Local investors save Strafford air tank manufacturer

The quest for ownership of Strafford air tank manufacturer Midwest Products Inc., which shut down last February, has ended.

A large group of local investors representing three entities purchased the manufacturing plant's assets for $1.3 million July 1. Air tank production resumed July 8 under a new name, Quest Manufacturing Inc.

The ownership is evenly split between Quest Manufacturing's management team, Quest Capital Alliance LLC and SRC Holding Corp. Each investor group put forth $250,000.

The company, still led by President David Hartman and Vice President David Staskalunas, has rehired 19 Midwest Products employees. Shareholders with Quest Manufacturing are Hartman, Staskalunas, sales manager Rick Coltrane, plant manager Rick Busick and controller Roy Morton. All carried the same titles with Midwest Products.

Midwest Products was a subsidiary of St. Louis-based Huntco Inc., which filed bankruptcy after the Enron Corp. debacle. Huntco's business relationship with Enron led to its demise, company officials have said.

It was a scenario Quest Capital Alliance lives for, said Steve Fox, chief executive officer and general manager of the venture capital and investment-banking firm that financially rescues local businesses.

Fox, Jack Stack and Jay Burchfield founded the firm in January 2001.

"It was a perfect fit," Stack said. "The reason that we started that venture fund was to provide equity for small companies in our area to be able to prosper. (Midwest Products' closing) really kind of fit into the mission statement of the venture capital fund that we have."

Quest Capital Alliance is made up of 48 investors and has $6 million in funds. It has launched eight companies.

Stack also is president and chief executive officer of SRC Holding Corp, which will act as a mentor for the jump-start of Quest Manufacturing.

"We hope to provide them managerial assistance in finance and human relations, and in the establishment of running a business," Stack said. "We want to assist them from being a plant to being a business."

The help from investors is well-received.

"They've brought us into the family," Staskalunas said, referring to SRC's 22 companies. Both parties think the relationship may evolve into more, especially with the open-book style management used at SRC. The system, which gives employees decision-making powers and sometimes ownership, is taught in Stack's book "The Great Game of Business."

Hartman said that is a real possibility for his employees once the plant is running full throttle.

"We have to concentrate on the fundamentals of running a business right now," Hartman said. "Then that will evolve into an open book (policy). Why wouldn't it? That's the way it should be."

He predicts it could be within the first year of business.

The management team hopes employment numbers reach Midwest Product's approximately 150 employees. But the hiring is all revenue-driven right now.

"We've got to get the orders coming in ... because you just can't bring 150 people back in here," Hartman said.

Another goal is to again serve the consumer products clients like Wal-Mart, O'Reilly Automotive and Home Depot with air tanks, as well as the transportation segment with air reservoirs for air braking systems on tractor-trailers.

The latter industry will be a bit tougher because of its recent hard times.

"Long term, we're going to be OK," Hartman said. "Short term we have to manage our business very, very efficiently. We were out so long, everybody got new suppliers."

The plant's closing was not related to its production; sales volume peaked at $21 million in 1999.

"It was very painful to tell them that we had to shut down," Hartman said. "It's been our goal ... to go back and service those customers, but equally important is to get people back to work."

Fox sees that same value in reviving the business.

"We like the fact that we're effectively creating new jobs," he said, especially in the much-needed manufacturing arena.

Fox added that a second Quest Capital investment fund may be on the horizon. He is targeting the first quarter of next year.

"We've seen so many deals and a lot of the deals we see are beyond the scope of what Quest can do," he said. "Our plan was always to launch additional funds."

He expects a similar $6 million initial capitalization.

The Quest name is not related to the venture capital firm. Staskalunas said it was selected because it was fitting for their mission in finding new ownership.