Sussex IM's buyout of Albea Group's North American cosmetic-compact business is nothing short of a rebirth, the company's president and founder says.
And Keith Everson expects to see a pretty substantial growth spurt now that the injection molder is in full control of that line of business.
The Sussex, Wis.-based company has been acting as a contract manufacturer, first for Rexam plc, and later for Albea Group, making millions of compacts each year since 2009.
But when Rexam sold that business to Albea at the end of last year, the deal triggered a contractual clause that allowed the two sides to re-examine the relationship.
Sussex made it clear it wanted to stand independently and worked for months to finalize a deal with Albea to acquire the compact business, Everson said.
“We made the decision that we wanted to go out on our own. And that's where the offer to buy came up and we were able to close the deal,” he said. “Now we're going to be able to work directly with the cosmetic firms again because everything else was filtered through Rexam or Albea.
“We're one of the premier compact manufacturers left in the United States. A lot of that business has gone overseas or companies just went out of business. I've been calling on the cosmetic industry for 33 years. And when I started off in this area, there were probably 12 compact makers in the United States. Today there are two or three,” he said.
“How we have been able to stay in this business is the automation. We build our own automation, take the labor out of the formula and then we're competitive globally,” Everson said.
The company's customers include such well-known names as Elizabeth Arden, L'Oreal, Mary Kay, Neutrogena and Revlon.
About 15 percent of the company's $70 million-per-year business currently comes from cosmetic compacts, but Everson sees that percentage doubling. The company employs 400 workers and the president does not see the deal affecting staffing levels.
“We're going to be a lot more nimble and quick to respond. We don't have as many hoops to jump through as other companies, bigger organizations, do,” Everson said.
Former Sussex IM owner Rexam approached Everson with the idea of a management buyout amid a downturn in the global economy in 2009. As part of that deal, the two sides agreed to a five-year supply arrangement.
When Albea acquired Rexam's cosmetics, toiletries and household-care business, that opened the window to reexamine the business relationship, Everson said. Terms of the deal were not disclosed by the privately held company.
“Everybody's excited here. We're hearing from customers, they're excited that they are dealing with us direct again, so it's kind of like a new birth. It's a rebirth,” the company president said.
Sussex IM also reacquired its innovation center, which had been located in Wisconsin but was moved to the Chicago area by Rexam in 2009 as a result of the management buyout.
That facility, at least for the cosmetics industry, sat idle for four years, Everson said.
“It's a really neat area. It's a place in our facility that's designed for innovation, very flexible, very open,” he said. “And we're now getting that back up and running and bringing in customers and showing them new, creative ideas.”