Brief history of Elite Elastomers
After spending more than 15 years in the rubber industry working for Dana Inc. and others, former Elite Elastomers President Steve Glidewell, a chemical engineer by trade, became imbued with the entrepreneurial spirit in the early 2000s.
"I like to tell people I reached that magic age of 39 where I was still stupid enough to start a company," Glidewell told Rubber & Plastics News in March 2019. "I feel if I had waited too much longer I probably wouldn't have had the guts to do that."
Elite broke ground in December 2001 on a greenfield operation, and it was late 2002 before the mixing operation was production-capable. As the team tried to build up a business, Elite got caught up in the economic downturn that followed the 9/11 attacks in 2001.
But the slowdown actually worked to the firm's advantage, according to Glidewell. Elite started with one mixing line, added a second in 2004 and a third two years after that—eventually working its way toward material compound development and excelling in the formulations that can lead to intellectual property.
In 2016, the company formed Elite Engineered Products, which the firm said allows it to "couple its cutting edge ability to develop non-metallic materials with its extensive knowledge of the manufacture of the products made from those materials."
Drawn to the Heartland
DestinHaus Capital, established in 2018, has its roots in a management consulting firm founded by the Nathans 14 years ago, also in California. The original firm strategized with Japanese businesses to accelerate their growth, and as such developed close relationships with those businesses over the years.
The alliances paid off for DestinHaus with the purchase of Elite Elastomers in February.
"Our primary focus was on Japanese corporations," said Hema Nathan, Murli's wife and a managing partner at DestinHaus. "This was a great opportunity to set up a private equity firm so that Japanese corporations could assist in the U.S."
DestinHaus raised its first fund in 2020, and Elite represents the fruits of that initial equity. The firm is "actively focusing on" a second fund for future acquisitions, according to the Nathans.
"For the past 14 years, we have been in the management consulting space," Murli Nathan said. "We have studied the compounding space in detail, and we know who the major players are. Based on that, we developed a strong interest in Elite."
He said DestinHaus was drawn to Elite for its technical capabilities and custom formulations, Glidewell's priorities in establishing valuable customer relationships and Elite's practical geographic location.
Glidewell continues to work as a consultant for the Nathans on the compounding side.
"Steve has a lot of experience in this area," Murli Nathan said. "Customers know him, and he knows the customers—and we needed that. And this is not an 'arm's-length' relationship—he is actively working with us and will continue to do so for the foreseeable future."
Murli Nathan noted that the central U.S. "is a good part of the country to facilitate manufacturing," and the Ripley campus has the land and infrastructure to add capacity, including a second color line.
"Elite has several customers in close proximity," he said. "We have customers in different parts of America and globally, but a significant portion of them are in this range.
"Our goal is to invest in Ripley and the area, whether that is through hiring or improving wages and benefits for the workers. In terms of assets, we intend to increase specialty compound capacity there. We have the infrastructure to do this."
Weathering the headwinds
DestinHaus and Elite are seeing the same market tightness as everyone else who bases their success on raw material pricing and efficient supply chain management.
And though both are volatile right now, the Nathans say Elite remains in a good position.
"One of the benefits for us is that Elite created very strong working relationships with suppliers," Ahdiv Nathan said. "They put us in a really good position to meet demand, and we are making it through this. We continue to be able to fulfill orders for our customers. We have not seen any signs of things easing up, but we continue to feel confident that we can weather this on the procurement side."
Murli Nathan added that Elite continues to see strong demand, especially as the world's largest economies open up following the coronavirus pandemic.
"There has been a tremendous surge," he said. "We are pleased to see that we have been able to manage this. We are not seeing anywhere near the 40- to 50-week lead times that some are seeing, and we are proud of our supply chain management from that perspective. We continue to be able to shore up the working capital side of things, and that is where our value is.
"I believe this is all a function of demand being so high, rather than a dearth of raw materials being the issue."
Murli Nathan added that he hopes to see DestinHaus build on its advanced compounding materials portfolio, and even add segments in silicone and engineered plastics in the next five years.
"We expect to have multiple locations and multiple manufacturing sites," he said. "We are starting with Ripley, but we will look to expand our geography and even our down fleet investment opportunities. We are taking things one step at a time."
And DestinHaus will use the best of Japanese and American intuition to accomplish this, according to the Nathans.
"This is not just about compounding," Hema Nathan said. "It is about manufacturing in Middle America, about preserving and improving people's lives. For us, it is about investing in manufacturing where it already exists—and working with local authorities to ensure that this is sustained."