SOUTH BEND, IND. (Aug. 9, 11:05 a.m. ET) — Indiana Rotomolding Inc. is a new, and old, custom rotational molder that came together quickly.
Jack Welter wasted no time last fall, when Kópavogur, Iceland-based Promens hf sold six U.S. rotational molding plants — Elkhart Plastics and Bonar Plastics operations — to a private equity firm.
The new owner, Olympus Partners of Stamford, Conn., had built up a concentration in tank rotomolders by purchasing Snyder Industries Inc. and Norwesco Inc., in 2008.
The U.S. Promens factories made tank-type products, but also were adept at custom rotomolding.
So Welter picked up the phone. “I approached them shortly after the sale about their plans for custom and proprietary. So that's when the talks began,” he said.
Welter and a group of fellow managers ended up buying five of the six factories, three in northern Indiana and two out West. Announced in February of this year, the deal came together just four months after Olympus bought the Promens operations.
During a July 19 interview at the South Bend headquarters, Welter talked about Indiana Rotomolding's future. He recalled the history of Elkhart Plastics, which Welter, an accountant, joined about two decades ago and learned the rotomolding ropes.
Indiana Rotomolding is the eighth-largest North American rotomolder, with sales of $60.5 million, according to the current Plastics News ranking. The company has 500 employees running 41 rotomolding machines.
Welter, who had remained as top executive during the Promens ownership years, said he was motivated to lead the management group to buy back the custom molding operations.
“The reason that I did it is, I realized that after the sale of Promens [to Olympus], I started looking out into the future and thinking about what I wanted to do,” Welter said. “And when this opportunity presented itself, it was really appealing — for myself, personally — to run the business again, on my own, but also to get some of the key people involved, and really go back to where we were.”
He declined to say how many people are in the management ownership group.
Welter, the president and CEO, said employees are charged up about Indiana Rotomolding. “I've really had a tremendous amount of positive comments when I walk through the plants, about, ‘Hey, this is great,' ” he said.
A dedicated workforce is important to a rotational molding factory. Operators make adjustments based on how the big hollow parts are running each shift. It's hard, physical labor — especially during hot, humid summer days in Indiana.
“Our success is due to our plant personnel. I mean, those guys are the experts in molding, our managers and our supervisors,” Welter said. “The challenge is to make that job as easy as possible for the operator, which is very difficult. It's a hard job and we try to make it less difficult whenever we can.”
Indiana Rotomolding's Hoosier State plants are in South Bend, Middlebury and Elkhart, and operate under the name Elkhart Plastics. The two other plants, former Bonar facilities in Littleton, Colo., and Ridgefield, Wash., operate under the names Littleton Plastics and Portland Plastics, respectively.
The story of Elkhart Plastics is a tale of an independent Indiana manufacturer bought by a global rotomolding giant, then sold to private equity and now returning to its roots.
Promens, part of Icelandic investment firm Atorka Group, claimed to be world's largest rotomolder. Promens made its move into the U.S. in 2005 by purchasing Bonar Plastics, which had global operations, and the following year, acquiring Elkhart Plastics.
Welter remained as vice president of rotomolding at Promens North America. “There was a big adjustment with Promens. But actually it was a good fit,” he said. “It was a very interesting time. We really did have a lot of interaction between the European molding companies and us, traveling back and forth.”
Promens was out to build a global rotomolding company, the largest supplier of containers to materials-handling markets.
Then in late 2006, Promens diversified outside of rotomolding by acquiring Polimoon ASA, a large European maker of packaging and automotive parts. Polimoon brought expertise in injection molding, blow molding and thermoforming. Rotomolding was no longer the largest segment.
Promens sold its six U.S. plants to Olympus Partners last October, to focus on its larger European business. Olympus was interested in Promens' U.S. operations, Welter said, because the business competed with Snyder Industries in intermediate bulk containers.
Custom molding accounted for over half of total sales, leading to the talks with Welter and the other managers.
future, a look back
Welter said custom rotomolding is not easy. “Trying to be efficient and a custom molder is really the biggest challenge, because the runs typically are not long,” he said.
Since several different molds can be mounted to the metal framework, deciding which parts to mold is important.
“It's really having the right mix of products on a machine that'll allow you to be efficient. That's very difficult,” he said.
The history of Elkhart Plastics — like much of the plastics industry in north-central Indiana — is rooted in the recreational vehicle industry. Dick Petersberg founded the company in 1988 with a single machine to serve RV makers. Ed Welter, Jack's father, was an investor but not active in the business.
About 1½ years after the company started, Petersberg was killed in a car accident on his way home from work, Jack Welter recalled.
Welter joined the company in a finance role. “When I came on, I knew accounting. I didn't know anything about plastics. Really, I had to learn,” he said.
He and Rod Juday ran the company. Juday had worked with Petersberg at rotomolder Riblet Plastics, now Ameri-Kart Corp.
Welter became president of Elkhart Plastics in 1994.
The company began by focusing on RV water tanks, then in the early 1990s helped motor-home manufacturers convert other components to rotomolded plastic. One example was storage liner compartments, which had been metal. Welter said the molder also worked with boat makers to convert wood seating to plastic.
Elkhart Plastics moved out of its original building in 1991. The business continued to grow by finding new markets and acquiring other, smaller competitors in Indiana, including Rotational Solutions Corp. and Spin-Cast Plastics Inc.
“We started back in 1988 from zero, and we had some pretty nice growth to the point where in 2006, when we sold to Promens, we had grown to a pretty sizable operation,” Welter said. Plastics News ranking data at the time showed Elkhart Plastics with $34 million in rotomolding-related sales for 2004.
Now, three of the five plants are ISO-certified. Indiana Rotomolding builds fabricated molds and does tool design, prototyping, and computer-aided design.
The headquarters plant is the former Spin-Cast factory, where that company pioneered highway safety barriers filled with water or sand, to absorb energy in a crash. Some of the hollow rotomolded barriers have an internal insert of a metal skeleton. Those highway products are still a big part of the South Bend plant.
Indiana Rotomolding also still molds parts for RVs. “It's an important market to us, but it certainly is not our largest,” Welter said.
Instead, the company serves a wide range of additional markets, including commercial vehicles, fitness equipment, lawn and garden, electrical/electronics, automotive, waste management and medical furniture.
Welter said the Colorado plant rotomolds an exotic product: plastic steers used in roping practice.
With that kind of diversity, the goal is keeping all 41 machines full and meeting customer deadlines. “Our biggest challenge is scheduling,” Welter said. “Scheduling machines is one of the most difficult, but also most important parts of the business.”