General Rubber Corp. finds new home with CECO

DALLAS—CECO Environmental Corp.—a publicly traded company providing solutions to protect people, the environment and industrial equipment—reached an agreement Jan. 10 to acquire General Rubber Corp.

Terms of the deal, which is expected to be finalized in April, were not disclosed.

GRC, established in 1950, engineers, manufactures and sells non-metallic (rubber) expansion joints and other rubber flow control products. These performance products are used in the optimization of new process systems for both piping and ducting and improving the performance and reliability of existing systems. Its main industries will continue to be the industrial power and municipality markets, although it also serves the chemical and steel processing, marine, mining, HVAC and other industrial sectors.

GRC in 2020 obtained NSF/ANSI/CAN 61 and 372 certifications for its newly developed NSF compound for use in water applications. The certification was the result of an 18-month developmental effort to create a synthetic expansion joint and flow control material that would pass public health and safety requirements. This new capability opens GRC to a large and growing opportunity within the water, wastewater and stormwater markets.

"The combination of the GRC products complements the CECO portfolio very nicely. And with our global resources, we feel we can increase sales and profitability while we move into new adjacent markets," said CECO Environmental CEO Todd Gleason.

CECO plans to integrate the GRC business into the Effox-Flextor-Mader Inc. joint venture CECO has with Chartwell Investments Entrepreneur & Founder Capital L.L.C. CECO, being the majority shareholder, will be the lead decision maker with respect to the business and management team, Gleason said.

CECO manufactures industrial air quality and fluid handling products, serving a broad landscape of industrial and other niche markets. The company is headquartered in Dallas and has 24 locations across eight countries. Its goals are to help clients improve air quality, optimize the energy value chain and provide custom-engineered systems for applications such as power generation, petrochemical processing, general industrial, refining, midstream oil and gas, and electric vehicle production.

The GRC acquisition has several key benefits. It will help increase CECO's short-cycle mix for orders—averaging around $100,000—to 27 percent from 22 percent. GRC also will more than double CECO's platform addressable market size.

"With this acquisition, we will be able to bring turnkey, environmentally friendly solutions that protect critical infrastructure, piping and flow controls for the water, wastewater and stormwater markets," Gleason said.

Lloyd Aanonsen, GRC president and CEO, said the deal also benefits GRC and its customers in a number of ways. Through discussions with industry executives and trusted advisers, Aanonsen said it became clear that GRC would benefit more financially from a merger or acquisition rather than relying on organic growth.

"It just made more sense for us to be joining a large, global company," said Aanonsen, who will join CECO as vice president and general manager of the newly formed damper and expansion joints platform. "(Both parties) feel that we complement (CECO's) solutions to support people, the environment and industrial equipment. We have found that growing our business through operational excellence is still a possibility, but this puts us at another level."

In addition to Aanonsen leading the dampers and expansion joints platform and the General Rubber business unit, his business partner Amy Hammarstrom will join CECO as a general manger, reporting to him. Roughly 100 General Rubber employees, the entirety of its current employee base, will be integrated into CECO with no disruption or changes to day-to-day operations, Aanonsen said. Globally, CECO now will employ nearly 950.

Additionally, General Rubber's manufacturing and back-end office in Tucson, Ariz., and its sales, engineering and marketing office in Venice, Fla., will remain open.

Customers will receive the same superior service and high-quality products under the CECO umbrella, Aanonsen said, adding that they also will benefit from a company that now has greater size and scale and an enterprise approach.

"We can deliver our solutions to more people in more places," he said.

The acquisition also will benefit the GRC unit through technology investments, personnel and adherence to proven processes and policies to support efficient operations.

"We now have a larger suite of products as part of a large global company, which is exciting," Aanonsen said. He expects growth to continue in the GRC and platform businesses, based partly on the $500 billion federal infrastructure bill that will support project costs needed by customers.

Gleason agrees that growth is expected to continue following the acquisition. CECO saw its orders rise 30 percent year-to-date through the first three quarters of 2021.

"With the GRC acquisition, we will expand CECO's addressable market size by $300 million. With more and more investment in infrastructure and water segments, we anticipate nice growth for an extended period," Gleason said.