STAPLES, Minn.—Stern Rubber Co. is readying for a new frontier, while not abandoning its current one, through two major expansions that will nearly double production space and employment.
The firm plans to add 60,000 square feet of production space through an investment north of $3.36 million to two of its three Minnesota facilities—its main campus in Staples and its gate valve site in Aitkin. Both plants will double in size, with employment increasing by at least 75 jobs.
The projects are part of Stern's preparation to break into the automotive industry after being acquired by Zhongli North America Inc., the North American unit of Shanghai-based Zhongli Corp.
Zhongli purchased Stern with the intent of localizing its automotive products manufacturing capabilities in North America. Stern Rubber President Bob Jackson said the firm also is interested in continuing to grow Stern's current non-automotive business.
“Zhongli so far has been a good transition,” he said. “They have not come in and totally changed everything. They're continuing to let us continue business as usual. There are obviously more changes coming as we continue to get into the auto world, but with an acquisition you never know. Sometimes you get a company that comes in and says "everything is changing.' It's just not that way. We're doing business as usual and actually Zhongli is changing some of the way they do business to be closer to what we do, which is interesting.”
Chris Heckert—managing director of Generational Capital Markets Inc., an affiliate of Generational Equity L.L.C., which assisted Stern Rubber in the selling process—said more foreign companies are interested in acquiring U.S. firms to establish a base in the region. The company said Stern Rubber and Zhongli is an example of a positive acquisition.
“Having more domestic manufacturing has been an important push for many groups,” Heckert said. “It's become price competitive. As some of the foreign countries' prices have increased and costs have gone up that margin difference between manufacturing something in China and manufacturing something in the U.S., while certainly not even, is a lot smaller than it used to be. Combine that with the fact that if you have domestic manufacturing you're able to control your supply chain a lot better. Your product isn't sitting on a boat for 60 days.”