate. The company opened in 1952 and makes farm auxiliary parts including grain elevators, feeding systems, livestock barn exhaust fans and a variety of other equipment. It also does more than 90 percent of its business in global markets, with production in North America and Europe and a recent expansion into Malaysia.
CTB also has 15 injection molding presses in its poultry-feeding and egg-packaging division, and uses plastics in various electronic parts.
CTB had completed several acquisitions, and was itself purchased by Berkshire Hathaway in 2002.
The two companies quickly realized the potential of an acquisition and Stephens pointed out that Berkshire Hathaway would be an ideal owner one that invests for the long term and keeps management in place to run the business.
In this case, we have a parent that was happy with us, he said. They bought all of our buildings as well as the assets. The fact that Berkshire Hathaway is all about buying and holding and letting you run your company was ideal.