Changing landscape doesn't faze AirBoss

NEWMARKET, Ontario—Being slotted in the second spot on the North American compounding ladder doesn't faze AirBoss of America Corp. in the least.

That only makes it try harder to please customers, a company official said.

“We have not focused so much on growth for growth's sake, but rather we have re-engineered our business so we can penetrate new markets at the opportune time for what we believe will be a pending upswing in the North American market,” said Robert Dodd, recently named president of AirBoss Rubber Compounding and executive vice president of the company.

He said Hexpol, which is the largest mixing company in North America, has aggressively consolidated the region's compounding landscape. “A lot of customers are concerned about having limited suppliers,” he said, “and see AirBoss as a way to keep that in balance.”

Dodd, who was manager of the compounding operation and executive vice president of the firm prior to his promotion in January, noted that AirBoss Compounding competes against some excellent companies. “What differentiates AirBoss is our ability to provide our customers with a worry-free environment in which to do business,” he said.

It has remained strong in the market because its customer base “consists of some very knowledgeable rubber industry professionals who appreciate our value proposition,” Dodd said.

AirBoss operates rubber mixing facilities in Kitchener, Ontario; Scotland, N.C.; and Acton Vale, Quebec. The Kitchener factory is its largest site by far.

The company prides itself in being fiscally conservative and providing world-class compound and customer service, Dodd said.

Unlike its top competitor, Hexpol, the Newmarket-headquartered firm has not expanded regularly via acquisition. Instead, he said, “we have focused on organic growth and provided our customers with a cost-effective service-based model.”

That internal growth has been supported by a strong, multi-year capital investment program.

For instance, “we have invested heavily in our Scotland Neck facility over the last few years,” Dodd said. “We have added to its reliability, consistency and product offerings.”

AirBoss upgraded the 150,000-sq.-ft. complex in 2013 and purchased and installed new strip equipment, giving it the ability to handle custom compounding. The additional machinery allowed it to make and supply the U.S. market with varying dimensions of strip material piled in a stable cross-weave configuration.

That, in turn, created the opportunity for the plant to handle complex projects with the most challenging requirements.

In 2014, the company added the capability to mix silica at its upgraded Kitchener plant, and it plans to do the same at its Scotland Neck site in 2015.

Those improvements, along with earlier ones made at the Acton Vale facility, have helped the compounding business grow in its primary markets.

In the third quarter of 2014, AirBoss recorded sales of $74.2 million, a 42 percent increase over results in the third period of 2013. Net income rose to $3.8 million from $2 million last year.

For the first nine months of 2014, sales jumped 36 percent to $225.1 million, with $100 million coming from compounding. Net income came in at $10.1 million, up from $7.1 million in 2013.

AirBoss Compounding's volumes increased 13 percent during the third quarter from the like period last year even though there continued to be weakness in some traditional markets such as conveyor belts and off-the-road tire retreading.

Looking ahead to the remainder of 2015, Dodd said the company's current plans “are to continue maximizing the capacity we currently have available” to handle customers' needs.