Executive of the Year: P. Gren Schoch's leadership a constant at AirBoss

AirBoss of America Corp. has been fortunate throughout its 30 years of existence. While a few key leaders have come and gone, since the beginning one always has remained at the very top as a mainstay to guide the ever-expanding business on a steady course: P. Gren Schoch.

Co-founder, chairman and CEO of the versatile manufacturer and compounder, Schoch was at the helm as the company powered through peaks and valleys on its way to great success as a producer of first defense, first response, automotive and other products, and as one of the leading mixers of rubber compounds in North America.

In the last year alone, AirBoss' defense business, which is part of its Engineered Products segment, has been awarded several significant contracts totaling about $150 million to manufacture military products, primarily for the U.S. Department of Defense, while its rubber compounding operation has continued to expand and gain ground.

In fact, virtually every AirBoss business has performed well this year. And it was only a downturn in the automotive sector that negatively impacted the firm's anti-vibration products unit. Despite that, in the first nine months of the year, overall sales and earnings steadily increased from those recorded in 2018.

While good financial results were his goal in 2019, Schoch's total focus isn't locked strictly on the here and now. He always has an eye on next year, the following year and five years down the road.

Three top officials on AirBoss' management team referred to him as a creative, dynamic and resourceful leader. Yet, one said, he's humble and has always been a "we" guy, not an "I" guy.

For his consistent role in leading the company to new levels of growth this year and in the past, P. Gren Schoch has been selected as Rubber & Plastics News' Rubber Industry Executive of the Year for 2019.

Major upgrades

AirBoss never seems to rest on its laurels. And 2019 has been no exception as it made significant moves to improve its businesses.

Throughout the year, the firm has expanded just about all of its production operations. It invested roughly $7.5 million in its Rubber Solutions segment in the first half of 2019. In the last nine months, that figure increased to about $13 million as it began to upgrade its Engineered Products division, especially the operation's anti-vibration products business.

AirBoss recently began combating the slide in the automotive market by launching a program aimed at improving the performance of the anti-vibration unit through a combination of disciplined cost containment, client relationship expansion, new product development and diversification.

It also is expanding the business by adding new injection molding presses and replacing old ones at the firm's production plant in Auburn Hills, Mich.

Schoch said the new presses will greatly cut cycle time and improve costs, "which should support improved margins." The machinery was needed, he said, to help the business move into more highly engineered and sophisticated products.

He added that the plan is to diversify into non-automotive applications and invest in the development of new anti-noise, vibration and harshness offerings.

AirBoss' compounding business and, to a lesser degree, its defense products operation also have been and will continue to be upgraded. Included among the investments for the compounding business are:

• A mixing line was added at the company's Scotland Neck, N.C., mixing facility and a new color and specialty polymer line was installed at its Kitchener, Ontario, compounding factory earlier in 2019;
• Another large volume mixing line will be added at Kitchener by early 2020; and
• A new state-of-the-art laboratory and development center in a building located adjacent to the firm's Kitchener compounding plant was recently completed after AirBoss gutted and renovated the building. Included in the renovations are the addition of a first-floor reception area along with a lobby for customers and suppliers, a large customer conference room, a technical library, purchasing and sales offices, and the new laboratory that is being used for research and development.

On the defense side of the business, AirBoss added another injection molding press at its Acton Vale, Quebec, facility to help with the operation's military products order backlog.

By the end of 2019, the firm anticipates its capital expenditures will be in the range of $18 million to $20 million. In 2020, expenditures are expected to decrease to levels closer to depreciation.

Inauspicious beginning

AirBoss' present situation is a major leap from its initial years in the rubber business as a tire maker.

A successful engineer, Schoch also had a solid education in business and built a reputation as a good businessman, especially in the mining field, by the 1980s.

He had been running MPH Consulting, a successful engineering and geological firm—which primarily worked in more than 80 countries in the mining industry—since 1976, and in 1982, with a $10,000 investment, Schoch founded and was chairman of Petromet Resources, an oil and gas business he sold in 2002 for $960 million.

He then co-founded Newmarket, Ontario-headquartered AirBoss in 1989 with a small group of investors—including Bob Hagerman, who served as CEO and president from the early 1990s until 2013 when he retired from the posts (although he still continues to serve on the firm's board of directors)—as a venture capital to produce a unique tire in North America.

The non-flat tire—made with molded segments attached to a wheel—was the brainchild of a group of inventors in Australia "who wanted us to manufacture and market it in North America," according to Schoch. "They contributed the intellectual property and we supplied cash, management, manufacturing and marketing in North America."

However, AirBoss quickly discovered that the tire was not suitable for vehicles in the region. "So we began to modify it for the light construction industry," he said.

But the modification process took time—actually years—to complete.

From 1989-94, through countless trials and errors, AirBoss developed a tire that was ideal initially for skid steer loaders and eventually for backhoes and other vehicles in the construction industry.

"We just about went broke developing it," Schoch recalled with a smile. In 1995, the tire hit the market and was successful. AirBoss was on its way.

Meanwhile, the company purchased a small injection molding and compounding company in Michigan that it eventually used to produce the tires.

"One of the first things we did was shut down the firm's small mixing facility," Schoch said. AirBoss purchased its rubber from a mixing plant in Kitchener that was owned by a firm called ITRM. "They were producing 15 million pounds a year and they were struggling with only 10 employees. So we bought the plant from them on Dec. 31, 1995."

Not much of the 1 million-sq.-ft. facility was being used to produce rubber compounds at the time, but the facility had state of the art equipment and had produced in the range of 30,000 tires a year when the site was owned at one time by Michelin, he said. "It was a great mixing plant, but it only had three primary mixing customers, AirBoss and two other companies.

"The good news was that they were making great rubber, but the bad news was they made no money. After we bought the plant, we increased its capacity to 100 million pounds and filled that capacity within two years. Then we expanded it by 50 percent" as its work force slowly grew from 10 to 250 employees.

In 1999, the company acquired the Acton Vale Co. in Quebec, which mixed rubber and molded products. It was the largest manufacturer of rubber-based winter footwear in the country, Schoch said. "It made all sorts of boots, including those for firemen, and produced 100 percent of the rubber for snowmobile tracks. They also had another little product, an over boot used by the Canadian military."

In addition, the Acton Vale factory mixed rubber for itself and some customers, and made the calendered rubber for other customers' products, including tracks for agricultural tractors.

"When we started AirBoss, our plans were to make it into a big tire company with the tire we developed," Schoch said. But after the purchase of the Kitchener facility the situation changed. Two years later, the Kitchener factory was producing and selling 100 million pounds of mixed rubber a year while the tire operation only made 10 million tires.

"So we sold the tire business off to a group of employees and focused on rubber solutions—mixing, calendering and manufacturing products," he said.

Steady expansion

Over the next few years, AirBoss sold off the consumer footwear division in Acton Vale and focused on the military goods side of the business—at that time principally for the Canadian military—and the industrial mixing and calendering units. It also kept and expanded its firefighter boot offerings.

Eventually, it became the main supplier of products—including gloves, boots, gas masks and specialty goods—for the military in the U.S., Canada, and other NATO countries. The company has built up that end of its business to more than $60 million in annual sales.

"We are now the world leader in the production and supply of rubber-based chemical, biological, radiological and nuclear boots and gloves," according to Schoch.

In 2005, the company purchased a building in Scotland Neck, refurbished the facility and turned it into a mixing facility.

A major producer of automotive parts, Flexible Products in Auburn Hills, was acquired by AirBoss in 2013, giving the company a solid footprint in the sector. That business is doing pretty well, Schoch said. "It was a good investment. But the last two or three years have been challenging, especially for automotive. We're building the business up, especially on the non-automotive side."

The automotive business primarily makes anti-vibration products, and is presently focused on the light truck, SUV and minivan market, principally for use in the domestic market.

AirBoss' plan is to diversify the operation's offerings into other industries, including heavy truck, construction, motorcycle and others, producing 50 percent of its products for the non-automotive sector within five years.

In 2015, AirBoss added to its defense offerings by purchasing a company that produces filters for gas masks along with its production and research and development facility in Landover, Md., where the company now manufactures the filters along with numerous other military and first defense products, although Acton Vale continues to serve as its primary defense goods production facility.

AirBoss' defense business won't remain part of its Engineered Products segment for much longer. By Jan. 1, the growing operation is expected to be merged with Critical Solutions International Inc., a Charleston, S.C.-based supplier of a number of products for the military in the U.S. and other nations.

It will be renamed AirBoss Defense Group, and AirBoss will have the majority interest in the company. The merger will help build the defense products business faster and allow it to develop globally with a broader range of goods.

AirBoss is changing steadily, according to Chris Bitsakakis, president and chief operating officer of the company. "Three to five years ago, AirBoss was a good company that had plateaued." It was making progress, he said, but had limited ideas on how to move to the next level.

Today, he said, a new management team is in place in each of the firm's divisions "focusing on quality and customer service excellence. We have a disciplined approach to organic growth by taking care of our customers' needs above all other priorities.

"The focus on customer service and the drive for efficiency improvements have made a tremendous difference. Our product quality is improving at the same time as our operating efficiency is on the upswing. We are making investments that further enhance our ability to address the needs of the markets we compete in, while focusing on product innovation as the key driver that will bring AirBoss to the next level."

The buck stops

With a current work force of about 1,200, the versatile company has become a big factor in all the sectors in which it operates. Its Rubber Solutions segment—with mixing facilities in Kitchener, Acton Vale and Scotland Neck—now has the capacity to process about 400 million pounds of polymer compound annually.

Its Engineered Products segment is transitioning and growing as the automotive parts business branches out into non-automotive markets, and the defense operation becomes a larger, stand-alone unit, controlled by AirBoss.

Schoch, who remains the company's largest shareholder and throughout numerous interviews always seems to pass credit along to others rather than pat himself on the back, probably never figured the company would become as diverse and as large as it is today.

"In the beginning," he said, "we didn't know it would take off this way—we hoped it would, but hope isn't a strategy. But it wasn't just luck, it was a lot of hard work on everyone's part. We've had slow consistent growth, with occasional big jumps with new products. But most of our growth has been organic."

As chairman and CEO, he said, "the buck stops here, as they say. My responsibility is to develop the overall strategy and make sure shareholder interests are well looked after."

He's done that and more. And the AirBoss board of directors appreciates his efforts, according to Daniel Gagnon, the chief financial officer. Schoch is well respected by board members and has a wealth of experience in the rubber industry, Gagnon said, "and as such his opinions are valued and well received.

"He understands the governance responsibilities that come with running a publicly listed corporation and executes his board duties accordingly."

Schoch has experienced plenty of highs and lows as the top official during the last 30 years. But probably the most dramatic low was the global financial crisis in 2008-09. "It was a very difficult time for everybody," he said.

And the high point? The fact that AirBoss has accomplished "all this without raising a lot of public money," he said. "We've had one public issue—$10 million in Canadian dollars to buy the Kitchener plant—and that's it."

He admitted that it's hard to make a go of it in the rubber industry. "Kitchener was once the rubber capital in Canada and now, I think we're the only one left. Our plant is well over 100 years old.

"There's an old story in the industry: The way to make a small fortune in the rubber business is to start with a big fortune."

AirBoss didn't have a fortune when it started, but Schoch didn't let that stop him from leading AirBoss up the mountain to success.