Novi, Mich. — Cooper Standard Automotive Inc. changed a lot in 2018.
After executing five major deals — four acquisitions and a divestiture of one of its primary product lines — Cooper Standard has reshaped its core product offerings and set the foundation for its non-automotive business.
The firm now operates under three automotive product groups: rubber and plastic sealing, fuel and brake lines and fluid transfer hoses, plus its non-automotive Industrial and Specialty Group (ISG). Chief Operating Officer Keith Stephenson said the firm will continue to invest heavily in these areas, but long term Cooper Standard has set a goal for its ISG to account for 25-30 percent of its revenue within the 2023-25 time period.
"We love the automotive space, and we intend to continue to grow our business on the automotive side both organically and inorganically," Stephenson. "But we also think we can leverage our technology into adjacent markets like commercial vehicle, industrial and agriculture."
Organically, Stephenson said the company has had success within the commercial vehicle and power sports areas. It also has secured licensing agreements to produce its Fortrex compound, a lightweight elastomeric material that combines the best attributes of EPDM and thermoplastic vulcanizates, two common materials used in sealing, in non-automotive applications.
In the third quarter, the firm said it had secured a second licensing agreement with an unidentified "major North American material compounding company with an extensive sales force and customer base."
In the fourth quarter, Cooper Standard entered into an agreement with PolyOne Corp., allowing the company to sell Fortrex-based formulations into select markets. Cooper Standard said those applications include electrical/electronics, health care and complex industrial products. It will exclusively retain all rights to Fortrex and will generate revenue/profit from royalty income based on PolyOne's sale of Fortrex.
"The business is growing organically and doing a very nice job there," Stephenson said. "We've added some talent to the organization. We want to find additional bolt-on opportunities in the future in addition to growing organically."
Cooper Standard's acquisition of Lauren Manufacturing and Lauren Plastics, will help it significantly expand into non-automotive applications and lay the foundation for further growth within those industries.
One of its biggest deals of 2018 was its July acquisition of Lauren Manufacturing and Lauren Plastics, which projects its ISG business to account for 7.6 percent based on fiscal 2019 revenue. Prior to 2018, Cooper Standard's non-automotive business accounted for about 5 percent of its $3.62 billion in consolidated 2017 sales.
"It was an excellent opportunity to acquire what we feel is a very good company," Stephenson said. "Lauren is an excellent strategic and cultural fit, which was very important for both us and Lauren. It's everything hoped for in terms of the quality of the asset and the quality of the people. This allows us to grow our ISG business significantly in North America."
Lauren adds new markets that Cooper didn't previously participate in, most notably seals for the building materials space. In addition to adjacent, non-automotive markets, the firm brings established customers and relationships that Cooper's core technologies can break into.
Stephenson said the integration process has gone smoothly and that Lauren has become a "very important part" of its ISG business.
"Lauren is a jewel," Stephenson said. "We think of it as a high-quality asset. We think there are other assets like it out there that if we can find them, buy them right and integrate them well, it could be really beneficial to the company and our shareholders."
The firm expanded its global leadership team to place an added focus on acquisition opportunities, appointing Gabrielle Corrent as its vice president of strategy and mergers and acquisitions.