WINSTON-SALEM, N.C.—Sometimes the whole is greater than the sum of its parts.
Sealing distributors J Royal, RT Dygert, All Seals, High Performance Seals and Problem Solving Seals have been integrated into the Hercules OEM Group. The move is designed to increase the scope and scale of each company by maximizing their unique capabilities throughout the U.S. and provide all five companies savings through greater efficiencies.
"We were trapping ourselves a little bit," Group President John Moncrieff said. "We were trying to manage the companies geographically and not step on top of each other. We realized that we had this huge scale and synergy that we weren't utilizing properly. So we decided to group it up and bring these companies together."
The group employs 120 throughout its five companies. Core products include O-rings, hydraulic seals, custom molded rubber seals and glass/metal assemblies. Moncrieff said each represents about 20 percent of its sales.
The integration already is paying off, as he said group sales are up 19 percent through July and on pace to hit $83 million.
"We're already seeing some of the back-end savings that bringing our companies together has allowed," Moncrieff said. "We've done all of that through attrition. We haven't had any layoffs or let anybody go, but as people have left the company we just haven't had to replace them because we're seeing more efficiencies throughout the group."
Winston-Salem acts as the group's headquarters, which also is where J Royal is based. The custom sealing and engineered product distributor focuses on custom molded rubbers, specialty gaskets and specialty stamping/glass applications. It also does assemblies through its 10 percent stake in a Chinese manufacturing company.
The Winston-Salem site is a new building, spanning 30,000 square feet with enough land on the 2.5-acre site to expand further if needed. It also operates a 15,000-sq.-ft. warehouse in Tallassee, Ala.
RT Dygert's 40,000-sq.-ft. warehouse is located in Burnsville, Minn., with a 2,000-sq.-ft. sales office in the Chicago suburbs. It specializes in hydraulic seals and specialty O-rings for high-end applications.
All Seals in Forest Lake, Calif., distributes mechanical seals with a focus in the medical and aerospace industries from its 20,000-sq.-ft. warehouse.
High Performance Seals is based in Auburn, Wash., with a 5,000-sq.-ft. site that focuses on hydraulic seals for cylinder and off-road equipment manufacturers. It also deals in metal fabrications for shock absorbers.
"We've got such a long history and linage in the seal industry," Moncrieff said. "We've got some real names that have been in the industry for a long time and are recognized across the U.S., and world, as really solid seal distributors."
Problem Solving Products is the newest member of the group, having been acquired in April 2017. Based near Denver, in Centennial, Colo., it has a 3,600-sq.-ft. warehouse and specializes in Kalrez and perfluoroelastomer products for semiconductor applications.
"We found over the years that we like to concentrate on high-end, defensible businesses," Moncrieff said. "PSP with the Kalrez and the FFKM was an area we were not penetrating very well. It was an entry into the semiconductor and FFKM markets."
The OEM group will remain a subsidiary of the Hercules Fluid Power Group, which in turn is owned by Diploma P.L.C. Based in England, Diploma is divided into three segments—seals, life sciences and controls (specialty fasteners).
"Their mantra is to buy good solid companies, keep local management in place and run them as independent business units," Moncrieff said. "Over the last four or five years, as some of those acquisitions started to mature, they realized how much overlap they had and also how much individuality we had at each location. We wanted to leverage and scale what we had."
The firm has invested in new packaging equipment to ensure there is one redundancy built into each location. This way it can utilize that capacity when one place gets overloaded.
It's just one way the firm is leveraging the unified power of the group, and Moncrieff said there is more to come.
"We're really just hitting the tip of the iceberg with our abilities to leverage all of the expertise that we have across the group," Moncrieff said.