Back when Fortis Plastics LLC ran into trouble a few months ago and start closing plants, we heard from other injection molders who put the blame on the company's private equity ownership. But private equity isn't all bad. We can even find other examples in the plastics sector where PE owners helped save companies -- and jobs. The Wall Street Journal recently was looking for a PE success story for a report on Mitt Romney, whose record at Bain Capital has become an issue in the Republican presidential primaries. Interestingly enough, the WSJ chose to feature a plastics-related company for its example of a positive PE investment: Gloucester Engineering Co. Inc. The story, "Appetite for (Creative?) Destruction," opens with the story of how Gloucester was on the brink of failure during the machinery downturn in 2009-2010, until private equity firm Blue Wolf Capital Partners stepped in. Here's what the WSJ's Gregory Zuckerman and Ryan Dezember had to say about Blue Wolf's experience:
Blue Wolf, which manages a $118 million fund, invested in Gloucester just as it went into Chapter 11 bankruptcy protection, and bought the entire company when it re-emerged from bankruptcy in late 2010. "If we could fix the operational issues, there was no reason we couldn't see this grow," said Blue Wolf managing partner Adam Blumenthal. Blue Wolf brought in a new management team, installed a computer system that helped better manage inventory and estimate job costs, and built up a business to service Gloucester equipment around the world. It also struck a deal with union workers that Mr. Vartabedian says kept pay and pensions unchanged but mandated employees perform a wider range of tasks than their previous job descriptions allowed. "The one goal we had was to make the company successful," said Joe Orlando, who took on multiple roles, including maintenance and truck driving under the new union agreement. "There were a lot of people that live in Gloucester and wanted to keep the jobs here." .Gloucester now employs about 100 workers, up from 30 at the time of the bankruptcy. Mr. Blumenthal said he expects substantial job growth over the next several years.There are plenty of other examples -- both good and bad -- of what PE ownership has meant for the plastics industry. Plastics News will have more to say about PE trends on Jan. 23, with one of our annual special reports on mergers and acquisitions.