Stockwell expands footprint, prepares ESOP transition

PHILADELPHIA—When production space runs tight, that usually means business is growing. And Stockwell Elastomerics needed some breathing room to chase new opportunities.

Fortunately, that room is here.

The firm just opened a 10,000-sq.-ft. building, the third on its Philadelphia campus, for additional warehousing of raw materials and distribution. The project represents a $3.75 million investment. President William B. Stockwell said the space is needed to pursue growth opportunities, as sales have been strong for the last two years.

The company already has added 15 jobs in the last 10 months, bringing its employment to 90. Stockwell said he anticipates a few more being added in the coming six months.

"We would not be able to grow as much as we have without the promise of the new building," Stockwell said. "We were really tight here until the new building opened. It was a real challenge.

"Having more raw materials on hand will help us be more aggressive in the marketplace. Now that we're under roof and building up a fresh supply of material, we'll be more aggressive in getting out there and seeing some of these new prospects within our markets."

The firm has two primary businesses—molding and fabrication. The molding side accounts for about 30 percent of the company's $25 million in sales and is housed in a 17,000-sq.-ft. building. Stockwell operates nine liquid injection molding presses, utilizing liquid silicone rubber, and six compression molding presses that use high consistency silicone rubber.

The fabrication side is housed at the firm's 33,000-sq.-ft. building and is the bulk of the company's sales.

Silicone compounds represent about 95 percent of the molding business and 75 percent of the fabrication business. The firm uses some other compounds such as Roger Corp.'s Poron-branded urethane foam in addition to some neoprene and EPDMs, but liquid and gum silicones are the predominant compounds.

The company makes custom gaskets, seals, cushioning pads and elastomeric components. Its main industries include defense, security and electronics; LED lighting; and medical—all are growing for the firm, Stockwell said.

"We have a lot of different customers out there," he said. "We have a lot of mid-sized customers out there with a lot of demand. The economy is very strong right now, and our customers are focused on what we do best."

The new warehouse will allow the firm to respond quickly. Stockwell said rapid response is one of the keys to his company's success. While the added space won't directly add more manufacturing, he said it will allow it to stock more raw materials and free up space within its existing footprint to add more equipment, including additional tables, slitting equipment and a fifth waterjet cutter.

The firm's primary stocking materials include closed cell silicone sponge, silicone foam, Poron micro cell urethanes and solid silicones.

"We pride ourselves in rapid response," Stockwell said. "We have applications engineers here on site who speak directly to our customer's mechanical engineering teams. We frequently meet our customer's engineering teams before we meet their purchasing departments because we're usually trying to fix a design issue that our customer is having. We often fix a problem using one of our prototyping methods, and then often need to turn 100 to 1,000 pieces in a very quick time frame to put a fire out. If we don't have enough raw materials on site, it becomes problematic to do that."

Setting up ESOP

Stockwell Elastomerics is approaching 100 years in business, founded in 1919 by Stockwell's great grandfather, who was a salesman for the old Boston Woven Hose and Rubber Co. He left the firm in August 1919 to become a stocking distributor.

Within a year, he moved out of his garage and set up shop in Philadelphia.

Stockwell represents the fourth generation of the family-owned company. At 64-years-old without someone in the family to pass the business to, he's decided to set up an Employee Stock Ownership Plan, with the vision of transferring the company to its employees within the coming years.

He said he had concerns about selling to a private equity or strategic entity, that they might find it more efficient to close the business and roll it in with other operations.

"At the end of the day, to the best of my ability, I wanted to see the existing staff and personnel here try to sustain this business going into the future," Stockwell said. "At the end of the day, I looked at this ESOP option. It has a track record and there are companies in this region who are successfully using this option. I spoke with (CEO) Ken Baker of NewAge Industries and utilized some advisory help in the Philadelphia area to build a model of transition using ESOP."

The ESOP closed on Aug. 10, 2017. At that time Stockwell sold about 30 percent of the business into the ESOP. As years progress he plans to sell more into the ESOP as well as bringing in succession leadership.

All employees will benefit from the trust. The decision brought some relief among the work force.

"I think there was some trepidation, people were whispering about what I was going to do, if I was going to sell like most owners do when they reach my age," Stockwell said. "When the ESOP announcement was made, there was a lot of relief and joy I would say."