STAMFORD, Conn.—American Roller Co. L.L.C. is ready to grow after taking on Hamilton Robinson Capital Partners as its new investment group.
Hamilton recapitalized American Roller in February, investing an undisclosed amount into the company to fuel a growth strategy, said Dan Cahalane, American Roller CEO and president.
The company—which provides engineering services and industrial rollers, including rubber and urethane coverings, plasma coatings and core fabrication—set out several years ago to develop more capabilities and a long-term plan to scale up, Cahalane said.
"You have to centralize a lot of your business processes and create a virtual working environment for quote, for order entry, for customer service" he said. "We set out years ago to put business processes in place to allow us to do that."
After developing a plan that integrated more of that virtual environment into the business, the American Roller team saw an opportunity to build up even farther than they had anticipated while remaining mainly a customer service company, Cahalane said. At the time, about 80 percent of the company's revenues were from stripping and re-covering customer cores. Customer service shops need to have strong customer service, quality and be local to the customer.
"When we put all these processes together, we looked at ourselves and said, we can really scale up but still be this huge customer service organization," Cahalane said.
At the time, American Roller was owned by CM Acquisitions L.L.C., a Chicago private equity firm that had acquired the company in 2001. Cahalane went to the board to discuss plans to acquire more capabilities specific to rollers and geographies in an effort to scale, he said. American Roller, headquartered in Union Grove, Wis., runs locations in both the U.S. and China.
"The roller industry does not do much with product development and research engineering," Cahalane said. "We are one of the only companies that has a staff of engineers."
Over the long term, maintaining that application engineering knowledge sets American Roller apart from competitors, he said.
CM Acquisitions was made up of more than 30 people, with many individuals over the age of 70. When the plan for greater investment came along, they said it might make more sense to find a new ownership group for the sake of American Roller's growth, Cahalane said.
"It was hard for these owners, because they just loved American Roller. They loved the legacy, they loved the business," he said.
The sale process ran from September 2018 to February 2019, while American Roller met with an undisclosed number of other companies, including both private companies and private equity firms, Cahalane said. By the end of the process, Hamilton Robinson was the top choice. Hamilton Robinson, made up of about 10 individuals, is a "more boutique" investment group.
"We settled on them, just like a lot of things in life, because of the people," Cahalane said. "They understood the complexity of the business. They picked up on it very quickly in terms of where to improve and what we were already doing well. They do just the right mix of being involved with management to help but not running the company."
Aside from the overall investment, Hamilton Robinson provided insight about where American Roller could benefit the most from improvements. That guidance wasn't just all about flat numbers, but took into account the people at American Roller and their unique capabilities, he said.
"They understand businesses are people. They've had a lot of discussion with us on the intellectual capital of our company," Cahalane said.
American Roller already had a strategic plan in place as it was acquired by Hamilton Robinson, and the investment group has done some minor tweaking to that plan. The existing American Roller leadership team is very forward-looking and progressive, he said. So having Hamilton Robinson's input was more like getting a second viewpoint with some additional capital. He said the biggest change is toward rethinking manufacturing from a more lean perspective.
"As good as American Roller is, and we're very proud of it, is that we think we can do better in manufacturing and lean manufacturing, reducing our lead times," Cahalane said. "We're in the process of adopting a lean culture, not just in manufacturing but in all of our business processes."
Hamilton Robinson is bringing experience in lean manufacturing that it's gleaned from previous companies, suggesting the investment in creating a lean culture throughout to improve the business, he said. Lean efforts are in the process of getting started within the company.
"Lean isn't a project, lean isn't a program. It's a way of life," Cahalane said. "It's basically a formalized lifelong process improvement program."
American Roller isn't in a rush to hire a corporate lean position because it then generally falls to that person to manage lean processes rather than something practiced throughout the company, he said. Instead, 10 leaders within American Roller are undergoing a three-day session with a lean consultant to begin the education process. The firm has labeled three focus areas for lean process development and training within the next nine months.
"We're going to have consultants come in and work with us and train us," Cahalane said. "A year from now, the plan would be that our own resources are lean-trained so we can be self-sufficient on other lean projects going forward, that we just do on our own."
As American Roller continues to grow, it plans to add more team members, including potential new senior leadership while formalizing the business management going forward. One mode of bringing in new employees will be through upcoming acquisitions, which can fit directly into the American Roller system, he said. Aligning with a larger firm like American Roller brings benefits for both parties, as with potential employees with industry experience at a premium, it can be difficult for smaller firms to maintain business.
"The reality is that so many manufacturers face a shortage of people," Cahalane said. "For those that are in the roller industry that are like a 15-person shop, plugging into the American Roller network might be the only way to survive. If you can partner with American Roller, you can get access, technical resources, back office resources, that right now you're just desperately struggling with."
American Roller isn't just acquiring for the sake of doing so, but is looking for opportunities, where geography, people and products fit not only for American Roller but the seller, he said. Acquisitions will be more selective, where culture meshes well moreso than just the overall numbers. There isn't a goal timeline for bringing on more acquisitions, but some movement could happen within the next six months.
The firm also is continuing to look for opportunities in the Chinese market beyond its current presence, he said. In serving the local market there, American Roller has grown its business in China by about 10 percent every year.
Looking for acquisitions, the target isn't to reduce employment, especially because many smaller shops don't have overlap such as a director of quality or director of safety and environmental like American Roller, he said.
"Our industry needs to know, American Roller is a great platform, a great place and great people. Give us a call if you're interested in joining the family," Cahalane said. "We're sending the message loud and clear: We value people, we want to bring you into our family."