New owner, new building invigorate Rubbercraft

LONG BEACH, Calif.—For a company that's been around 113 years, there are plenty of new things about Rubbercraft Corp. of California.

The company still is growing into a new factory it moved into just four years ago; it's in the early stages of a three-year plan to replace most of the equipment in that plant; and it's been just a year since private equity firm Industrial Growth Partners bought its parent firm, Sanders Holdings Inc., from former owner Eric Sanders.

Long Beach-based Rubbercraft touts itself as a “high technology company that designs, develops and manufactures precision engineered custom elastomer and rubber parts.” It has capabilities in both molded and extruded rubber goods, with expertise in surface bonding of elastomers to metal, fabric, composites and Teflon. Silicone is the most used elastomer, followed by neoprene, nitrile, Viton and other high-end materials.

About 75 percent of its business is in aerospace and defense, followed by medical, energy and a variety of other industries.

While it does have some higher volume business—such as its CMI line of eye guards for optoelectronic devices—it doesn't shy away from business that may be for only a single piece or for an item that won't bring in a replacement order for years, said David Lee, vice president of engineering.

“We process 700 unique orders a month,” he said. “We just had a request for quote for canister seals for a sea sparrow missile launcher that we made 15 years ago. It's a unique launch. We built 60 units and have had no activity for 15 years, but now they're looking for replacements. We still have the tooling and the engineering. We'll resurrect it and build new canister seals.”

Lee said that Rubbercraft has its own laboratory and does all of its own mixing and compound development. It has both a white mill room and black mill room to control contamination, along with providing complete traceability to meet aerospace industry requirements. The firm's business also is requiring on average 50 new tools a month, which Rubbercraft designs but then has made by six area tool makers.

When Lawrence O'Toole was brought in 21/2 years ago as CEO of Sanders Industries to oversee the Rubbercraft operation in Long Beach, in many ways his timing was good. The prior owner had made the sizeable investment to construct the 140,000-sq.-ft. plant that replaced three smaller facilities that together spanned just 60,000 square feet.

But the Sanders' businesses were showing flat sales, and O'Toole was summoned from the outside to reinvigorate the companies. With a background in building security, O'Toole left the rubber technology to the experts at Rubbercraft, but positioned himself to look at the business from a different perspective.

“I think we make a good team together because I get to ask the outsider questions,” he said. “I was brought in for strategy, not for technology or product.”

Lee said the setup is helpful, because often the questions O'Toole asks are things that those immersed in the rubber operations would never have thought of.

Thus far it seems to be working, as 2014 showed double-digit growth in sales, O'Toole said, without disclosing Rubbercraft's revenues.

Part of the resurrection is the plan to replace virtually all of the production machinery at the factory by late 2017 or early 2018. “That's one thing customers like to come in and see,” he said. “We understand the value of the older equipment; it's tried and true. But customers also like to see that we're bringing in new state-of-the-art equipment, especially as it pertains to the tolerances they want us to hold.”

O'Toole declined to disclose the amount of the investment to replace the machinery, though he said some of the equipment runs several hundred thousand dollars each.

Engineers at the new factory also set up a manufacturing cell to produce the CME eye guards that are used on such items as sniper rifles and night vision goggles. That has helped to ensure that scrap on the products has been drastically reduced, and only those with the proper expertise are involved in the production.

“This cell is a concept we will be rolling out over the next couple of years to a couple of other product lines that are conducive to that sort of production,” O'Toole said.

The company also isn't afraid to take on challenges it said other customers shy away from. For example, he said many competitors don't like to handle the metal part of a product because in many cases that may be more expensive than the rubber that is getting bonded to it.

“We encourage having total control of those substrates, so if there is an issue, we know where it happened,” Lee said.

Rubbercraft is getting leaner, O'Toole said, noting that while business grew substantially last year, the work force is down to 200 from 225 a year ago. “We still see ourselves as a target-rich environment for continuous improvement,” he said. “I don't mean removing headcount; I mean improved processes and cycle times, and reducing scrap. And that's one of the things that really excites us about this business is the cost that we can still take out of this.”

Not that the firm isn't looking to bring in new workers. It has several open slots for engineers as it wants to keep up with the amount of new potential business that customers want Rubbercraft to consider, O'Toole said. Most of its recent hires, he added, have been referrals from current employees.

Besides continuous improvement, the management has stressed setting up a culture where the focus is externally on the customer. “A lot of businesses get internally focused and think, "By the way, the customers are out there,' “ he said. “No, the customer is in here with us every day, and they're the ones paying our paycheck. That's a big cultural transformation that this building needed to go through, and we've come a long way in that regard.”

IGP is a private equity firm that focuses on companies that boast custom engineering and custom manufacturing, and that's what O'Toole said attracted it to Rubbercraft. IGP previously owned rubber industry companies Q Holding Co. and West American Rubber Co.

“It's a good ownership,” he said. “They're very willing to keep the investments going, and they're very willing to support our expanding into some new growth areas.”

Besides Rubbercraft's model of concentrating on highly engineered goods where involvement starts with the design process, IGP also liked the growth trajectory the firm had begun, along with its growing backlog of business, O'Toole said. “They also liked looking at several key parts that we make for customers, and how important they are strategically to the customer,” he said. “They like that we're making parts in here that our customers can't do their products without, and they can't quickly go buy it from somebody else.”

For its part, IGP will help Rubbercraft accelerate its lean journey, help it invest in ERP systems and provide access to capital that firms its size don't normally have available. “Many of the people we compete with are smaller companies that might not have the financial wherewithal to invest in things that we look at and are willing to do anytime a customer opportunity warrants it,” O'Toole said.

But while IGP officials offer support, they don't try to run the businesses themselves. “They want to know the strategy and bless the strategy,” he said. “They want to know and bless the financial plan. But on Monday morning, what you plan to do to get there, they are out of your face.”