TPG Investing $14.3mm in Kentucky Blow Molding Operations

https://www.plasticsnews.com/news/tpg-investing-143m-kentucky-blow-molding-operations

(as reported in Plastics News)

TPG Plastics LLC is expanding the company’s fuel container manufacturing operations to Kentucky in a $14 million project.

The blow molding company, which currently has operations in Willowbrook, Ill., said the new facility in Murray, Ky., will help with distribution and cut transportation costs for customers in the Southeast.

TPG will make gasoline jerrycans for consumer use as well as fuel systems used on products such as leaf blowers and weed whackers, according to Chief Financial Officer Pavel Smyshlyaev.

“We expect to start production in the first quarter of next year,” he said. “Initially, in the first year, we expect to have about 50 people working there split between operators, material handlers [and] quality.”

Some workers from the Willowbrook plant will split their time between facilities as the new location gets up and running, Smyshlyaev said.

The company expects to eventually employ about 75 in Kentucky.

TPG Group is leasing a new 62,000-square-foot building owned by the Murray-Calloway Economic Development Corp. The location has the ability to expand to 200,000 square feet. The company has the option to purchase the site after 10 years for a nominal amount.

The total value of the project, including the building and equipment, is $14.3 million, including about $7 million to $8 million in equipment.

That equipment is a combination of new machinery as well as some excess machinery not being used at Willowbrook, Ill. The company also has opportunistically purchased machinery over time at attractive prices that will now be moved out of storage and be used in Kentucky.

“It’s important for a number of reasons,” TPG Group President Saquib Toor said about the new facility. “I think we came into TPG Plastics with almost a mission to grow the business and really bring in the latest technology that’s available globally for blow molding.

“This expansion is really important for us to implement that technology and the commitment we made to our employees and investors and our customers to have the latest technology out there, the most efficient equipment and also bring the best quality product to the market,” he said.

The company’s Willowbrook facility faces building design challenges that make installation of new equipment difficult. But the new Kentucky building has 40-foot ceilings that make placement easier, the company said.

TPG Plastics expects about 80 percent of the production at the new facility will be portable jerrycans used by consumers, with the remaining 20 percent fuel systems used on equipment.

Initial work will include the installation of three blow molding machines, including two already in the possession of the company and one that will be delivered next year, Smyshlyaev said.

The Kentucky Economic Development Finance Authority approved incentives that could provide up to $1 million if TPG Plastics meets employment targets and payment of average hourly wages and benefits totaling $27 per hour. The company is also eligible to receive recruitment, job placement and training services through the Kentucky Skills Network.

Both Smyshlyaev and Toor are principals at Beaconhouse Capital Management LLC, a private investment firm. Beaconhouse acquired The Plastics Group Inc. last year, rescuing the facility from foreclosure under previous ownership.

Beaconhouse also owns Alterra Holdings LLC of Seymour, Ind., which describes itself as a “fast-growing compounder with a core expertise in technical plastics compounding, elastomers and R&D.”

TPG Plastics also makes kerosene and diesel fuel cans.

 

Alterra owner buys TPG’s Illinois plant

A private investment firm that’s already shown a keen interest on the materials side of the plastics business is now diving into industrial blow molding.

Beaconhouse Capital Management LLC has acquired the Willowbrook, Ill., operations of The Plastics Group Inc., rescuing the facility from closure. And the Chatham, N.J.-based investment firm sees that facility as a foundation for continued expansion into the processing business.

TPG had been in financial trouble and announced plans to close sites in both Willowbrook and Fremont, Ohio, early this year.

Beaconhouse was in earlier talks with the company but could not reach a deal with the previous owners before a decision was made to close. But the investment firm eventually was able to strike a deal with lenders to purchase the Willowbrook site. It also purchased some equipment from Fremont, which did close its doors, through a separate equipment sale

These days, TPG President Saquib Toor said the Willowbrook site has been stabilized under new ownership and is blow molding between 15,000 and 20,000 gasoline cans each day. The operation also makes fuel tanks for portable equipment such as lawn mowers and snow blowers as well as all-terrain vehicles.

“It’s one of the largest manufacturers of gas cans and fuel systems in the United States. We manufacture between 3 [million] and 4 million cans per year that’s being sold to big box retailers, home improvement centers as well as going through distribution to [convenience] stores,” Toor said.

The gas cans are marketed under the Briggs & Stratton and Garage Boss brands.

TPG has about 20 lines in Willowbrook, with more than half currently in production. TPG is hunting for business opportunities to restart eight idle lines.

“We will be looking to fill up those lines in the next 18 to 24 months while continuing to build up our portable gas can as well as our fuel system business,” Toor said.

“We’re also open to additional acquisitions. We would be interested in other blow molding facilities that could either leverage our unused capacity to help those customers as well as other converting technologies, like injection molding, so we can find opportunities with our existing customers,” he said.

The company has been under new ownership since Sept. 1, but Beaconhouse had been operating the site since May as the two sides finalized the sale.

Some 60 workers are currently employed by the company, and Chief Financial Officer Pavel Smyshlyaev expects that number to rise over time.

“We have rehired some of the employees,” he said. “We continue to do so on an opportunistic basis.”

The average tenure of a Willowbrook employee is 18 years, and the new owners see value in retaining these long-time employees. “We have very little turnover,” Smyshlyaev said. “We worked hard to save the livelihood for 60 families and we really appreciate our employees.”

Toor said Beaconhouse is bullish on TPG for a few reasons, including a new spout that has been under development by the company that he believes will help drive new sales.

“We saw a lot of strong operating people at the plant level. We saw a lot of R&D dollars that were spent on the spout and just needed a little more expertise to take it to market and get all of the approvals. On top of that, we saw additional cost savings opportunities given that we understand polymers and plastics from a sourcing side,” Toor said.

Beaconhouse also owns Alterra Holdings LLC, which describes itself as a “fast-growing compounder with a core expertise in technical plastics compounding, elastomers and R&D.”

“There are a lot of cost savings opportunities based on our background in plastics,” Toor said.

Freeing up Willowbrook from the overhead of also managing the Ohio facility also helps improve finances at the company, the men said. That site made larger blow molded items such as kayaks and bed components. The location had two key contracts in the bedding industry, but lost one contract and had difficulty managing production.

Key products coming out of Willowbrook include 1-, 2- and 5-gallon gas cans, 5-gallon kerosene cans and 5-gallon diesel fuel cans. The company also does some limited injection molding of drain pans and funnels.

The Briggs & Stratton name is licensed, but TPG owns the Garage Boss brand. And that’s an important aspect of the business, Smyshlyaev said.

“We are masters of our own destiny in our own sense. We are not manufacturing behind the scenes for somebody else,” he said. “We actually do have a brand name. That’s really exciting for us. We like going into stores and seeing our can on the shelf. It makes us proud.”

Source: https://www.plasticsnews.com/article/20181113/NEWS/181119975/alterra-owner-buys-tpg-s-illinois-plant

Acquisitions create specialty compounder Alterra Holdings

(as reported in Plastics News; www.plasticsnews.com)

Acquisitions create specialty compounder Alterra Holdings

Investment firm Beaconhouse Capital Management LLC has combined several plastics materials assets to create Alterra Holdings LLC.

Chatham, N.J.-based Beaconhouse acquired all three parts of Alterra in 2016, with a goal of pursuing specialty plastic acquisitions in the elastomer space, Chief Financial Officer Saquib Toor said in an April 25 phone interview.

It first acquired bioplastics firm Trellis Earth Products Inc. of Wilsonville, Ore. Trellis had marketed bio-based finished products and also had operated a bioplastic materials plant in Seymour, Ind., that it acquired from Cereplast Inc. in 2014.

Beaconhouse next became a majority owner of Compounding Engineering Solutions Inc., the Clifton, N.J.-based compounder, which also includes Harmony Elastomers. CES was co-founded in 1999 by industry veteran Arash Kiani.

The final acquisition — so far — for Beaconhouse was the polymer asset base of Metabolix Inc. That deal included lab equipment, an extrusion line and more than 1.8 billion pounds of ​ polyhydroxyalkanoate resin.

“We were trying to find the best compounder, and we found CES,” said Toor, who also serves as a managing partner for Beaconhouse. “We’ve changed the model of the other businesses to reflect what CES was doing.”

Alterra now employs 35 in Clifton and Seymour. The firm aims to add 15 more employees, mainly in technical support and development, by 2019.

Sales for 2017 are expected to be around $10 million. The Clifton and Seymour sites operate a total of eight production lines with annual production capacity of more than 100 million pounds.

Alterra also is selling more than 2,000 cases per month of bioplastic-based food plates, which it makes in Seymour. Toor said the firm is willing to sell that part of the business.

Moving ahead, Alterra will focus on its cross-linked EPDM and butyl materials — which are used in adhesives, automotive and construction — as well as on its thermoplastic vulcanizates and SEBS-type thermoplastic elastomers. The firm’s TPVs will be aimed at automotive uses, while its SEBS materials will be targeted for consumer products markets.

Bioplastics “will be part of the portfolio,” Toor said.

Alterra soon will be launching a new distribution website that will include product pricing. Toor said the website will provide greater transparency and establish Alterra as “price leaders.” Eventually, Alterra wants all of its customers to order via its site.

Kiani now serves as president of Alterra. In addition to CES, he has previous experience at extrusion machinery firm Coperion.

Alterra officials added that the firm “is well funded with equity” and will pursue more acquisitions of smaller companies with unique end market presence or elastomer technology.

Beaconhouse Capital Purchases Polymer Assets from Metabolix Inc.

In October 2016, Beaconhouse closed on the purchase of Metabolix Inc. (NASDAQ: YTEN) polymer assets. The purchase included over 1,800,000 lbs of PHA resin, various lab equipment and an extrusion line.

The transaction will from the basis of a new focus for Beaconhouse in specialty chemical and plastic acquisitions. The assets provide Beaconhouse a platform to seek additional acquisitions and it will continue to serve Metabolix’s existing and future customer for several PHA grades, which are the only available US-made marine certified compostable plastics.

The current grades offered by Beaconhouse includes:
– Denitrification pellets offered to the aquarium industry.
– Compostable PHA/PLA for film application
– Compostable PHA for injection molding application.

For additional information or help with PHA sales please contact Talal Aldaher at taldaher@alterraplastics.com or Peter Russo at prusso@alterraplastics.com.

Alterra Holdings Company (www.alterraholdings.com) is a Beaconhouse Capital Management LLC portfolio company.