As many manufacturers scale down, Vancouver-based Columbia Machine Inc. has acquired the primary assets of Santa Ana, Calif.-based Foster Equipment Co. and developed a manufacturing services division in hopes of growth.
“There are always opportunities in a down economy and I feel fortunate to work for a company that looks for them while the competition is cutting back,” said J.P. Gianotti, general manager of Columbia Machine’s Turmac division.
The acquisition was announced Feb. 25. Gianotti declined to share its terms, but said the companies’ leaders began acquisition discussions in late 2008 and have known each other for more than 10 years. Columbia Machine has been family-owned in Vancouver for more than 70 years.
Foster makes machines that fill and pack bags of construction materials, such as cement. Columbia Machine, which makes machinery and systems related to concrete and palletizing, will sell the bagging machines with the Foster Packers brand through its Turmac division.
Pete Foster and Alfred Melendez, the California company’s former principals, will remain in Santa Ana and take on roles as a bagging market account manager and service technician, respectively.
“It was a very small company with a very strong product line,” Gianotti said. “Our manufacturing facility has a lot more capacity than they had and our sales channels are much further reaching than what they had.”
Columbia Machine sells in more than 100 countries and Gianotti said there are excellent prospects for the Foster products to sell in developing and industrial nations.
“We think there’s an emerging market in developing countries for bagged goods,” Gianotti said. “For every packer that’s sold there could be a lot of incremental business that could shore up and improve our business in other areas.”
That means the acquisition could lead to expansion within the company’s Turmac and concrete products divisions, he said.
“It impacts every division of Columbia Machine in a positive way,” Gianotti said.
Meanwhile, Columbia Machine opened its Manufacturing Services division Jan. 30 to provide other manufacturers with new services including machining, fabrication and assembly, said Bryan Goodman, vice president of manufacturing operations.
“We’ve seen a lot of companies trying to design and build something that they don’t have an effective way to do so,” Goodman said.
While serving those companies, the new division should help business pick up since construction clients have slowed.
“Concrete products (are) so tied to the construction industry and that’s a rough one to ride right now, but now we have the flexibility to go to almost any other industry,” said Project Manager Steve Rommel.
The new division had confirmed its first client project March 2 and had two others on the way, Goodman said.
“Our desire is by mid-summer to have enough contacts and enough companies interested that we would be starting their work, which will require additional hours in the factory and at some point equate to more jobs,” Goodman said. “It’s a move to help the company grow.”
Gianotti declined to give specifics on the company’s financial state, but said its palletizing and robotic palletizing divisions are having record years, balancing out other divisions that are down.
“We’ve seen a downturn in our products and that’s one of the reasons we want to diversify our product line,” he said.
Columbia Machine laid off an unverified number of workers in manufacturing and administration in the months prior to the acquisition.
“It was a prudent correction to deal with the economic factors we’re facing,” Gianotti said.
Layoffs and an acquisition may look like contrasting actions, but Gianotti said the recession made layoffs necessary while the acquisition should help the company recover when the economy improves.
“You can’t look at either (action) as an indicator of the overall health of the company,” he said. “We weren’t laying off employees to buy a company.”
To minimize the chance of further layoffs, Columbia Machine employees are cross-training and transferred between departments when business is slow in certain areas.
“We want to have jobs here for the next 30 years so we’re trying to be very prudent with our cash and with our business practices,” Gianotti said.
Charity Thompson can be reached at cthompson@vbjusa.com.
