ROCK HILL, S.C.—Lexington Precision Corp. is in a much better place than it was just a little more than two years ago.
The automotive and medical rubber goods maker was in Chapter 11 bankruptcy reorganization in July 2010 when private equity firm Aurora Capital Group purchased it. That relationship lasted about a year, when another private equity firm—Industrial Growth Partners—took over Rock Hill, S.C.-based Lexington in August 2011.
IGP, headquartered in San Francisco, invests exclusively in middle-market manufacturing companies. Concurrent with the purchase, IGP brought in Ray Grupinski as CEO to head up Lexington. And in July, Lexington and IGP combined to acquire Twinsburg, Ohio-based Quality Synthetic Rubber Inc., another rubber product firm that was a major player in both automotive and medical markets.
Instead of being in bankruptcy proceedings, Lexington Precision now sits as the parent company of a $160 million rubber product manufacturer with operations in five states and China, and a future that has the firm's top executives downright optimistic.
Story of transformation
Grupinski came to Lexington right as IGP purchased the firm.
He brought 28 years of business experience—the first 20 mainly in automotive with some time spent in health care and the last eight years nearly 100-percent focused on medical.
He ran Nypro Inc.'s $400 million global health care operations, but liked two things about the opportunity at Lexington: the acquisition strategy and the chance to be a CEO.
As a leader, Grupinski said he's hands- on and very customer focused. “I want to be very supportive of the team,” he said, “and just share with them my basic knowledge over the last 29 years in manufacturing. The majority of my time will be spent on the customer side.”
His first task was to bring Lexington together as a company. “I think that Lexington lacked leadership,” Grupinski said. “There were groups of very talented individuals, but it wasn't pulled together and consolidated as a focused team. And that's what I think IGP expected, for that to happen.”
With nearly three decades in operations, Grupinski is a big believer in lean and Six Sigma activities. “This is the seventh acquisition I've done in my life, and we've deployed lean activities in all of them” he said. “It's really making sure that we produce a work environment that is very clean and has the most ergonomic conditions for our operators, which leads to safer and more productive operations.”
A lot of the Lexington focus was on its medical factory in Rock Hill. The firm reorganized the molding room; invested in improving air quality and workplace comfort; implemented uniform cell loading; and added a Class 8 platinum-cured silicone molding department, among other activities.
Lexington's automotive plant in Jasper, Ga., didn't need as much help in deploying lean initiatives, Grupinski said, because it made larger insulator-type products where a number of processes already were automated.
He also brought in former Nypro colleague Mike Torti as vice president of sales and marketing. Torti called Grupinski a “very high energy guy” with a background in operations and quality. “He's very focused on taking out cost and improving efficiencies in operations,” Torti said. “He has a track record of that.”
Lexington had been around a long time and was known for its niche in wasteless/flashless transfer molding capability. Technically the company was strong and was a serious player in automotive with its silicone insulators for ignition systems, Torti said. But it never appeared to have the right owner on board that could provide the proper financial support or leadership.
“With Ray coming on board, you have the leadership, you have an operational expert and you have the investment from IGP,” he said. “Then you shore up Lexington and move right away to an acquisition that is a perfect marriage.”
QSR already had implemented a lot of lean practices, so over time the operations will make sure things are done the same way, according to Grupinski. “We'll commonize our lean practices and continue to move forward,” he said. “It's a cliche, but it's a journey, so we'll start the process. Lean goes on forever.”
The Lexington CEO also has become a fan of IGP. He said he hasn't worked with a lot of private equity firms, but from stories he has heard from others, the Lexington owner definitely would rank in the top echelon.
“These people really partner with us, help us to find the right talent and are in it for the long haul,” Grupinski said. “It's not a quick flip.”
IGP is strong in moving forward and doesn't typically buy one thing and bolt on a lot of things, he said. But when the operations fit together well—as was the case with Lexington and QSR—the owner won't hesitate in pulling the trigger.
Torti calls IGP “hands on in a positive way.” He said IGP has a lean expert that Grupinski can call on as needed, and is very supportive of its CEOs and in providing needed investment.
He said the owner also gives its firms the freedom to do what they need. “They've been in the mid-market manufacturing sector,” he said. “All they do is buy manufacturing operations. They very much understand everything about manufacturing. The resource pool they can offer us is second to none in the private equity world.”
Torti said Lexington likely was attractive to private equity firms because of its healthy medical business, where rubber molders generally can make higher margins than in other sectors.
“They saw an opportunity with Lexington, but they also understand they want to help their companies as much as possible with further investment inside facilities and with intelligent bolt-on acquisitions that give the business inertia,” he said.
'Q' marks the spot
And while Lexington Precision has made much progress in the past two years, the trade name itself will cease to exist in the market, company officials have determined.
Lexington Precision will remain the parent company of all of its operations, but the names of its businesses will bear different names—all centered along the letter Q.
The automotive operations, which have about $110 million in annual sales, will keep the Quality Synthetic Rubber name.
Randy Ross, former QSR CEO, will serve as president of the automotive group. Its manufacturing operations will be in Twinsburg, the Lexington plant in Jasper and one QSR had operated in Dong Guang, China.
The medical unit, with $50 million in sales, will have a new name altogether: Qure Medical, based at the Lexington Medical site in Rock Hill.
Other operations will be within the QSR factory in Twinsburg—previously called Medical Elastomers Development Inc.—and at the Limtech silicone molded products business in Sturtevant, Wis., that QSR purchased in November 2011. Plans also are in the works to add medical production in Dong Guang.
Even the tooling division, which primarily serves internal needs, will keep with the lettering program and be known as Quadra Tooling and Automation. Quadra was the corporate parent name for Limtech's rubber goods business, and itself had operated under that name as a tooling maker for about 60 years.
Torti said the Quadra name will be used both at the tool shop in Sturtevant and for the Lexington tooling division in North Canton, Ohio.
“We're going with the whole 'Q' thing across the board,” Torti said.
To get the word out, letters have been sent out to all customers, banners will change on company websites and all employee email signatures and phone greetings will change, he said. In addition, the firm has filed for trademark protection and registration for all three names and logos, along with the tagline, “When precision matters.”