Manufacturing panel offers acquisition strategies

Work ethic, talent and workplace culture are the key factors when considering a company merger or acquisition, according to panelists at the Springfield Area Chamber of Commerce’s Manufacturing Outlook event Dec. 5.

Around 325 people attended the chamber’s fourth and final Outlook series event for the year.

Panelist Bill Hammitt, AmProd Holdings LLC’s president and chief operating officer, said acquisitions boil down to value and talent.

“We go after transactions so that we can add value,” Hammitt said of his company’s strategic growth in operating American Products LLC, Press Room Equipment LLC and EnSight Solutions LLC. “Talent is a huge thing, especially leadership talent.”

Chamber President Matt Morrow moderated the panel at the $4 million, newly opened, north-side Glendalough Convention Center expansion at the DoubleTree.

Another panelist, Krisi Schell who directs SRC Holdings Corp.’s talent, culture and community development, said a cultural alignment is part of making sure transactions work well with all parties.

SRC has been active in partnerships with other manufacturers over the years, resulting in the formation of dozens of companies under the SRC banner, such as Ceramex North America LLC and CNH Industrial Reman.

“It’s important that you have to negotiate a level playing field,” she said. “Having that in the agreement, having that well established when you’re starting is very important.”

Hammitt agreed.

“You have to recognize for those owners, this is their life,” he added.

In other M&A circumstances, such as owners phasing out or businesses hitting a financial ceiling, panelist Jason Corson of BKD Corporate Finance LLC, said the timing is critical.

“Sometimes your timing and the market’s timing do not add up,” he said. “It’s important to really keep in mind what’s going on in the market and what’s going on in the general economy, of course.”

Studying resiliency
While the panel discussion dealt with the current environment of manufacturing, a presentation by guest speaker Sarah Low, associate professor of regional economics with the University of Missouri-Columbia, addressed the resiliency of manufacturing plants in the recent past.

Using data from a national survey of manufacturers as well as the U.S. Bureau of Labor Statistics, Low noted about half of the manufacturing plants survived the study period of 1996-2011. That period was one of industry decline, she said, and it included two recessions – in 2001 and 2007-09.

She said manufacturing employment fell by nearly 30 percent during the 15-year period, so she wanted to identify the factors related to manufacturing plant survival.

Here’s what she found: Fifty-four percent of the manufacturing facilities survived, with a survival rate of 59 percent for single-unit plants and 48 percent for multiunit plants. Low said single-unit facilities are more likely to remain in business during lean times, as they have closer community ties. Multiunit plants’ survival is more unpredictable, she added, due to decisions likely being made at headquarters outside of the local area and workforce.

“In terms of building communities, building economies here in the state of Missouri, it might be prudent to invest in plants that have entrepreneurial or local roots,” she said, defining a local market as one in which a product is made and sold within a two-hour drive.

Low also found rural area plants were much more likely to survive than those in urban areas, and those selling textiles and apparel were the hardest hit due in part to automation and trade-related policy decisions.

Manufacturing core
Paula Adams, president of Penmac Staffing Services Inc., has plenty of experience working with manufacturers with local roots. They have been a big boost to Penmac’s bottom line, she said.

“Manufacturing is the core of our business,” said Adams, who attended the chamber event. “It makes up about 85 percent of our business model.”

Although the company’s revenue has held above $110 million the last few years – and Adams expects the same for 2018 – the need to find enough people to fill manufacturing roles remains a challenge, she said.

“If I could grow a people tree, I would do so,” she said, noting she anticipates no dip in the workload for 2019 with lots of opportunities for growth in manufacturing jobs.

She said events like the Manufacturing Outlook allow the industry to come together and keep in tune with challenges manufacturers face now or in the future.

The chamber’s Outlook series will return in 2019 with Health Care Outlook first on the calendar June 19.