New CTP owners focusing on billion-dollar mark

CHARLOTTE, N.C.—The new owner of Carlisle Companies Inc.'s Carlisle Transportation Products business is focused on growing the operation significantly.

"We want to be a billion dollar company," said Kevin Forster, CTP's president and CEO. "We're just under $800 million now, and we feel like we can grow to a billion dollars."

Carlisle completed the sale of CTP on Dec. 31 to private equity firm American Industrial Partners for $375 million.

The CTP unit includes Carlisle's specialty tire and wheel business and its power transmission belting operations. It manufactures and distributes bias-ply and radial tires, stamped and roll-formed steel wheels, and tire and wheel assemblies to non-automotive customers, and power transmission belts and related components.

CTP has seven manufacturing facilities. It produces tires at plants in Clinton, Tenn.; Jackson, Tenn.; and Meizhou, China. It manufactures belts in Fort Scott, Kan., and Springfield, Mo., and produces wheels in Aiken, S.C., and Ontario, Calif.

The unit also consists of 10 distribution centers in the U.S. and Canada, along with ones in Roosendaal, Netherlands, and Meizhou, China.

The business will continue to offer products under the Carlisle brand name.

Forster is not concerned about profit margins, even though that was one reason Carlisle sold its CTP business in the first place. David Roberts, Carlisle chairman, CEO and president, outlined a standard of 15 percent earnings margin for Carlisle business units during a conference call in July 2013. CTP reported a 6.7 earnings margin in 2012.

CTP reported 2012 sales of $778 million and $52.4 million in operating income. The tire and wheel business represented an estimated $375 million to $400 million of the revenue total. Forster said the margins are acceptable, but the firm feels like it can expand them over the next few years.

In doing so, Forster said AIP will make significant investments focusing on manufacturing systems. He said the firm plans on investing in new manufacturing technology for lean production and add more automation in its wheel plants.

"I think AIP has folks who understand manufacturing," Forster said. "They've got operations specialists inside their group. I think their perception is this company is pretty well run, and they want to make investments to improve and grow the business. Carlisle had invested more to right size the business. Now under AIP, we can invest for growth."

Forster said CTP is in a position to focus on growth after Carlisle spent the last few years cutting costs. The firm reduced its footprint by closing some plants and distribution centers.

Since 2010, Carlisle consolidated some of CTP's manufacturing in the U.S. The company spent $65 million to refurbish and convert a former Whirlpool Corp. factory into its current Jackson facility. It relocated tire production from its plant in Carlisle, Pa., to the Jackson site and closed the Pennsylvania facility at the end of 2010.

It also moved tire production from its factories in Buji, China, and Bowden, Ga., to its Jackson facility. The Bowden site was destroyed by fire in 2008.

Carlisle later closed the Buji plant, moving tire production to the Meizhou factory and belt manufacturing back to existing factories in Kansas and Missouri.

During that span, the firm consolidated 19 distribution centers in the U.S. and Canada into nine—opening a center in McDonough, Ga., in the process—and merged its three-wheel manufacturing plants in California into one.

"I think we've got the footprint right now. We're basically investing for growth," Forster said. "We're looking for improved efficiencies and growth of the business."

He sees growth opportunities on both sides of CTP's portfolio with opportunities mainly in the agricultural, construction and original equipment manufacturer sides of the tire business.

The construction market is one of the larger markets. Forster said the firm has a small share and believes CTP can increase it in that particular segment. He also sees opportunities in the speed trailer market for both tires and wheels despite CTP having a significant section of that market.

On the belt side, Forster said the company sees growth opportunities in the power sport segment and industrial distribution.

Forster said there are no plans to change CTP's leadership and that the management team transferred with the business.

Forster has been the president and CEO of CTP since August of 2011. He started with Carlisle in 1990 when it acquired the Carlisle brake and friction business from BF Goodrich. He ran that company until he went to Asia as president of Carlisle Asia-Pacific for six years.

Forster returned to the U.S. in 2002, becoming vice president of corporate development until 2008. In 2009, he returned to his position as president of Asia-Pacific before assuming his current role.

American Industrial Partners, a middle-market private equity firm founded in 1989, specializes in North American-based industrial businesses. AIP manages a portfolio of more than $1 billion in committed capital. Its current holdings include Allied Specialty Vehicles and Heil Trailer International Co.