2/7/2014

Three distributors primed for growth through expansion

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By Mike McNulty

Three growing distributors of hose and other goods have made separate acquisitions that not only will increase their size, but also expand their presence in parts of the U.S.

Minnesota Flexible Corp. bought hose and accessories distributor General Rubber Co.; Singer Equities Inc. acquired Cumberland Valve; and the Alaska Rubber Group purchased five facilities that made up the Pacific Rubber Group.

Alaska Rubber also is in the process of building a testing facility in Seattle to test and certify hoses up to 25,000 psi, according to Mike Mortensen, chief operating officer of the group. Details on the project have not been released.

The acquisitions further consolidate a section of the industry that has seen a number of mergers and purchases in the last 10 years, two officials involved in recent transactions said.

"Many large hose distributors have purchased smaller players as their owners have approached retirement age," said Andy Larsen, vice president of sales for Minnesota Flexible.

Financial details on the three transactions were not disclosed.

Alaska Rubber Group

An employee-owned distributor of hydraulic and industrial hose, fittings and rigging supplies, the Alaska Rubber Group doubled its size with the addition of the five hydraulic and industrial hose operations in the state of Washington.

The deal expanded its distribution network across southeast Alaska, which is primarily serviced from Washington, and throughout the Pacific Northwest.

Businesses acquired include Pacific Rubber Inc. of Seattle; Port of Tacoma-based Timco Inc.; North Sound Hose and Fittings in Everett; Central Hose and Fittings in Pasco; and Inland Pacific Hose and Fittings of Spokane.

The companies were purchased from a group of owners, two of whom were founders of Alaska Rubber.

"We're always exploring opportunities for growth, and it is exciting to see where this new addition to our group will take us," said Janeece Higgins, president and CEO of the Alaska Rubber Group. "Some of the former owners of the Washington stores, Don and Drennon Adams, were the original founders of the Alaska locations. We all started with a similar model. It's kind of our DNA."

She said she has known some of the employees at the Washington locations for years, "and the knowledge and experience they bring will help shape the future of the company."

She noted that everyone involved with the Washington operations will help shape the future of the entire group.

All of the acquired locations have stores and warehouses; all fabricate and distribute hydraulic and industrial hose.

The expanded group serves the oil, mining, fishing, timber, agriculture, wine, government, trade, original equipment and construction industries.

Several new lines have been added with the addition of the Washington businesses, Mortensen said, "and we'll make them available throughout the group. The Washington stores will do the same with products from Alaska Rubber."

Formed in 1980 and headquartered in Anchorage, Alaska Rubber has three locations—in Anchorage, Fairbanks and Wasilla.

Each location purchased will retain its original name, but each will be branded as an Employee Owned Alaska Rubber Group Company. "We definitely want to keep the local culture at each location intact," Mortensen said.

"There's a strong commitment within each store to customer service, and over the years each store has developed a loyal customer base," he said.

As the company integrates the acquired facilities into the group, Mortensen said, it will look to find efficiencies, win new customers with expanded offerings and the group's expanded skill set, and capitalize on economies of scale as a much larger operation.

"In addition to these obvious goals, we are bringing the energy and empowerment of employee ownership," Mortensen said.

"In our experience, as employees begin to understand they have a stake in the company, significant growth is a natural byproduct," he said.

Minnesota Flexible

St. Paul, Minn.-based MFC had been searching for a way to move into the Wisconsin industrial market for some time but needed the right opportunity when company President Will Stewart said he learned that General Rubber, a distributor of hoses and accessories, might be on the market.

He contacted the firm's owner, Jack Kacsur, who indicated he was on the verge of retiring, Stewart said. The companies struck a deal on the purchase price fairly early, according to Larsen, and the transaction closed shortly thereafter.

Included in the deal were GRC's headquarters, fabrication and warehouse operation in New Berlin, Wis., and its Appleton, Wis., administrative, fabrication and warehouse facility that serves Green Bay and the Fox River Valley area.

"We do not plan to close either of the facilities," Larsen said, "and we will continue to do business as General Rubber Co. in Wisconsin."

The acquired business has a work force of about a dozen, a spokesman said.

GRC moved to its New Berlin location four years ago because it was growing and needed to expand. Prior to that, GRC was housed in the same Milwaukee location for 50 years.

Stewart said GRC is an ideal fit for MFC. "We have been looking for an avenue to penetrate the eastern portion of the Wisconsin market for several years," he said, maintaining that MFC's product offerings "will be an excellent fit for that marketplace."

He said MFC is "committed to working with its customers on designing the right products for their applications, producing products that meet their quality expectations" and providing excellent service.

The company also has offices in Grand Rapids, Minn.; Galesburg, Ill.; and Peoria, Ill.

Founded in 1969, MFC is a fabricator of industrial hose, fittings and formed tube assemblies. It serves original equipment, reseller and MRO customers in most industrial markets.

Customers of MRO purchase the firm's products to use in their manufacturing processes, while OEM customers buy its goods for use on their equipment when they manufacture their products, Larsen said.

GRC, which has been serving firms throughout Wisconsin since 1926, is a distributor of hoses and accessories for hydraulic, air, water, welding, refrigeration and other equipment.

Singer Equities

The acquisition of Cumberland Valve, which was formed in 1980, from founder and owner Bruce Riley will expand Singer Equities' presence in the Philadelphia, northern Delaware and southern New Jersey region, according to Scott Priestner, vice president and Northeast regional manager for Singer.

Specializing in industrial and hydraulic hose fabrication and distribution as well as valves and fittings, Bridgeton, N.J.-based Cumberland will operate as a division of Landisville, Pa.-headquartered R W Connection, a Singer Equities business that has grown to 10 locations in the region and added its first in New Jersey with the addition of Cumberland.

Tom Davis, who has been with Cumberland for 24 years, will continue as general manager of the business, reporting to Priestner. Davis and his staff will operate out of the Bridgeton facility, and the business will continue to market its products under the Cumberland Valve name.

He and his team "have helped Bruce Riley build a solid business in the region, and we are excited to have them join our R W Connection organization," Priestner said. "We look forward to expanding the product lines, increasing the fabrication and testing services as well as inventory to expand our market share in the Philadelphia, northern Delaware and southern New Jersey region."

Riley launched Cumberland 33 years ago and is happy R W Connection will now oversee the business. "R W Connection's leadership will ensure the future success of Cumberland Valve and its very loyal employees, which is paramount," he said.

Made up of a group of distributors that focus on the the industrial rubber products sector, Glen Burnie, Md.-based Singer Equities, is a wholly owned subsidiary of SHP Holdings.