Beard, president and CEO of the $1 billion diversified holding company, sees each of his acquisitions as a child who contributes something unique to make the bigger family of TriMas better.
Take HammerBlow, one of seven companies he’s acquired since 2002, as an example. It was a $100 million trailer component manufacturer in 2003 when Beard identified its product as a boost to a company TriMas already owned.
“HammerBlow was the market leader for commercial-duty trailers, and it had a great heritage in its product lines,” Beard says.
TriMas already owned a company that produced jacks and couplers for light-duty trailers, so HammerBlow was a perfect fit for its portfolio.
“It’s a nice combination because we got to make a market and product extension,” Beard says.
TriMas boosted HammerBlow’s buying power and won the business new customers and a ticket into the international market through TriMas’ Southeast Asia buying offices.
“Together, our two companies became a much more identified market leader, and both companies gave each other’s products access into other markets,” he says. “We try to position our businesses to take our great brand and product and participate in end markets that have growth.”
Bringing companies such as HammerBlow under its corporate wing feeds TriMas’ success strategy and explains how the business grew to be a profitable, international player in less than four years. With this acquisition and subsequent growth, TriMas’ aftermarket business is now more than $500 million.
“If you look at how TriMas makes its money, it’s by being the market leader in the products we sell and now we are working very hard at taking our current product offerings and expanding our exposure into international markets,” Beard says.
Balancing organic growth and acquisitions to add to the Trimas family will continue to be the key to the company’s success
The balancing act
TriMas broke away from its parent, Metaldyne, in 2002 a strategic move steered by Beard, who was recruited by its owners in 2000 for this express purpose.
Beard says that for TriMas to succeed, he has to strike a careful balancing act.
“The way you grow a business like this is through a combination of organic growth new product development and taking the great market position with products you offer and extending those offerings,” Beard says.
Diversity is the key, but so is focus. TriMas has five core operating groups: RV & Trailer Products, Recreational Accessories, Packaging Systems, Energy Products and Industrial Specialties. Each potential acquisition must fit into one of these categories.
“To (grow) across an unlimited number of businesses is impossible,” he says.
TriMas’ success comes through leveraging buying power, international market connections and customer crossover opportunities among its businesses.
Beard is careful to adopt businesses that can both stand on their own and deliver value to the corporation.
“Our first priority is organic growth,” Beard says, noting that less than half of TriMas’ growth is through acquisition. “So it is important that our businesses have the ability to grow on their own.”
Product offering is also critical. One example is Haun Industries, which logically fit into TriMas’ aerospace engine offerings in the Industrial Specialties group.
“Haun was a small, product-based business that made components for engines that we did not,” Beard says. “By acquiring Haun, we extended our products.”
Haun kept its name, heritage and brand, just as TriMas’ other acquisitions have. Draw Tight, a manufacturer of towing products, is another example of keeping the value of a brand.
“There is no real reason to overshadow them with a nameplate,” Beard says. “The end customers know Draw Tight, and so do our distributing partners. They are interested that TriMas is behind Draw Tight, but Draw Tight is the brand in the market that has the equity.”
TriMas is used as the unifying brand behind the companies.
“We position our brand to the financial markets,” Beard says.
A small Bloomfield-based staff is responsible for managing treasury and overseeing legal and corporate policy.
“The business direction and responsibility is really in the hands of the presidents of the businesses that TriMas owns,” Beard says. “We try to give our businesses the best of being little, nimble and entrepreneurial, and we give them the best of having a big brother or parent behind them. When we buy materials, we act like the big company and leverage our (power) on those deals.”
Blending the right businesses
The acquisition process starts with paying the right price.
“Someone selling their business may have a variety of different agendas,” Beard says, noting that companies don’t always see beyond numbers when they review bids. “First, their end goal is to get the ultimate highest price, and at that point, (TriMas is) only as good as the next guy’s price. That is not what we are trying to offer.”
TriMas mostly targets businesses worth less than $100 million, and Beard says that in the future, it will consider candidates half that size. But the value Beard presents to acquisition prospects can’t be measured in dollars and cents.
“We want to provide businesses tools to help them grow in ways they couldn’t independently,” Beard says. “We try to augment their strategic direction and their access to capital. We also augment their operational management and allow them to have access to Southeast Asia and Europe.”
But how hands-off can TriMas be if it wants to ensure its businesses return these favors by bolstering the overall corporation?
“We don’t want to be so smart that we undo what’s already working,” Beard says. “Growth is hard. Change is hard for most organizations. And when you are growing organically, in a sense, it is simpler because the growth is internal. That doesn’t mean there aren’t issues when you launch new products. But in my mind, those challenges are easier to manage.”
Well-defined integration plans assure that both TriMas and the acquired company understand the roles each will play in operations, sales, production and, ultimately, driving the company into international markets.
Beard returns to HammerBlow to illustrate how sometimes a company that was formerly a competitor must learn to work with a 30-year rival a sticky cultural situation.
“The challenge of people learning to work together and integrating systems is always risky when you first buy a business,” Beard says. “In this particular case, one of [HammerBlow’s] factories was closed, some of their products were transferred into one of our existing facilities and some of our products went to one of their remaining facilities. Engineering centers were moved, people changed locations.
“We bought HammerBlow for growth, so we spent a lot of time both with their management and our own team planning how the companies would operate when they came together. In this case, it was more than ‘How do we get the mail in the morning?’ but also ‘How do we take our new product offering to the customer, and how do we take advantage of two longstanding brands and get the most out of them?’”
Beard says that a series of face-to-face meetings to discuss how each company would benefit the other helped managers understand why consolidating operations were critical to improving profits.
“There weren’t surprises or negative emotions about someone being the winner and someone being the loser,” Beard says. “The result was two companies coming together that had a very clear vision of how they would operate once they were married.”
Beard thinks of TriMas as a board or a proactive partner to the operating companies.
“We aren’t trying to run our companies from Bloomfield Hills, Mich.,” he says. “We work very hard to give them freedom to execute their plans. We may work and debate about those plans, but once we have a direction, our role is to provide resources, value-added guidance.”
Some of the most strategic access TriMas provides its businesses is in international markets, an emphasis Beard says is essential in today’s economy. Today, 80 percent of TriMas’ business is focused in North America, something Beard is working to change.
“We want to broaden our international scope and eventually balance that out over the next several years,” Beard says. “We have a great market in America, and we see great growth here for us, but we also see great opportunities in Europe, and we see huge opportunities in India and Southeast Asia over the long-term as those companies mature and become users of many of the products we manufacture.”
Already, TriMas has built a manufacturing facility for its packaging group in China, and it is in the process of establishing a location in Thailand.
TriMas’ international operations represent a key area where the corporation is centralized in its structure. For example, all of its businesses can take advantage of a global purchasing council.
“We buy a little more than $100 million in components sourced in Southeast Asia,” Beard says.
Also, international manufacturing facilities double as incubators, with room for another of TriMas’ businesses to produce products to test international waters before investing in full-out production overseas.
“We used the packaging facility in China as an incubator to let our Lamons Gasket Co. start manufacturing production in China,” Beard says. “And then when Lamons Gaskets business and its demand in Southeast Asia grow, we will most likely allow it to grow into its own facility.
“It would have been cost-prohibitive for Lamons to set up their own shop,” he says. “But because we were there and it could take a portion of the China plant, it can grow with Exxon (a key customer) and other oil refineries in Southeast Asia.”
Meanwhile, diversification 14 companies in five operating groups will serve as a safety net for TriMas.
“In theory, someone is at the bottom of the trough while someone is at the top,” Beard says. “We want to hold on to our diversity. We will provide that risk-adjusted diversity.”
How to reach: TriMas, (248) 631-5450 or www.trimascorp.com
Editor’s note: This story is based on an interview conducted in February 2006.